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In our fast-paced world, there is a heightened desire for a better work/life balance. This goal affects everyone from professionals working long hours, dual income households juggling inflexible jobs and children, and older workers wanting to spend time with grandchildren and ease into retirement.
While some want to increase their working hours, the more common reason for pursuing work/life balance is to reduce working hours. Most of us have wished for more hours to pursue interests or hobbies, spend more time with the kids, fit in some exercise or just relax on the couch at the end of a hard day.
Traditionally it was professional women leading the push for part-time work as a way to balance the competing demands of a career and parenting.
Now, greater numbers of men and women are considering flexible working arrangements that allow them to balance paid jobs with time taken out for parenting duties, personal hobbies, improving their health or doing volunteer work.
Need for time out
Recent statistics show that 29 percent of men under the age of 35 have given serious thought to leaving an organisation that does not extend workplace flexibility.
Currently, 16 percent of Australian men work part-time compared to 44 percent of Australian women. Economists have calculated that women taking time out to care for children will, over a lifetime, suffer an average 17 percent fall in her income.iii Sadly, this has an even greater effect on the cumulative earning capacity of women in the workforce.
Meeting day-to-day expenses
If you’re considering cutting back your working hours, understanding the impact on your take-home pay and weekly expenses is essential. While some expenses, such as childcare, may decrease, most expenses will still need to be covered.
As a rule of thumb, you should still be able to make progress with your finances after your change. Hopefully this will be achieved by continuing to earn an income which exceeds your expenses. If not, it’s time to review your expenses in detail and cut down on your costs. This groundwork should be done before you make any changes.
Doing your research
Some of the big factors to be considered if making a switch to part-time work include your ongoing expenses, the changes in your annual tax payable, your access to credit and other debt – especially large borrowings such as a home mortgage – and your eligibility for government benefits.
Job security is also a big consideration: there is clear evidence that part-time work is less secure and predictable than full-time work. This underscores the need to plan carefully for the financial consequences of opting for greater job flexibility.
You should also consider the impact that a reduced wage may have on your superannuation balance. I’ve run calculations for many people looking to take a career break or restore some work/life balance, and the difference in final balance surprises almost everyone. It may be wise to consider extra contributions to your super fund to maintain the same contributions that were being made previously.
Alternatives
If you’ve considered going part-time to help restore some work/life balance, but do not really want to leave your full-time position, there are other options.
Most people make this change because they are seeking more time. Reducing your hours at work is an easy way to do this, but there may be less drastic ways to achieve the same goal.
You could speak with your work to see if they can offer you more flexibility, e.g. allowing you to avoid the work commute by working from home, or varying your start/finish times so that you can squeeze in that early morning run.
You may also consider outsourcing some of your household’s unpaid but time-consuming duties, like cleaning, gardening and even cooking. Not only will this buy you more time for leisure at the end of your hard day’s work, it can also improve the wellbeing of the whole family.
Plan your finances
A structured plan to restore your work/life balance is possible without compromising your finances or your career. Your adviser can guide you through the implications of transitioning to a part-time job, and build a financial plan that will optimise your situation in light of these changes.
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James O’Reilly is the Director of Northeast, a fast-growing financial advice firm that empowers clients to achieve meaningful financial progress and well-being. He's also the co-host of the Australian Retirement Podcast, one of Australia's fastest-growing podcasts.