Though the benefits of contracting are plentiful, when you’re between placements, managing your money can be one of the more stressful parts of working this way.
Any period without a steady flow of income can be a worrying time. Fortunately, contractor accountancy service specialists Nixon Williams have offered some handy tips to ensure you don’t place yourself into financial difficulty when not working.
Nixon Williams’ advice focuses on three key areas. The first is having a thorough knowledge of what you are spending. Frivolous expenditure is a sure-fire way for funds to disappear quickly, so Nixon Williams advises keeping receipts for a better visibility of where money is going. This will allow you to better identify where spending could be cut back.
The firm also advises setting oneself a budget and vigilantly sticking to it. This will help you avoid spending beyond your means, and will allow you to know how much of your current funds are required as cost of living each month.
If you do this while working a contract, you are putting yourself in a better place for a time when you may not. And if you are not working currently, doing this could well give you that nudge you need to get that next contract sorted sooner rather than later as well!
The final point is key to contractors who operate their own personal service company – be aware of what you can claim.
As a director of a PSC, you can claim tax relief on many expenses while you are working. These all add up, and add to your take home pay each month – all funds in the kitty for a possible period between contracts.
Expenses that could be claimable include travel, accommodation and meals in certain circumstances, so be sure to make a record of such things and claim this money back where possible.
Though being without a contract is obviously not a desirable position to find oneself in, it does come with the territory as a contractor. Be sure to prepare yourself for such a time to avoid unnecessary headaches!