As companies change sizes, they often come across tasks that they don’t have anyone to do or just simply need an extra pair of hands while they find someone willing to take that role permanently. Contract workers swoop in to provide that help and allow those companies a bit of flexibility in how they approach adding new positions and distributing their workload. This flexibility is why the temp industry has grown so much in the past few years and why contract work is expected to continue to increase. As more people enter this unique market, it becomes increasingly important for those people to understand the nature of finances and financial stability while working in temporary positions.

Understand The Nature Of Contract Work

The nature of contract work is that you necessarily have ups and downs during your career. There’s always a point in the contract where the work runs out and you get a few weeks or months to yourself while you’re looking for the next contract or temp role. These dry spells are simply a part of the job description. Because of this, using the money that you do earn to its fullest is an important part of your success.

Spending all of your money as you earn it can work for some people, but contract workers have to consider the possibility that they may spend time not earning money. This ebb and flow means that contract and temp workers must be proactive when it comes to their finances. Spending wisely with a budget and building savings are unavoidable when working in the contract industry.

Know Your Value

A crucial facet of contract work is maximizing your time on the job. Making the most of the time you spend working is a key part of accruing enough capital for down periods. The most effective way to achieve this is to ensure that you are negotiating good rates on your contract offers. Contract negotiations are an intimidating aspect of temp work, but they’re crucial to your success in the field. Mastering negotiations by understanding the typical pay rates in your field and knowing what you deserve based on your experience is the best way to get ahead in a contract position.

Build A Safety Net

Another crucial step in securing financial stability through temp work is your financial safety net. Your savings are essential to making sure that you’re able to cover all expenses in case of a dry spell. To do this, it’s important to dedicate some of your money to a savings account while on the job. This can be done automatically by setting up your direct deposit to go to your savings account in addition to your checking account.

Many people enroll in a high-yield savings account, one that offers more return on your investment but doesn’t allow you to withdraw funds as often. The goal when saving is to cover a few months of expenses. People typically try to save up to 3-6 months worth of expenses as part of their safety net, so incorporating that timeframe into your savings goal is recommended.

Create A Budget That Flexes With Your Income

If part of your paycheck is going to savings, the rest should go to your budget. A budget allows you to preempt your finances by planning what to do with the money you earn. People often do this through a method known as zero-based budgeting. When zero-based budgeting, the goal is to use every dollar that you earn in your budget, leaving zero left over. If you have extra money, it should’ve gone into your savings account. Budgeting like this is a scary prospect right out of the gate, but after you spend a few months taking note of what you spend your money on, you’ll gain a better understanding of how much you need for rent, food, transportation, entertainment, and everything in between.

Another tip when budgeting in a contract role is to plan for your lowest expected monthly income. That way, when the pay isn’t ideal you aren’t left with expenses that you can’t afford. Planning for your lowest income will also give you a lot more room to change your budget or save more when you get a contract worth a little bit more.

There are a lot of tools out there to help you budget, each with their own advantages and disadvantages. One of the most commonly used is a simple spreadsheet. While these are convenient and easy to jump into, dedicated budgeting software often comes with features and recommendations that allow you to get the most out of your money. It’s worth taking a peek at these tools if you haven’t already.

Diversify Your Income Streams

Because dry spells are a normal part of contract work, temp workers find themselves with fluctuating income that isn’t commonly seen across most other professions. Due to this fluctuation, many contract workers look to diversify their income sources. There are a ton of new ways to do this, as the gig economy has really exploded in the past few years. There are a lot of skills that translate well into gig work, so sites like Upwork and Taskrabbit are ways to make a little extra income when between contracts. You can also find remote work that can provide a lot of additional financial support.

Beyond freelancing, there are other ways to create some additional income. Passive income is a great way to make sure that you’ve got a financial cushion to fall back on. There are numerous types of passive income, with the most common being stocks and high-yield savings accounts. Passive income can also be generated a little more actively, through marketplaces and digital content creation. There are a ton of ways to make a little extra on the side if you’re willing to put in the time and effort to find them. Making the most of these alternative income streams will go a long way for any temp worker looking to ensure their financial stability.

Partner With Premier

At Premier, we’ve developed the experience needed to support contract and temp workers to the best of our abilities. Our recruiters are experts at finding the right fit for you in your next temp role. Our seamless, tech-enabled recruiting process is perfect for helping you find your next position. Let Premier be the way you get into your next role. Get started with us today!