3 Ways for Subcontractors to Maximize their Salary
It was staring me right in the face.
Sharp wheels, a firetruck red body and more power than I’d ever need. Slick chrome trim and a gorgeous sunroof. No room in the back for kids, but who cares? This was for me. I’d earned it.
Sound familiar? Subcontractors are often subjected to impulse shopping because their earning is inconsistent. It’s tough not to feel entitled to a reward after a particularly gruelling month that ends in a big pay-day. We work hard for our money, we deserve a treat every now and then, right?
The problem is the money doesn’t always flow so easily. With every hill there’s probably going to be a valley, and for people working in trades associated with the oil and gas industry - electricians, plumbers, welders, carpenters - not to mention people working in the offices of these trades, the market is fluctuating. Your income will fluctuate, too.
1. Ask Yourself: Is This a Need or a Want?
We all get caught up in shiny new things, but chances are you don’t need a new red sports car. What do you need?
- A home for you and your family
- Utilities like heat, water, and electricity
Don’t be afraid to treat yourself from time to time, but perhaps a nice dinner would be a better way to celebrate instead of committing to a new vehicle.
2. Prioritize Your Budget
If there’s one thing we’ve learned in this business, it’s that unforeseen circumstances are always lurking around the next bend in the road. Sure, you might currently be able to afford that car in the window, but what if something happens?
Planning for expenses you can’t predict is a priority.
Maximizing your salary is about paying for the important things first, and then using what’s left over for the next priority. We can help put you into a new home or even help you buy a vehicle, but only you can help yourself when it comes to putting money aside, even if it’s only a relatively small amount for a rainy day.
3. Contribute To a Savings Plan
You can do this by paying yourself a salary that’s less than what you gross each month. If you stick to that salary, then your savings are built in.
“Calculate 10% of your gross pay – the amount before taxes and other deductions – and set up automatic savings based on this figure. For example, if earnings before all deductions are $1,500, earmark $150 for savings. 10% is the starting point for savings.”
Start with a savings plan and then withdraw only what you need to pay your mortgage and your bills. What’s left over is a bonus to be saved or spent frugally on things like food, clothes and sure, a night at the movies.
Working in the freelance world or as a subcontractor has plenty of advantages and freedoms. However, it’s those same freedoms that sometimes land us in hot water. You might think you don’t need health benefits or a dental plan, but at some point those financial deficiencies catch up.
Put yourself in a safe financial state by prioritizing your salary and sticking to the plan.