Working for a start-up is an interesting state of being. On the one hand, the pay is usually quite good. Better than some more regular, conventional jobs. On the other, it is inherently risky – statistics indicate that over 50% of start-ups fail before they reach their 5th year, with the figure being even higher for tech-based start-ups. We already know, of course, that being the founder of a start-up comes with a set of risks, but this is equally true – working for a start-up also means the possibility of being laid off, or the company liquidating, at any time.
But if you are working for a start-up, the chances are that you thrive on the risk. Given that, it is hardly our place to advise you to get a safer job; rather, let us look at some ways to avoid financial stress while you work for that start-up that might, some day, change the world.
Avoid debt
One of the first things a lot of us do when we get a job is to opt for a new home or a new car, with the support of a home loan. A steady job means a steady flow of money, which allows you to take a loan and buy that dream house or car. And if you are working for an age-old corporation, the government, or a bank, this is still true. But when you work for a start-up, keep in mind that the job may not be steady. In fact, even when you apply for a loan, the chances are that the banks will consider you a somewhat riskier prospect than others. The fact is, if the start-up fails, you will have to do without a steady income until you find another job, and then the last thing you want is a major loan burden. So wait for a year, and see if the company you work for is stabilizing itself and becoming what it wants to be. Only when you are as secure about the future as the founders project themselves to be should you take out loans.
Avoid credit-card spending
On a similar note to the above, it is also important to avoid spending heavily on your credit cards. Like long-term debt, but with a much more crippling interest rate, credit cards are very susceptible to leading users to a debt trap. Do not allow credit-card spending to exceed what you can comfortable repay without deferring, and you should be fine.
Take health insurance
Of course, we have often recommended on these pages the importance of having health insurance in general, but when you work for a start-up, keep in mind that their employee health insurance may be non-existent, or at least not as good as that of more established companies. As such, it is a must to have and maintain a good insurance cover for yourself and your dependants to protect against unforeseen health or accident concerns.
Prepare an emergency fund
The inherent riskiness of the start-up career means that it is possible that you might have to spend a certain amount of time without employment. So it becomes all the more important to save as much as you can of your salary so that there is enough of an ‘emergency fund’ that you can count on if such a day comes.
Keep your ear to the ground
Stay abreast of news concerning your start-up and the industry it is in, in the media. Sometimes employees can be the last to know how much difficulty their employer is in. Be alert, be aware, and do not be afraid to explore a job change if it appears that the company you are in may not stay afloat for long. Loyalty is a fine quality, but securing your family and your own future is more important.
