A month on the bench

[Gaz_M]

The best rule of thumb I was taught as a contractor was: 1/3 of my daily rate for me, 1/3 for the taxman and company reserves, 1/3 for warchest. Just manage your personal budgets to match your 1/3 of daily rate and you could take 6 months a year off if you had to, if you're lucky and stay in work nearly all the time then that's 1 month earlier retirement for every month you work!

Where does that rule of thumb allow for expenses? In all my gigs I need another chunk to cover hotel and mileage payemnts.

[craig1]

Where does that rule of thumb allow for expenses? In all my gigs I need another chunk to cover hotel and mileage payemnts.

Net daily rate over the year... or more accurately put, your company's annual profit excluding all payments to you divided by 3.

[Gaz_M]

Net daily rate over the year... or more accurately put, your company's annual profit excluding all payments to you divided by 3.

Oh, the 1/3 left for me is nowhere near enough to pay my bills then.

Nice idea if you can get your personal budget low enough.

[craig1]

Oh, the 1/3 left for me is nowhere near enough to pay my bills then.

Nice idea if you can get your personal budget low enough.

If you can't survive on 1/3 of your daily rate then how are you putting enough away for the inevitable bench periods, future life, training courses, retirement, etc? It really hit me hard how important that money was when I had to take essentially an entire year off to look after my very ill wife, that money came in very handy. You never know what tulipy curve-balls life will throw at you.

I really don't mean, or want, to be preachy but if you're not making enough money out of contracting to be putting any away then maybe contracting isn't the right option...

[Gaz_M]

If you can't survive on 1/3 of your daily rate then how are you putting enough away for the inevitable bench periods, future life, training courses, retirement, etc? It really hit me hard how important that money was when I had to take essentially an entire year off to look after my very ill wife, that money came in very handy. You never know what tulipy curve-balls life will throw at you.

I really don't mean, or want, to be preachy but if you're not making enough money out of contracting to be putting any away then maybe contracting isn't the right option...

I put as much into the warchest as I can but can't put enough away to only work 6 months a year.
I'd be interested how many contractors can afford to only work half a year because there sure aren't any where I'm currently working.

[Old Greg]

I put as much into the warchest as I can but can't put enough away to only work 6 months a year.
I'd be interested how many contractors can afford to only work half a year because there sure aren't any where I'm currently working.

I can cover living expenses for a family of 4 on 130 days billed per year, but we don't have an extravagant lifestyle. If I work more than that, we put money by.

[Scrag Meister]

I started contracting nearly 5 years ago and am happy that NLUK has been around to (virtually) slap me every so often. If I hadn't been on this forum then I don't think I'd have been sensible as I have been. I am aged 30 now and with a 1 year warchest so things are looking up. Problem is I never seem content! I always said if I got 6 months warchest I'd be happy, then if I got 9 months etc. Now I am on 12 months I am thinking I should have 2 years in the event of a down turn.....

Perhaps I need to just spend more and relax.

Just aim for the 30-40 year warchest, depending on your age, and soon enough you'll be retired, and you can rename it to pension. :-)