What are the financial consequences of working less, and what is the solution?

Working less can be an attractive idea, especially if you want to spend more time with your family, hobbies or personal projects. But before you make this decision, it is important to fully understand the financial consequences. In this article, we discuss the impact of working less on your income, pension, benefits and provide practical tips to be financially prepared.

What does working less mean for your salary?

It may seem obvious, but working less means a lower salary, which directly affects your monthly income. This may mean that you need to review your expenses and adjust to your new financial situation. In some cases, the impact may not be that significant, for example, if you are in the highest tax bracket.

A thorough analysis of your budget helps you gain insight into your fixed costs and any savings.

Here are a few practical tips to get started:

• Draw up a detailed budget: For example, by splitting fixed costs, variable expenses and savings goals.
• Use automatic savings plans: Have an amount transferred to your savings account monthly. This prevents you from spending the money.
• Renegotiate fixed costs: Think of your energy supplier, insurance or subscriptions. Even small savings count.

Example: "Anna works one day less per week and compensates for this by downsizing her subscriptions. She saves €100 per month, which partially offsets her lower salary."

What impact does it have on my pension?

A lower income also leads to less pension accrual from your employer (if they do it at all, of course). This is often arranged proportionally, so if you work less, they pay less into your pension. This can have consequences for your long-term financial stability. It is important to understand how working less affects your pension and what measures you can take to compensate for any shortfalls.

Practical Tips:

• Consider contributing extra to your pension to compensate for the difference. This is possible in the third pillar, for example with us, but also through other schemes. 
• Discuss with a financial advisor what is useful and suits your life. This may cost something, but then you will have a good idea. 

And how do allowances affect things?

Although a lower income has disadvantages, there are also possible advantages. You may be eligible for higher allowances, such as healthcare and rent allowance, because these are based on your income. In many cases, this will not be the case for people with a full-time job. But for students, for example, it can be beneficial. 

Practical Tips:

• Check allowances: Use online tools such as the Belastingdienst's (Tax and Customs Administration) allowance checker to see what you are entitled to.
• Apply for allowances on time: Don't miss out on benefits by missing deadlines.

Quick insight: "With a lower income, Mark receives an extra €50 in healthcare allowance per month. This partially covers the reduction in his holiday pay."

Holiday Pay: What To Expect

Holiday pay is calculated based on your salary. If you work less, your holiday pay will also be lower. This means you may have less to spend during your holidays. To compensate for this, you need to save extra. 

Practical Tips:

• Plan your vacations well in advance and look for affordable options.
• Set aside a portion of your monthly income for vacations, so you can still enjoy yourself without financial stress.

Cost savings: Benefits of Working Less

A positive aspect of working less is that you can save on certain costs. Think of lower expenses for commuting and childcare. These savings can help to soften the impact of your lower salary.

Practical Tips:

• Use public transport to reduce travel costs.
• Consider alternatives to childcare, such as flexible working hours or working from home.

Working less has both financial advantages and disadvantages. By preparing well and making smart financial choices, you can make the transition smoothly and enjoy the extra free time. Create a detailed budget, look for ways to optimize your pension and check your entitlement to benefits to minimize the impact on your financial situation.