My version of FlexWork includes hourly wages, which means my paycheck can fluctuate depending on the exact number of hours I bill in a given week. I don’t earn any income on sick days or while on vacation, so having a healthy savings in place helps our family maintain financial stability. Our overall savings account balance may fluctuate with my income, but our ability to pay monthly bills does not.
Even if you earn a set salary while working flexibly, saving can help you maintain financial flexibility to weather unexpected events, such as surprise expenses or a leave of absence.
You’ll thank yourself for taking time to think through your income, benefits and professional expenses. Prior posts in this blog discuss benefits options (in two parts) and professional expenses, as well as the differences between working as an employee or independent contractor. All of these factors are important considerations when planning your finances.
Quick review
If you work as independent contractor, you’re considered self-employed. You’re responsible for paying your taxes, health insurance, retirement and other personal financial obligations. A law firm is likely to foot the bill for certain job-related expenses, such as research tools and parking.
If you work as an employee, taxes are withheld and paid by the employer, but you may not qualify for all employee benefits if you work reduced hours. For example, health insurance underwriting may require a certain minimum number of weekly hours. Be sure you understand your eligibility for all the benefits in your employer’s package so you know what will come out of your own wallet.
The manner in which you are paid will also impact your finances. Wages paid on a salary basis are predictable, while wages paid on an hourly basis can fluctuate. I appreciate the advantages of the hourly pay structure, but it does take planning.
Plan to save!
If you’re working full-time and considering reducing your hours, I recommend having a healthy savings in place before you reduce your hours. Give yourself a goal, such as 3 to 6 months of household expenses, before you leave your full-time position. (Please consult a financial expert for advice applicable to your specific needs.)
If you’re a stay-at-home mom looking to re-enter the workforce, it’s most likely that your earnings will represent additional income for your family. Even so, you want to be sure your expenses don’t eclipse your earnings. It would be ideal to have a savings built up before you go back to work, but at the very least, saving a portion of each of your after-tax wages will help you develop a cushion over time.
Benefits of saving
Life is predictably unpredictable. It’s easier to ride out the storms if you have a savings in place. In addition to being able to absorb unexpected bills and leaves of absence, saving can enable you to take time off or spend more money when needed. I’m learning firsthand that teenagers are expensive! Also, there are a lot of random school holidays, and sometimes you just need a family vacation.
I try very hard to be home when the kids have school holidays, including winter break and spring break. It can mean working from home on those days, or it can mean putting in extra hours before a break so I can take uninterrupted time off. Having a savings helps me not to worry about how many hours I’m billing during those breaks. I haven’t found a way to get out of working all summer just yet, so I’m grateful for summer camps!
How do your finances flex?
Have you found other ways to help your family be financially flexible? Do share!
FlexWork for Attorney Moms 