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So....
Got made redundant after 27 years with same employer in December.
Got a start as contractor with a similar organisation end of a January. Cash is better than previous job and job is both different and bigger. Really enjoying the role and the folks I work with. This new org also shed many jobs (staff and contractors) recently but I was asked to continue in the new org.
However, I worry a bit about the future....in that things could change tomorrow and it's 1 month notice only.
So, how do you folks who are contractors deal with the future....save wisely, be frugal and don't get ill??
I guess the underlying thing for me is that I feel an outsider - be happier if I was an employee. That said the majority of folks in our dept are also contractors.
I recognise that I'm working, getting paid and enjoying work but something is still missing for me.....
You get one month notice as a contractor that is good! Not contracting myself but as with any job I treat it as make hay while the sun shines and always have the buffer so you can walk out tomorrow or if you are fires tomorrow.
Make sure you have enough cash to cover whatever length of time you think you could be without work. 6 months absolute minimum for me, but your view may be different.
Never put yourself in the position where being out of work means you're srcewed, always have a rainy day fund.
Think yourself lucky that you have 1 months notice, I'm on zero notice.
The fact that you realise things could change tomorrow is a good thing, you're mentally prepared for it. a lot of contractors dont/arent.
Look forward to whatever the next contract could be, I find thats the best bit of contracting, ie going somewhere new, doing something new, with new people.
I've been contracting 20 years now, never had a permie job, dont think a permie job is for me.
Not in same situation as you, in that I ended up being freelance because I'd been made redundant and finding employment was so hard. I tried to allocate, as you infer, proportion of income against tax, savings for a rainy day, future expenses before I took cash out to pay household bills, towards flash bike and so on..
Just need to be more disciplined but I ended up working with a bunch of guys, here in NE Scotland (oil & gas, natch), that were great, had great respect for and worked very thoroughly with very little aggro - much less so than I'd encountered in previous employ, and that was pretty good.
Don't fret about the employ bit but learn from those around you and be professional.
Same as Julians.
In the past ten years I've had two contracts end on zero notice. With kids it's scary, you feel like you are letting them down. Both times three months no work. But both times a better contract came along with better people in a better location.
As others have said, you need to build up a fund to cover you between contracts (every contractor I know can tell you their "time to bankruptcy").
However, assuming you can get that sorted, it's refreshing to realise that if you are good at what you do then (a) existing clients will continue to employ your services (b) new clients will request your services without you needing to go looking (I haven't needed to search for new clients for quite a few years now).
And I like being the outsider (no HR issues; no appraisals; no politics to worry about); basically you can go home and switch off if you want.
Personally I have no intention of taking a full time job again (been self employed for 15 years now).
Our household set up is such that we could survive on just the OH's salary if absolute needs be, so no real worry that I could be out of work.
The 'it's not forever' aspect of contracting suits me right now and if you suffer from itchy feet, short term contracts look better than never sticking in any one permie job for very long.
Like the above poster mentions, I find it easier to switch off from work and not let aspects get to me when I know I'm not going to be somewhere long term.
(plus I get paid a lot more 😀 )
Also in O&G in N.East Scotland, and for those of you who are up here, then you'll know that getting other jobs can be a challenge at the moment, so I feel pretty lucky TBH. The change has been positive and refreshing but I would feel more part of things if I was staff rather than contract.
A fair number of colleagues have been contracting for years and would not want a staff role if offered as it would mean decrease in income, increased taxes, salary for the wife, etc, etc.
Thankfully redundancy sorted the mortgage, etc out so we don't have to immediately worry if things go pear shaped.
I guess I should really be grateful and make hay whilst the sun shines!
It'll take time before you feel comfortable as a contractor but it will come.
Make sure you pay the exorbitant fees to go on the courses that will keep your skilset up to date.
Firstly working for a single employer on one month notice doesn't sound much like contracting from a security point of view and also check the tax implications.
To answer the question having a savings buffer is good. As is having a range of clients. TBH I usually have the opposite problem of too much work. Its hard to say no in case they don't ask next time. Also don't forget that the tax man will want a chunk at the end of the year. Its easy to look at the bank balance and think I'm having a good year before I remember that a load of it isn't my money.
Depends on job but I'd be looking at around twice the income of a salaried job. That should cover holidays, sickness, expenses, training, memberships, insurance, pension, etc, etc ,etc and still leave enough to put some by for a rainy day.
Benz I used to contract in O&G but went staff some time ago as it suited my family circumstances.
The contracting was good and I would still happily be there. I know the situation in Aberdeen and I have survived a round of layoffs so I appreciate how different it could be right now.
