The Money Trap through the eyes of a contractor - Dr. David C

Great Article - by one of our Employees - Dr. David C.

David is retired Military, and has been contracting for awhile. Here are some lessons he has learned and wanted to share.

Don’t Get Trapped in the “Money Trap” – How to Secure Your Finances When Government Contracts Change Hands?

If you are working for a company that has won a government contract, you might feel like you have job security. After all, government contracts can last for years, and they often involve large sums of money. However, it's important to remember that government contracts come up for rebid, and the contract may be awarded to a different company. When this happens, your job and income could be at risk.

One of the most common mistakes that people make when working on government contracts is assuming that the income will continue indefinitely. This is a dangerous trap that can lead to financial hardship if the contract is not renewed. To avoid this trap, it's important to live within your means and bank some of your income into savings to cover potential gaps.?

Living within your means is a critical step to ensure your financial stability. When you receive a good salary, it's tempting to increase your standard of living and spend more money. However, this approach can backfire if you suddenly find yourself without a job or with a lower salary. It's important to develop a budget that takes into account your current income, as well as potential fluctuations. Avoid overspending on unnecessary items and focus on saving for the future.?

Another critical step is to build up a savings cushion that can help you weather any potential gaps in income. This means saving a portion of your income each month and putting it into an emergency fund. Ideally, your emergency fund should be able to cover at least six months of expenses, but even a smaller cushion can provide a safety net if you experience a sudden change in income.?

When the government contract changes hands, the new contracting company might offer a lower salary based on how they bid the contract. This is a common scenario, and it can catch people off guard if they haven't prepared for it. However, if you have a budget and an emergency fund in place, you'll be better equipped to handle the situation. You can try to negotiate a higher salary, but if that's not possible, you can fall back on your savings until you find a new job or adjust your expenses to fit your new income.?

In conclusion, working on government contracts can provide a good income, but it's important to avoid the “Money Trap” by living within your means and building up a savings cushion. Don't assume that the income will continue indefinitely, and be prepared for the possibility of a change in income. With careful planning and preparation, you can ensure your financial stability even in the face of uncertainty.

?

?

?

?