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The 3 Financial Habits of Successful Contractors

We write a lot about ways you can thrive as an independent earner. From topics such as invoicing and finding work, to all of the tax admin that you need to think about, we’ve got a solid collection of resources to choose from.

But what about the ways in which you can make your money work harder for you? We’ve seen a few trends around personal financial management that we think are worth sharing. With these tips in mind, you can be sure that you’re making the most of your income. 

What is personal financial management? 


When we talk about personal financial management, we’re referring to any strategies or plans you have in place for budgeting, saving and spending your income. Managing your financial future isn’t just about planning around the income you earn today. It’s more of a mindset that you can pull through into your daily life, and hopefully allow yourself some financial and mental freedom from having to worry about peaks and troughs of inconsistent earning. 

Good personal financial management involves taking stock of your present situation and putting a plan in place – a strategy that you can actually manage – so that your future self can reap the benefits. 

Why is this important? As it turns out, being in control of your personal finances has been proven to improve mental well-being. Moreover, it helps shore up your time – giving you peace of mind now and saving you stress and confusion later on. 


1. Set manageable, measurable goals

Setting realistic goals is one of the best habits that a successful independent earner can develop. These goals can range from savings goals to investment goals, to education and travel goals, or even home renovation ambitions. Whatever your goals, be clear about the milestones you’d like to set and surpass on your journey to completing them. 

Questions to consider: 

  • What am I actually looking to achieve with my investments and savings? Think about where you’re at in your life and career. Are you looking to buy a house within the next five years? Ten years? Are you looking to start a family? Do you want to save up for a career break? Do you want to diversify your investments? Try and pick out a handful of short, medium and long term goals and get your head wrapped around what it would take to reach the numbers you set out for yourself. 

  • How often will I be getting paid? If you’re on a fixed-term contract, it’s likely that you’ll be getting paid at the same time each month. On the other hand, if you work multiple contracts or have a predominantly freelance income, try and add up your monthly income and use that figure to project out a budget for the weeks, months and years ahead.

  • What does my budget look like? How much do you spend on rent, food and transport per week? This is your baseline, so every financial goal you set should be established with this budget in mind. 

  • How will I measure my progress? This could be as simple as taking stock of your savings growth over time, or as complex as building a spreadsheet that tracks every dollar that you spend, save or invest. It’s important here to notice the moments where you surpass a milestone and celebrate your wins. 

Need help determining your financial goals? Our friends at Sorted have a really handy goal planning tool, which you can use to determine your goals and where they fit into your short, medium, and long-term plans. 


2. Invest in yourself, for both today and tomorrow. 

Goal-setting is one thing, but actually achieving these goals is another matter entirely. Now it’s time to actually put your plans in play. 

The first step is to set up a system that makes it really easy to make regular contributions towards the progress of your goals. For some, this involves software or spreadsheets that calculate how much to apportion into your various cheque and savings accounts on a regular basis. Other contractors just muddle through, subtracting percentages on the back of an envelope and seeing a progress bar fill up in their banking app. However you look at it, a level of automation is still required. 

Why should I set up automatic payments that directly contribute to all of life’s obligations? It can be really easy to get overwhelmed by tax and insurance payments, ACC levies, and monthly expenses such as rent, utilities, transport, and food. We’ve noticed that many independent earners are so focused on these obligations that they are often unable to pay into their KiwiSaver schemes, or make investments into stocks, funds, even investing in their own skill sets.  

In Hnry, you can set up automatic payments that will go straight into any NZ bank account every time you get paid. With Allocations, you can pay off tax debt, pay rent to your landlord, contribute to your KiwiSaver, make charitable donations, invest in stocks and funds, and make regular additions to a savings account – all without having to lift a finger. 

Our partnerhsip with Hatch allows Hnry customers to set aside a percentage of their income to go straight into their Hatch portfolios, ready to invest in the US stock market, every time they get paid. So as an independent earner you can take those steps to invest in the world’s largest share market and make your money work harder for you. 

Regardless of if you get paid on the same day each month, or if you get paid when you complete a project, you can get ahead of any inconsistencies and ensure that you’re still on track to meet your goals.


3. Smooth out any income inconsistencies and plan ahead. 

One of the best habits you can develop is in planning ahead of any potential income inconsistencies. We’ve talked about this topic before, but at its essence, smoothing out income over time is super relevant to feeling financially successful when you’re earning independently. 

Let’s say you’re an IT contractor, and around the Christmas break you know you won’t be paid for at least a couple of weeks. Given this knowledge, it makes sense to plan ahead: throughout the year, you set set aside a percentage of your income into a ‘rainy day’ fund. By the time the Christmas shutdown rolls around, you’ll still be able to make ends meet and not feel the pressure of a couple of weeks of no income. If you balance out your spending and savings patterns throughout the year, your future self will be better off for it. 

This concept extends to one’s career as well: if possible, setting aside these pockets of savings and investments now will help you navigate any hiccups in the future.

DISCLAIMER: The information on our website is for general educational purposes only. It doesn't cover all situations and circumstances, and shouldn't be taken as direct tax advice. If you're looking for specific help with your taxes, join Hnry and our team of experts can provide you with assistance tailored to your business needs.

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