Since the recession of 2008 employers have been slow to re-hire people for positions that they cut. If you lost your job, you may have started working with a temporary staffing firm or working as an independent contractor, or freelancer, to help make ends meet. You may have viewed contract or temporary work as just a short-term stop-gap measure and continued looking for a full-time staff position. However, like many Americans, you also may have thought you would have found a permanent staff job by now. You may need to reconsider that assumption.

What It Means

Temporary work typically means signing up with a temporary staffing firm that places people on short- or long-term assignments with a client. Independent contracting is when you work for yourself (meaning that you are self-employed) and seek short- or long-term work opportunities with clients. According to the American Staffing Association, more than 6,000 temporary staffing placement firms provide nearly 3 million Americans with jobs every day.

Today there are long-term temporary and contracting opportunities across virtually every field including health care, accounting, legal work, sales, etc., and at nearly every level.

Potential Benefits

There are several potential benefits to temporary work or independent contracting. This type of work can provide:

• a replacement of a significant portion of your income
• the opportunity to gain experience in other positions and/or industries
• the flexibility to look for full-time work, take care of family needs, or pursue opportunities like travel, professional development training, etc.
• the ability to network within new work environments
• the ability to potentially deduct a portion of your utilities, mortgage, and expenses as a home office deduction on your federal income taxes

It’s important to adapt a positive mindset about your situation. Think of it as a period of time in which you are building your resume, networking with new people you are meeting in the workplace, and gaining skills perhaps in a new industry or at least a new environment.

Know the Challenges

Long-term temporary or independent contracting work may also have potentially negative, unintended consequences. You could encounter challenges with long-term temporary or contract work such as:

• lower pay than you earned in your full-time job
• less favorable work conditions than your previous job or work
• fewer (if any) workplace benefits such as health insurance, paid vacation and sick leave, and retirement savings opportunities
• feeling like you are “on the fringe” because, as a contractor or temp, you are not included in some meetings or given access to certain type of information because you are not officially a part of the company

It’s important to know what temporary or independent contracting will provide and what it won’t. Having realistic expectations can help you better navigate your workplace, make informed decisions and maximize the opportunities you are presented with.

Bridging from Temporary to Full-Time Employment

One of the unique aspects of temporary or contracting work is that it gives you a feel for both the work and the employer to see if the job is what you thought it would be and if the environment is one you would like to work in full-time. Many temporary employees find full-time employment through their placement. According to the international temporary staffing agency Manpower 40% of its workers find a permanent job as a result of one of their placements. If you enjoy the company you’re working for as a temporary employee or contractor, and would be interested in long-term, full-time employment with the firm, ask either the contact at your temporary staffing firm or the person for whom you are working as a contractor. If the answer is yes – that there is the opportunity to work full-time for the company or firm - it’s critical that you look for ways to demonstrate your desirability as a potential employee and your ability to add value to the company. Make the mental shift to begin view your temporary position as not merely a way of earning income but an ongoing job interview. To improve your chances of landing full-time employment with the company you’re working for, you should:

• try to demonstrate your value as a full time and/or staff employee including showing up on time and working the full day
• volunteer for overtime or additional projects
• provide your direct supervisor with the information and results s/he needs from you in a timely manner
• communicate well with your supervisor and team members

Learn more about Managing the Transition to a New Job through our Unwantedchange.org website.

Budgeting and Prioritizing

While you’re undertaking long-term temporary or contract work it’s going to be critical that you budget your earnings to keep on track toward meeting your personal financial goals. If you don’t already use a budget use our interactive budgeting worksheet for beginners.

Once you have created a budget that reflects your current financial reality let’s look at how you may need to re-think your spending, saving and investing priorities while you do temporary work:

1. It’s critical that if you must draw down your emergency savings do so very carefully, and then replenish those savings as quickly as possible. While this may be exactly the type of scenario for which you began putting aside emergency savings it doesn’t mean that you won’t have other unexpected needs in the future for which you will need to have access to cash. Keep putting money aside as possible—in a down economy the rule of thumb is 6-12 months of living expenses.
2. Think carefully before making long-term financial obligations that are based on your current pay. Since the nature of temporary or contracting work is that the income is not guaranteed for the long-term, it’s best to focus on meeting your more immediate financial goals.
3. Keep your credit card usage in check. Learn more about Using Credit Cards to Make Ends Meet: The Risks of Viewing and Using Credit as an Essential Supplement to Income.
4. If you’re working with a temporary or staffing agency ask if there are opportunities to purchase benefits like group medical insurance, 401(k) retirement savings, paid holidays and vacation pay through the agency.

Learn more about how to create financial structure and stability without a steady paycheck and saving for retirement when you’re not working.