My advice would be a good accountant and you should have one by now.
Get at least 6 months fighting fund in the bank should you need it.
Good insurance and pension. Pension is a good place to chuck your money into.
Keep your nose clean with the tax man and your company.
Build up and keep your contacts out in the industry as you never know when you might need them.
If your worried about being an outsider it depends on the company and your colleagues. Where I work it would take you a few months to work out who was and wasn't staff. Pretty much treated the same.
1 month notice is good for contractors. A lot of places have 0 notice. I work as staff for a company for 11 years in Aberdeen and had 1 months notice and 1 months salary as payoff if I was laid off.
Anyway all the best and don't take any risks on the bike. Your day rate depends on it.
You get 'overpaid' compared to a perm job for a reason - no job security. Just save, save, save and save some more so you have money to tide you over during any lean times. Personally I'm keeping 12 months-worth to one side. Possibly excessive but it means a lot less worry.
And as mentioned above - don't forget to keep an amount aside to pay your VAT and corporation tax (if you're a Ltd) and set up a personal pension.
Personally because I'm very disciplined with my money I'm more financially secure as a contractor than I was as a perm.
Not being sure how long the money will be coming in for also means you spank a whole lot less on unnecessary shiny stuff, which is quite a release
Another ne scotland o&g contractor here. As per most above, save up until you have a substantial rainy day fund. I'd say minimum 1 year expenses, you'll be glad of it if you ever need it.
I've been doing it for a year and have built and take all the money I can up to the higher rate limit, Mrs CD is also a shareholder . That's easily for money for me. Have built up a 6 month watchers already and have just set up a sipp.
Mini CD is on the way so the whole security thing has been more concerning recently, especially as I only had 1 main client in the first year. Main concern is is long-term sickness or injury rather than getting the work though.
Corp tax is way to account for a get I set aside money for that every quarter. Vat is a little harder but I quite like the finance part as it makes me more connected with earnings rather than getting salary regardless.
Yup, zero hours notice here too..
I've only been at it since October, and am in Comms..
So far, so good, but scary times are ahead with all the operators about to go into meltdown.
We'll see..
I turned down contracting and stayed permy as I didn't want the hassle of worrying about my next role and maybe traveling (I don't do long commutes). I'm sure I'll do it one day but the kids are still a little young andy want to be around for them and I've a pretty decent gig at the mo
[i]And as mentioned above - don't forget to keep an amount aside to pay your VAT and corporation tax (if you're a Ltd) and set up a personal pension.[/i]
We set aside 25% on every receipt into the deposit account and use for the VAT and Corp Tax, plus as a reserve.
[i]Mrs CD is also a shareholder .[/i]
Yeh, right... What you need is both of you as 'fee earners', then you can pay equal salaries/divi's etc with no/little worry - also no/little IR35 concerns.
Best advice I got about 15 years ago when I took my first temp/contract position.
Nobody is permanent your contract is only as long as your notice.
Be sensible, bank some cash have a plan B, make contacts be good at what you do and make sure you have somewhere to go.
Similar fears prompted me to go back to a 'permanent' role a few years ago, but it turned out to be the shortest contract I've had in about 10 years' contracting, at 6 months.
At least on a contract you normally have some idea when it's going to end, and can plan accordingly. Gives you a greater feeling of control, once you're used to it.
+ what everyone else says about banking money while you can.
Not that I seem to be very good at that.
"Birds do not harvest or store food, yet see how God provides for them daily. Trust in the power of just being"
...I read the other day.
on that Kryton I remember a tale from a BnB owner in Keswick who after the big Christian convention found a note in the suddenly vacated room stating that "God Would Provide"
If your other half is taking money out of your company as mentioned above she will need to be able to justify it to hmrc. They are very hot on splitting incomes to dodge tax. If your other half is getting paid to do books etc then it needs to be seen as a fair market rate not 40k a year for a day a week.
Who can genuinely say their job is safe these days anyway ? I am contracting just now - the money is better, but I wouldn't have done it without some pretty solid savings.
Some good advice on here. My experiences of contracting are generally very positive. I'm lucky enough to have a number of clients. One of the reasons I started contracting was I couldn't face going into the same office day after day. Big difference between fixed price work for multiple projects and contracting/interim roles. I've done both and I much prefer the former, but it takes time to build up a customer base.
I took three months off last year and it was brilliant. But even with the money in the bank and knowing work was out there, I still got very twitchy towards the end.
Agree on split divi's. Luckily my wife is doing a number of book-keeping roles for other firms, and she also works on my stuff, helping out enormously writing stuff up and reviewing documents.