How to manage your time, your money and your success as a contractor

The lifestyle of a contractor can be very different than that of a permanent employee.

If managed well, you have the opportunity and freedom to perform a role you love, develop your skills and train at your own pace; whilst having control over when, where and how you personally want to work.  Sound interesting?

So once you’ve decided that a career in contracting is for you, then it’s time to shift your mindset to that of a contractor.

What will my hours look like as a contractor?

Don’t go into contracting thinking that you are going to do, and be paid for, 52 weeks of work a year.  Give yourself a buffer to ensure that you can truly enjoy the fruits of your labour.

The beauty of contracting is that you can be in control.  You can plan, manage and budget your time around what you want in life, holidays you want to take, and the down time you feel you need. Make sure you allocate time for training, holidays, and unplanned leave (sick days).

Brenton Henderson, founder of Oncore and long term contractor approximated:

“Estimate that you will work for approximately 44 weeks a year as a good forecast of your comfortable revenue earning potential. That way you have a built in buffer that you can flex as a bonus if you want to”.

Of course if work is everything to you, then you could spend all 52 weeks of the year in contract – you really are in charge of the balance that is right for you.

How long should each contract be?

There is no ‘should’ answer to this question.  The length of a contract can vary, depending on the industry and the project in hand.  Also some companies may initially propose a short contract assignment to get to know a contractors level of skill before extending the contract once they are confident of their ability.  Some contracts can start at just 3 months, although the majority of technical and skilled professional assignments are typically between six and twelve months+ long.

If the question is how long is preferable for each of your contracts to be, then that is really down to you and your circumstances, as well as the budgets and requirements from the client.

Matt Pepper, a Senior Business Analyst and successful Career Contractor of 20+ years suggests:

“Rather than focus on the contract term, I tend to focus on the task I’m contracting to do, the people I will be working with and the company contracting me. Some 3 month projects have been as rewarding as large multi year long transformation programs. I also find the short contract term often leads to longer terms if you are still needed. One of the advantages of contracting is that I am generally kept busy doing what I like. If the term is artificially long without the workload then I would feel unfulfilled.”

Covering insurance and other extra costs as a contractor

It’s important to recognise that permanent employees have a number of overhead costs and liabilities included in their employment agreement. As a contractor, you need to cover your own liability and factor in your security. You will need to have your own public liability (PL) insurance and professional indemnity (PI) insurance that cover you for any legal costs you may incur that aren’t covered by the client.  Oncore provides PI and PL insurance to our contractors to give you and your clients peace of mind.  For more information on that then please contact us here.

As a contractor you will not have access to any sick leave, so you may also wish to consider insuring your income with income protection.

What rate you should be charging?

There is no easy, one size fits all for this question.

First of all, it is market-driven and very dependent on the role, the skills required, how much demand there is and ultimately, whatever the company is willing to pay.

Matthew says

“Don’t be scared to be flexible, you have that advantage as a contractor.  If it’s a project you think looks really interesting and worthwhile for you to do, for a lesser salary, then weigh up what is important for you. That is the beauty of contracting, you may earn less for an interesting job that in turn gives you more skills and experience. Those newly acquired skills will then put you in great stead for a higher earning role next.”

Do your research, look at salary websites, talk to your agency. While you may be earning more on a daily rate as a contractor than a permanent role, remember to ensure you factor in all your liabilities, then work in a buffer.

Brenton suggests that:

“A rough guide could be to work on an approximate basis of 1.5 of the permanent salary rate and then pro-rata that to 44 weeks a year”. 

Managing your expenses and administration

In order to be successful, you also need to make sure you are managing your finances, administration, accountancy and taxes.  Ensure you set aside time for this type of non-salaried work, especially if you work through your own limited company. A few minutes each week to log your expenses and keep your accounts up to date will save hours of additional work and stress later on if it gets out of hand.

Keeping your next contract in mind

It’s important to align with good quality recruitment agencies in your target industries. Building up a good relationship with the right people means they will then look after you.  Tell them when you are going on holiday, taking time off, doing training and this not only keeps them in the loop – it also allows them to help you plan for your next assignment, exactly when and where you want it. Read more about this in our blog – How to get started as a contractor

It is also interesting to note how quickly the market can change. In the beginning of COVID in 2019/2020 permanent roles were being slashed across multiple industries and companies were implementing hiring freezes. Fast forward to today, and it’s a candidate short market with a shortage of sought after skills, while hiring appetite has lifted considerably compared to the same time last year. This puts the worker in the more positive position to negotiate and choose what they want. The advice from Matt Pepper here is to remember that as a contractor you have a reputation to uphold and jumping to a new contract before your current one has been completed could create negative impact on your career.

Ensuring you achieve a good work-life balance as a contractor

Achieving work-life balance is one of the main drawcards for becoming a contractor because of the plethora of benefits and flexibility this offers.  But you need to make sure you set yourself boundaries in which to achieve this.  From daily time management to planning a well-deserved break, to staying on top of your finances and admin, it can be a challenge to successfully juggle work and home life.

Time Management

Time management is crucial for the success of any working professional – but even more so when you’re a contractor.

Try and be strict with the boundaries between work and home (a challenge in these Covid-19 times when you are likely to be working from home).  Ensure you take the time to plan your working days, prioritise your tasks and set daily objectives to achieve.

That being said, given the current business climate, agility is paramount. So, don’t become so rigid with your time management strategies that you don’t have wiggle room to flex. Remember to organise time for quiet work, collaborative work and social interactions to ensure you can take care of business and be the team player everyone needs you to be.

Switch off on your time off

Easier said than done, we know!

According to research, over the last two decades, the hours of work for professionals has increased by 15% whilst leisure time has decreased by 33% – but this doesn’t have to be the case as a contractor.  You can be in control of the hours you want to work, versus the time off you want to have.  With good planning, you should also be able to truly relax in a work-free zone when you have your allocated time off between contract work.  Switch off your phone or your laptop, or at least keep your work-related notifications to a minimum.  Try to only respond to priorities, if it isn’t essential it can wait.

Without a doubt, you will be so much more effective and successful if you allow yourself a proper break with your family, spouse and friends whether that is in person or via video calls. Even if currently in lockdown, getting the mental break scheduled in is a good idea.

Contract Support

Oncore has over 20 years of experience of making contracting life easy.  We are a global company specialising in contract management and payment solutions for professional contractors, engaging with thousands of contractors across Australia, NZ and the UK.  If you are considering the move towards a successful career in contracting and would like to speak to us about how we can help then please do get in touch.  

For more advice on how to get started and be successful as a contractor, you can also listen to our panel of experts discuss and share their insights and advice in our recent webinar, “how to boost your career in contracting”. Click here to watch the webinar on replay