The benefits of full-time employment
Stability is just one of the advantages of a corporate gig. An office job typically comes with benefits such as health, disability and life insurance, and the option to contribute to a 401(k). Plus, most jobs offer paid vacation time.
When you get group health insurance from an employer, it comes out of pre-tax earnings and offers automatic acceptance even if you have underlying conditions. Premiums are typically split between the employer and group policyholders (the employees), and in some cases, coverage may include your family or other dependents. If you’re self-employed, private health insurance could be more expensive and more restrictive.
Plus, you may have the option of contributing to a 401(k) — a big plus, especially if your employer will match your contributions. You can contribute up to $24,000 to a 401(k) in 2024, and your employer may match a portion of this, often 50%, up to a limit based on your total compensation.
According to Vanguard, the average match for their plans — which cover millions of people — was 4.6% of compensation in 2023, while the median was 4.0%. Even at 4.0%, if Kim maxes out her 401(k), she’ll get an extra $3,760 from her employer.
Working at a company can also help create a sense of community and provide opportunities for socialization, or more — 24% of U.S. workers report having been in a workplace romance or gone on a date with a colleague. It could also be easier to build your career and skill sets through mentoring and learning opportunities.
Kiss your credit card debt goodbye
Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.
Explore better ratesHow to make self-employment work
While Kim chose a corporate job, it’s not the right fit for everybody. About 15 million people, or 10% of the workforce, are self-employed in the U.S., and the majority find their jobs enjoyable and fulfilling, according to Pew Research.
But to make self-employment financially rewarding, you must be vigilant in managing your money and your time. If you’re prone to procrastination, you may want to set aside a dedicated workspace in your home, block websites on your computer and set your phone to “do not disturb” during deep work.
You’ll also need a system for prioritizing and planning your work. This includes learning to say no to projects you don’t have time for (or clients who treat you poorly). Downtime is also critical for remaining productive, but it can be challenging if your office is in plain view of your couch or if clients email you at all hours.
To weather the instability of gig work, you’ll want to build up an emergency fund — ideally with three to six months’ worth of living expenses. You’ll also need to regularly put aside money for taxes and retirement savings, which can be harder to do when it doesn’t automatically come off your paycheck.
A major factor to consider is private health insurance, though you may also want to consider disability insurance (DI) and/or critical illness insurance (CI). DI and CI can help cover your everyday expenses in the event you become too sick or injured to work, and it may help to pay for medical expenses not covered by your health insurance.
Depending on the type of work you do, you may also want to consider business insurance, general liability insurance and/or errors & omissions (E&O) insurance. If you belong to a professional organization, you might qualify for discounted insurance rates for some or all the necessary insurance coverage. An insurance broker can help you create a risk management plan that ensures you’re properly covered.
Regardless of whether you work for a company or yourself, consider engaging a financial planner who can help you get the most out of your situation — whether it’s maximizing your company benefits or creating a savings plan for irregular income.
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