Mindset Matters: How to Overcome Your Financial Worries as a Contractor and Sleep Like a Baby

Nobody ever said running a construction company is easy. In fact, it’s probably one of the toughest industries to get into, from managing complex projects to dealing with ever-changing costs and tight deadlines. One often overlooked aspect, however, is the mental and emotional strain that comes with managing finances as a contractor. Financial anxiety can be a huge downer for construction professionals, impacting not only their business decisions but also their overall well-being.

Financial stress is the leading cause of poor mental health among construction workers. According to a 2022 report by IronmongeryDirect in collaboration with the charity Mind, finances were identified as the primary source of stress for 34% of construction workers.

Let’s explore the common financial anxieties faced by construction professionals and provide practical mindset strategies to overcome them. By addressing these issues head-on, you can foster a healthier relationship with money, create a more sustainable business.

Understanding Financial Anxiety

Financial anxiety in the construction industry can come from various sources, including:

1. Unpredictable Cash Flow: Unlike your regular 9 to 5 job, construction projects often have irregular payment schedules, leading to periods of financial uncertainty.
2. High Overheads: The cost of materials, labor, and equipment can fluctuate, making budgeting a constant challenge.
3. Project Delays and Disputes: Delays and disputes can delay payments and increase costs, adding financial pressure.
4. Market Fluctuations: Economic downturns and changes in market demand can impact project availability and profitability.

Recognizing these stressors is the first step in addressing financial anxiety. Let’s explore some strategies to help you manage these anxieties and build a more resilient mindset.

1. Set Clear Financial Goals

Setting clear, achievable financial goals can provide a sense of direction and purpose. Goals give you something to work towards and can help alleviate anxiety by providing a roadmap for managing finances as a contractor more effectively.

Steps to Set Financial Goals:

• Define Your Goals: Identify both short-term and long-term financial goals. Short-term goals might include increasing monthly cash flow or reducing debt, while long-term goals could involve saving for new equipment or scaling your business.
• Make Them Specific and Measurable: Instead of vague goals like “make more money,” aim for specific targets such as “increase monthly revenue by 15% within six months.”
• Create a Plan: Outline the steps you need to take to achieve each goal. This might involve budgeting, seeking new clients, or optimizing your operations.

One contractor I worked with set a goal to increase his annual revenue by 20%. He broke this down into monthly targets and created a detailed plan, which included marketing efforts, optimizing project management, and improving client relations. By having clear goals and a plan, he felt more in control and less anxious about his financial future.

2. Develop a Positive Money Mindset

Your mindset around money plays a crucial role in how you handle financial stress. Negative beliefs about money can just make your anxiety worse, while a positive money mindset can help you go through financial challenges with confidence.

Tips to Cultivate a Positive Money Mindset:

• Identify Negative Beliefs: Reflect on your beliefs about money. Are there negative thoughts holding you back, such as “I’ll never have enough” or “I’m not good with money”?
• Challenge These Beliefs: Replace negative thoughts with positive affirmations. For instance, instead of thinking, “I’m bad with money,” remind yourself, “I am learning to manage my finances better every day.”
• Practice Gratitude: Focus on what you have achieved and the financial progress you’ve made. Gratitude can shift your mindset from scarcity to abundance.

A construction business owner I know struggled with the belief that “money is the root of all stress.” As we worked together, we reframed this to “money is a tool that can help me achieve my goals.” This shift in mindset helped him approach financial decisions more positively and reduced his overall anxiety.

Reminder: everyone, in any industry, goes through financial challenges at some point in their careers. While it’s not the norm, anyone can go through it. So, please – don’t beat yourself up if you’re in this situation right now. And as always, you can seek support, whether professionally or from your family/trusted friends.

3. Create a Budget and Stick to It

Budgeting is a fundamental aspect of managing finances as a contractor. A well-planned budget can provide a clear picture of your income and expenses, helping you make informed decisions and reduce financial stress.

Steps to Create an Effective Budget:

• Track Your Income and Expenses: Use accounting software to record all sources of income and categorize expenses.
• Identify Areas to Cut Costs: Look for non-essential expenses that can be reduced or eliminated.
• Set Aside Funds for Emergencies: Allocate a portion of your budget to an emergency fund to cover unexpected expenses.

One contractor I’ve worked with found himself constantly stressed about cash flow. By creating a detailed budget, we were able to identify areas where he could cut costs, such as unnecessary subscriptions and excessive supply orders. This not only improved his cash flow but also gave him peace of mind knowing he had a financial safety net.

Reminder: While you may have seasons in your business where your cash flow just keeps coming in, I know how tempting it is to enjoy the fruits of your labor. I don’t mean to be a Debbie Downer, but while the money is coming in, make sure you’re still sticking to your budget, allocate certain funds for “having fun” (you earned it!), and think about investing your money back into the business to maximize your profits.

4. Seek Professional Support

You don’t have to go through this alone! Seeking support from financial professionals for managing finances as a contractor can provide valuable insights and reduce anxiety.

Types of Professional Support:

• Bookkeepers and Accountants: These professionals can help you manage your finances, prepare for taxes, and provide financial tips for independent contractors tailored to your industry.
• Financial Advisors: A financial advisor can help you create long-term financial plans, invest wisely, and achieve your financial goals.

A construction business owner I worked with felt overwhelmed by his financial responsibilities. When he hired me and my team, he was able to delegate the task of managing day-to-day finances. This freed up his time to focus on growing his business and significantly reduced his financial stress.

5. Practice Mindfulness and Stress Management

Mindfulness and stress management techniques can help you stay calm and focused, even in the face of financial challenges.

Techniques to Reduce Stress:

• Mindfulness Meditation: Practicing mindfulness meditation can help you stay present and reduce anxiety. Apps like Headspace and Calm offer guided meditations specifically designed for stress reduction.
• Exercise: Regular physical activity can help alleviate stress and improve your overall well-being. This is why I regularly go to the gym and make it a part of my daily routine!
• Work-Life Balance: Ensure you’re taking time to relax and recharge. Overworking can exacerbate anxiety and lead to burnout.

One contractor I know started incorporating mindfulness meditation into his daily routine. He found that even just 10 minutes a day helped him stay more focused and calm when dealing with financial challenges.

Conclusion

Financial anxiety is a common issue in the construction industry, but it doesn’t have to control your life or your business.

At Beyond Books Solutions, we understand the unique challenges faced by construction professionals. My team provides comprehensive bookkeeping, accounting, and financial advisory services tailored to your needs. 

Contact us today to learn how we can help you manage finances as a contractor more effectively, reduce your financial anxiety, and hopefully, you can start sleeping like a baby 😉