Is Contract Work Right for You to Increase Your Income?

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Contract_work_increase_incomeIt was mid-winter 2015. I had trudged through the snow on my usual 20 minute walk to work. What I really wanted to do was call in sick. I was exhausted from working all weekend implementing a software upgrade. But I had a meeting first thing with my director; I thought I was walking into a 1:1.

But instead: Lay off… Shock… Confusion…

Then TOTAL ELATION!

What?

Yep that’s right. Elation. I realized I had been handed an opportunity of a lifetime. I had been thrown a pot of proverbial gold. I had no immediate financial concerns, and after working so much overtime, I suddenly had ALL the time in the world! I had been laid off from an average salary job, and by the time I was done, I had almost doubled my salary.

There was no magic, or bag of tricks. I’m an average person. I’m not unusually smart. No special connections. No hand outs from parents. And I have a 2 year college diploma. So no fancy education either.

I simply switched from full time and to contract work. Almost feels like a bit of a cheat. If I can do it, anyone can. It’s more about right circumstances than anything else.

What should you consider when deciding if contract work is right for you and a good way to increase your income?

Job Market

There are certain industries that lend themselves better to contract work. The easy ones are IT – software programming and project management. There are many others I’m sure, but I’m most familiar with those two. You need to research your line of work, skills and see if contract work is common, and that there is a good supply of opportunity. Without that, no dice!

Financial Stability

In a lay off situation, if you’re short on money, you take the first opportunity. Whether that’s contract or full time. That fact aside, if you’re considering working contracts, you need to be financially stable. This can be anything from being able to live on one salary if you have a partner, or a cash cushion. Like minimum 6 months expenses saved. The more unstable or less plentiful your job market is, the longer you should be able to support yourself on your savings.

Skills

An obvious one, you need to have skills that are in demand. Employers are willing to invest in an employee if they’re full time; theory being that they’ll be around and will become more productive, take on more responsibility etc. It’s an investment. But contracting is the opposite. The whole point is that a company needs a skill set, right now. So they’re looking to bring someone in to fill a gap, get a job done. If you can’t do it, they’ll cut the contract and move on to someone else. So make sure you have the skills that are in demand, and keep upgrading.

Risk Appetite

This is as much about tangible risks as perceived risk. And you have to be brutally honest with yourself about both. In most cases, if you’re thinking about working contract, there’s a healthy market for it already. Financial stability can be something that’s worked towards. Risk appetite is usually what will make or break the choice.

Tangible risk factors need to be constantly re-evaluated. They vary over time and changing circumstance.

  • Health of the economy. Are companies doing well and spending money on projects?
  • Culture of a company for contract renewals: If they like you, some companies will renew contracts and assign you new projects.
  • How valued are your skills in the current climate/job market trends?

Perceived risk is a little more challenging to measure. This is different for each person. All depending on what’s important to you, and in large part personality. I’ve been offered a full time job near the end of a contract. Multiple times. I enjoyed the work and loved who I worked with. But I said no. EVERY. TIME. When I tell some friends/family that, they can’t wrap their heads around it. To me, there is a greater danger in working full time. I get comfortable, lulled into the false idea that I have security in working full time.

Truth is, there is no assured security for anyone. If there’s a downturn in the market, or profits, re-structing due to changing of the guard, you’re as likely as not to get laid off.

It’s all about how you view the reality of certain inherit risks and realities of consulting — without having delusions. If some aspect will cause you to lose sleep consistently, cause you major stress, that won’t be healthy in the long run. So your choice needs to be in line with how you perceive risks and your risk appetite.

One last note on risk, if you have a life partner, they invariably have to be factored into this decision. But I think that’s straight forward, so no need to delve into that.

So what do you think, is contracting right for you? Do you have any experiences to share?

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