The oil industry—or its support industries—can be a "boom or bust" line of work. When times are good, an oil-field worker can bring in as much as six figures annually. But when the price of oil drops or other outside forces push costs up, workers can be laid off in a heartbeat.
If you're starting work in the oil fields, then it's important to follow a few guidelines for maintaining a healthy financial life even in these volatile times. Here are six valuable tips for any new oil-field worker.
Think Twice About Debt. When you're earning a fat paycheck, buying assets on credit—things like shiny new trucks, houses, cool home theater systems or fun off-road vehicles—doesn't seem like a bad idea. But what do you do when your earnings drop below your debt payments? The result of taking on too much debt can be harassing phone calls, rising interest costs, garnishment, or even bankruptcy.
Automate What You Can. One of the best ways to ensure your finances stay healthy while you work long hours far from home is to automate as much as you can. Set up automatic payments of any debt, utilities, and housing costs possible so you never miss a payment. You should also have a portion of your paycheck deposited directly into designated savings and retirement accounts.
Live on the Same Amount. While some expenses go up and down each month, the majority of your monthly costs to live and work should remain relatively similar. Once you figure out this basic number, try to live on the same amount of money each month regardless of whether your income goes up or down. By making your costs more equalized, you should be able to save up extra for lean times.
Make Sure You're Covered. It can be easy for young, healthy workers to believe they will never suffer an accident, bad health, or other emergency. But this happens even to the best of people, so be sure to plan ahead for emergencies. This includes purchasing health insurance, life insurance (if you have a family to care for), taking advantage of Health Savings Accounts and having an emergency fund (often three to six months' worth of expenses) sitting in the bank.
Don't Keep Up with the Next Guy. It's easy to fall into the trap of trying to live like the guys around you, especially given your day-in, day-out proximity. But many of those other employees are heavily in debt and facing an uncertain future. Others who may be in a better financial situation often got there by learning how to manage their money in earlier years. Avoid living like one of the former people and ask the advice of those who are in the latter group. Learn from others' mistakes, and try not to repeat them.
Get Some Help. Meet with a financial professional on a regular basis, or at least once a year, to see how you can make better use of your money. This may include an accountant who can help you learn how to reduce your tax bill (which can be quite high for a young, single high-earner). Or you may want to consult with a financial planner who can help you look at long-term goals instead of just day-to-day expenses. Alternatively, you might want to include both accounting and financial-planning professionals on your team. Asking for help from pros is a great way to ensure that you feel more confident and in control of your fluctuating paychecks.
By following these few steps, you can set yourself on a brighter financial path that will undoubtedly lead to less stress and the ability to enjoy your job and your free time more.