Optimize your work-life balance: Working Less and Being Financially Strong

In today's society, finding a work-life balance is an increasing challenge. Writing that email, or responding to a colleague over the weekend. This is one of the reasons why many people are considering working less or organising their work differently. 

This article briefly offers some insights and practical tips on how to address this while staying financially strong.

Working Less or Differently

Working less can offer many benefits, including more time for yourself, your family and your passions. It can also contribute to better mental and physical health. 

Research shows that a lower workload can lead to better sleep, less burnout symptoms and even a stronger immune system. You have more time for relaxation, exercise and healthy choices. It also allows more time to be with your family or loved ones, and it boosts creativity and productivity at times when you do work. 

Nice, all those benefits, but how do you tackle this without jeopardizing your financial security? Because without security, you'll still come home from a cold shower. 

1. Calculate the Financial Consequences.

It is essential to get a clear picture of the financial impact of working less. Make an overview of your current income and expenses and calculate how much you can save by working less. For example, by traveling less by train or car. Perhaps paying less for child care. 

Also consider possible tax breaks and other financial arrangements. Use tools such as the buffer calculator to see how much buffer you need. 

2. Discuss it with your Employer

Transparent communication with your employer is crucial. Explain why you want to work less and discuss options, such as flexible hours, part-time work or a sabbatical. Many employers are open to such conversations, especially if you can demonstrate that it will benefit your productivity and well-being.

3. Career Switch or Sabbatical

If working less within your current position is not an option, consider a career switch or a sabbatical. A career switch can give you the opportunity to find a profession that better suits your wants and needs. A sabbatical can give you time to refocus and invest in personal development.

Financially in your Power

Especially mothers who want to reduce their work hours can benefit from specific financial strategies. It is important to get a grip on your finances and make sure you are independent and confident. It is also very important because, according to recent statistics, women are falling behind in both retirement knowledge and accumulation. Not helpful if you want to be in good shape later on. 

1. Budgeting and Savings

A good budget is the foundation of financial stability. Make a detailed list of your monthly income and expenses. Look for savings opportunities and set realistic savings goals. Automatic savings can help you set aside money regularly. 

Automatic savings is a powerful way to achieve your financial goals, mainly because it capitalizes on important psychological principles. One is the concept of "default bias," or preference for the default option. When it's automatic, you don't have to think about this every time. This lowers the threshold to take action and makes saving a habit.

In addition, automatic savings eliminates the temptation to spend money as soon as it is in your account. You simply don't see the money, so it feels less like you're giving something up. This principle is called "mental accounting": you subconsciously divide your money into categories, and money already saved feels less available for impulse purchases.

Thus, automatic savings is a smart and stress-free strategy for a better financial future.

2. Planning Financial Goals

Set short- and long-term goals for yourself (and your family). These can range from building an emergency fund to saving for a vacation or your children's education. By clearly defining your goals, you can work more focused on your financial future. 

A psychological trick often suggested is to visualize your goal and make small steps. That way you have a clear vision of your goal, such as a long vacation, or an education. And the small goals give you a chance to keep picking up a win. 

But what about quitting earlier?

Quitting Work Earlier

Many people dream of retiring earlier, but this requires careful planning and preparation. It is important to know how much income you need to live comfortably without working.

1. Calculate income sources

Calculate your expected retirement benefits and additional sources of income, such as savings, investments or part-time work. Make sure you have a realistic picture of your future financial situation. Use tools such as the Retirement Five to determine a good amount to set aside.

2. Being financially prepared

Building a solid financial foundation is crucial. Provide adequate cushion and invest wisely to maximize your income. Consider talking to a financial advisor to optimize your retirement planning. Discipline is important here; set up automatic debits to save regularly for retirement and use tax advantages. 

Being Financially Prepared: Further Details

Building a financial foundation goes beyond just saving. Here are some detailed steps to help you better prepare:

1. Automatic Savings Arrangements: Set up automatic transfers to your savings or investment account as soon as your salary comes in. This helps you save consistently without having to think about it.
2. Investment strategies: Consider investing some of your savings. Investing can yield more in the long run than saving, despite having more risk. Use investment vehicles such as index funds or ETFs to build a diversified portfolio.
3. Use Tax Advantage: Take advantage of tax advantages such as the annual margin and reserve margin to build up your pension at a taxadvantage. The money you transfer to your retirement pot is often tax-deductible, meaning you get a portion of your deposit back from the IRS.
4. Financial Planning: Use financial planning tools and apps to get a detailed picture of your financial future. Tools such as the Retirement Five will help you better estimate your future expenses and income.
5. Buffer: Build a buffer sufficient to cover at least three to six months of your fixed expenses. This provides a cushion for unforeseen circumstances such as job loss or emergencies.

Working less or retiring earlier are achievable goals, provided you are well prepared and make smart financial choices. By consciously budgeting, planning your goals and communicating openly with your employer, you can achieve a better work-life balance while maintaining financial security.