Optimise your work-life balance: Work Less and Be Financially Strong

In today's society, finding a balance between work and private life is an ever-increasing challenge. Still writing that email, or just responding to a colleague during the weekend. Many people are considering working less or structuring their work differently, partly because of this. 

This article briefly offers a number of insights and practical tips on how you can approach this while remaining financially strong.

Working Less or Differently

Working less can offer many advantages, such as 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, fewer burnout symptoms, and even a stronger immune system. You have more time for relaxation, exercise, and healthy choices. It also provides more time to be with your family or loved ones and enhances creativity and productivity during the times you *are* working. 

All those benefits are great, but how do you approach this without jeopardising your financial security? Because without security, you will still come away disappointed. 

1. Calculate the Financial Consequences

It is essential to get a clear picture of the financial impact of working less. Create an overview of your current income and expenses and calculate how much you can save by working less. For example, because you have to travel less by train or car. Perhaps you will pay less for childcare. 

Also consider possible tax benefits 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 the options, such as flexible working hours, part-time work, or a sabbatical. Many employers are open to such conversations, especially if you can demonstrate that it benefits your productivity and well-being.

3. Career Change or Sabbatical

If working less is not possible within your current role, consider a career change or a sabbatical. A career change can offer you the opportunity to find a profession that better suits your wishes and needs. A sabbatical can give you time to reorientate and invest in personal development.

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Financial Empowerment

Mothers, in particular, who wish to reduce their working hours can benefit from specific financial strategies. It is important to gain control over your finances and ensure you are independent and self-assured. This is also very important because, according to recent statistics, women are lagging behind in both their pension knowledge and accrual. This is not practical if you want to be financially secure later in life. 

1. Budgeting and Saving

A good budget is the basis of financial stability. Create a detailed overview of your monthly income and expenses. Look for savings opportunities and set realistic savings goals. Automatic saving can help to regularly set aside money. 

Automatic saving is a powerful way to achieve your financial goals, primarily because it leverages important psychological principles. One of these is the concept of "default bias," which is the preference for the standard option. If it happens automatically, you do not have to think about it every time. This lowers the barrier to taking action and ensures that saving becomes a habit.

Furthermore, automatic saving eliminates the temptation to spend money as soon as it is in your account. You simply do not see the money, which makes it feel less like you are giving something up. This principle is called "mental accounting": you unconsciously divide your money into categories, and money that has already been saved feels less available for impulse purchases.

Therefore, automatic saving 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). This can range from building an emergency fund to saving for a holiday or your children's education. By clearly defining your goals, you can work more purposefully towards your financial future. 

A psychological trick that is often suggested is visualising your goal and taking small steps. This way, you have your goal clearly in sight, for example, a long holiday or an education. And the small goals give you the opportunity to achieve a victory each time. 

But what about retiring early?

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Retiring Early

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

1. Calculating Income Sources

Calculate your expected pension benefits and supplementary income sources, such as savings, investments, or part-time work. Ensure you have a realistic view of your future financial situation. Use tools such as the Pension Five-Disk to determine a suitable amount you need to set aside.

2. Being Financially Prepared

Building a solid financial foundation is crucial. Ensure you have a sufficient buffer and invest wisely to maximise your income. Consider talking to a financial advisor to optimise your pension planning. Discipline is important here; set up automatic direct debits to save regularly for your pension and use tax advantages. 

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Being Financially Prepared: Further Details

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

1. Automatic Savings Schemes: 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 a portion of your savings. Investing can yield more in the long term than saving, despite carrying more risks. Use investment instruments such as index funds or ETFs to build a diversified portfolio.
3. Use of Tax Advantage: Make use of tax advantages such as the annual allowance (jaarruimte) and reservations space (reserveringsruimte) to build up your pension tax-efficiently. The money you transfer to your pension pot is often tax-deductible, meaning you get back a portion of your contribution from the Tax Office.
4. Financial Planning: Utilise financial planning tools and apps to get a detailed picture of your financial future. Tools such as the Pension Five-Disk help you better estimate your future expenses and income.
5. Buffer: Build up a buffer that is sufficient to cover at least three to six months of your fixed expenses. This provides a buffer for unforeseen circumstances such as job loss or emergencies.

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