As I’m nearing my goal of financial independence, I decided to take the opportunity to leave my steady job in Corporate America and become a contractor in my field of finance and accounting. When you tell people you are going to be a contractor, you get mixed opinions since it tends to go against the norm. Some people will say “that’s awesome” and other people will say how awful it’s going to be and give you a long spiel about how it didn’t work for them or someone they know. I guess you have the “Positive Pollys” and the “Negative Nellys” that just love to give their opinion no matter if you ask for it or not.
Since I love learning and do not believe in taking what people say for truth, I decided to do my own research and explore the benefits and downfalls of being a contractor. Do you think being a contractor is right for you? Read on to find out…
There are some people I know that have been a contractor for many years. They’ve chosen a career path that is increasingly becoming more popular. So it begs the question of why and what are the benefits they have found in doing contract work as opposed to having a permanent position with one company. Here are a few of the benefits I’ve learned:
- Exposure to different companies and industries. If you work in a field that has transferrable skills (like accounting), you can easily work for almost any company out there since there isn’t much difference in the work actually performed in different industries (retail, manufacturing, services, etc.). You get to learn how different industries do business in the world today.
- Experience with different management styles. Since you are constantly working for different people, you see a lot of different personalities. People lead and manage their folks in so many different ways, you can learn so much from working with different people.
- Freedom and flexibility. Contractors often get the ability to pick the projects and companies they work for allowing them the freedom to choose and flex their work-life balance the way they want. As a contractor, you are paid only for the hours you are on the job. You generally can only work 40 hours or less a week and therefore it limits you to more of an 8-to-5 schedule which is a great way to manage work-life balance.
- More money. You have the ability to name your price. Selling your specific skills to employers that need you provides you the ability to ask for a higher wage or hourly rate than what permanent employees make doing the same thing. It pays (literally) to do your research and understand what the market is offering contractors in your field of expertise. The hourly rate can also differ depending on the benefits, if any, offered by the employer and your level of expertise, within your field and as a contractor.
- Opportunity to learn new skills. Although you are generally going into a role based on the skillset you excel in, you will inevitably pick up new skills with every job you work. Building your skills can be really beneficial for your career in the long-run.
- Meet new people. You never know you could meet your next best friend or significant other as you meet so many different people with each job you work. It’s also a great way to build your network in your field of expertise.
- Very few meetings. Some people love meetings, so this may not be a benefit to everyone. However, contractors are rarely asked to join in important decision making meetings. They also tend to avoid involving contractors to help with policy decisions for the company. This is one thing I hated as a regular employee, companies love to have meetings if for no other reason than to just “meet” face to face. What a waste of time!
- Avoid office politics. Since you aren’t looking to climb the corporate ladder like everyone else, you get to listen to everyone else complain about the politics of promotions without having to engage in any of it. Although you may get annoyed by the brown-nosers and backstabbers, you will feel grateful you don’t have to have a part in any of it.
- You could be offered a full-time permanent position. Sometimes the best way to get your foot in the door with a company is to work a contract position. I saw this several times at the companies I worked at. Contractors would come in to fill a vacant position temporarily while there was a hiring freeze or the position was on hold, and eventually they ended up being offered the position.
Additionally, if you are looking to retire early or achieve financial independence, being a contractor can help keep you mentally sharp. Research has shown that we don’t provide our brains with enough mental stimulation, it can lead to a loss of cognitive abilities. Contract work can provide a great way to find meaningful work that enables you to have continued social and mental stimulation to live long and prosper.
Being a contractor sounds great you say? Well, it sure does if you like those benefits, it sounds awesome, but there are some downfalls you need to consider too. There are risks and negatives aspects of contract work as well. Life as a contractor can’t be only a bed of roses, right?
- Risk of being let go with no notice. When a company is considering lay-offs, contractors are generally the first to go and often with little notice. If you can mitigate the risk of being out of a job for awhile, have other family that can provide support, or just don’t need the money, this risk is easy to deal with.
- Inconsistent work. When you’re in a permanent position, you are generally doing the same type of work. You get a little training and you get better with it as time goes one and soon you are an expert. As a contractor, you often do various different projects that suit your skill base. If you are like me and good in various areas of accounting and finance, you can find yourself helping corporate accounting, financial reporting, accounts payable, payroll, treasury, and other areas. It can be fun if you like doing things, but you usually don’t feel the same sort of comfort level that you do in a permanent position since you are always doing something different.
- You won’t “move up” in positions. If you are still looking to get ahead in your career, contractors are often excluded from ‘promotions’ and development opportunities .
- No company benefits. Although some agencies you may work with offer their long time contractors benefits, it can take a while to get there. As a contractor, you miss out on paid time off (vacations, sick time, holidays) and other fringe benefits like healthcare and company retirement plans.
- Pay for your own training and conferences. Employers often pay for their associates to go to training and conferences to improve their skills and network. As a contractor, you are generally on your own – you have to pay for it yourself and you won’t get paid for the time you aren’t “on the job.”
- Companies may be weary of hiring you permanently. If you are looking at this as a bridge between permanent jobs, you need to be careful. Companies can sometimes see your “skills” differently and will often assume that you could easily jump ship.
I think being a contractor offers a wealth of opportunities when you are stable in your financial situation, but also flexible in your ability to work (or not). If you are at a point in your career where you are done climbing the corporate ladder and frustrated with the office politics, then even if you aren’t in the perfect financial position, you may want to look into contract work. There are many examples of good and bad experiences, it just depends on what you value most and what risks you can live with. You have to determine for yourself if the benefits of being a contractor outweigh the downfalls for you and your situation.
What do you think of contract work? Have you ever considered it?
Please share your thoughts and experiences with contract work in the comments below.