4 Money Management Tips for Contract Workers

Today, money management skills are more important than ever. Times are tight, and you may feel pressured to manage your money even more carefully if you are a temporary or contract worker. Whether you are a contract, freelancer, gig, or temp worker, here are five essential tips to help you manage your money more efficiently.

Tip #1: Ensure Steady Income

When you work from contract to contract or gig to gig, having a steady income you can rely on may be difficult. It is not impossible, however, if you plan ahead. Line up for your next contract or gig while still working to ensure a steady income as you transition between jobs. If you work contract jobs, you know when your contract will end, so start looking for your next position well before the current one ends. You can also work with a staffing or recruiting firm such as Beacon Staffing to help you find your next role.

Tip #2: Build an Emergency Fund

There will be occasions when you cannot find a new contract or start it on time. Build an emergency fund that can support you in between contracts. Aim to have enough money to support you for at least a month or two, preferably more if you can. You’ll likely find a new position well before those funds run out, but having plenty of money for food, shelter, and transportation allows you to choose the best position, not the desperate one.

Tip #3: No Big Spending

Contract and temp work are understandably unpredictable. Avoid making large financial decisions until you know your next assignment is secured. You may need that money if a contract falls through or doesn’t materialize for you, and getting back could be slow, complicated, or even impossible.

Tip #4: Consider a Second Part-Time Job

Though working a second job may not be your preference, having the reliable income earned from those 10-20 hours a week could be just what you need to get through a tight spot. Plus, many part-time positions have the potential of transitioning to full-time, if necessary. Additional work experience and skills may also be valuable when pursuing new contract positions.

Contract and temporary work allow you a great deal of freedom, but managing your finances requires some extra effort. Remember the above tips as you pursue new contract jobs so you can always be prepared and financially secure while you work.

For help finding your next temporary gig, turn to Beacon Staffing!

Financial Planning Tips for Contract Workers

As economic times become uncertain, many Americans feel substantial financial stress and pressure as they struggle to pay bills and support their families. For contract workers, income is unpredictable, so managing your money is even more crucial.

If you are a contract worker who needs to get control of your expenses and manage your finances, read on for some valuable tips that will help you avoid the stresses of financial woes.

Start with Your Expenses

Look at all your financial statements and calculate what you spend each month. Everyone’s circumstances are different, but you will likely have expenses that can be sorted into:

  • Essential spending
  • Luxury spending
  • Optional spending
  • Business spending

Essential Spending

This category includes any money that must be paid to meet your basic needs. It could consist of money for your home, such as rent or mortgage payments, as well as any taxes, maintenance, and repairs. Food, utilities, car maintenance, insurance premiums, and debt payments are also included.

Luxury Spending

Luxury spending is the fun stuff that isn’t essential but does help you enjoy life to the fullest. This includes vacations, entertainment, dining out, hobbies, sporting events, beauty treatments, and charitable donations.

Optional Spending

Optional spending is spending that helps you to live a comfortable life. It may include clothing and shoes, gifts for special occasions, and subscription services for entertainment.

Business Spending

Depending on your business type, these could range from professional services to software and web hosting to financial management charges.

Once you have identified all your expenses, add 10% to each to account for any overlooked or emergency expenses.

Work Out Your Average Income

Next, calculate your average income for a month. Include any income you regularly receive. Consider the necessary taxes as well. For any income where tax is not withheld, you need to estimate between 25% and 30% of those earnings for taxes.

Deduct your expenses from your income after taxes. This will give you your residual income for the month. Depending on what you have leftover, you may need to look at your optional and luxury expenses and see where you can reduce expenses a bit. This may require some tough choices, but in the long run, you’ll be improving your finances long-term.

Plan for the Future

First, look at your debts and focus on the ones with the highest interest charges. This will help lower your monthly payments and improve your credit rating, a critical factor in building a more stable financial future. Then, build an emergency budget with three and six months of essential and business costs saved up. Take some of your residual income and put it away each month to start building the emergency budget.

As a contract worker, you can take control of your finances and reduce stress with these tips. Review your budget twice a year, make necessary changes, and make your money work for you. If you’re ready to start your search for a new job, check out our open positions today!