Is making the switch to part-time work something you’d love to do?
There are many reasons why people work part-time. Perhaps you’re returning to work after having a baby, and would like to reduce your hours to spend more time at home with your little one. Or you may be starting to think about retirement, but don’t feel ready to give up your job completely. Alternatively, it could be all about freeing up time to pursue your true passion in life, or to take on a new hobby. There are lots of benefits to working part-time. No wonder 8.5 million Brits were registered as part-time workers last year.
If you’re considering reducing your hours for whatever reason, there’s the inevitable drop in income to think about. So, a little financial planning is in order before you make the move.
If you’d like to know how to budget effectively when moving to part-time work, these three tips are a great place to start.
Start saving beforehand
It’s always a good idea to build a savings fund, but it’s particularly crucial if you’re planning to take a cut in income.
Having a savings buffer means you won’t be stranded if an unexpected cost like a home or car repair occurs. It also means you can avoid having to take out an expensive loan or max out your credit card.
If you’re yet to reduce your working hours, it makes financial sense to really focus your efforts on growing your contingency fund. That way, you can begin the next stage of your career feeling more financially secure.
Cut out expenses
While an income reduction may seem scary, it doesn’t have to be – as long as you budget wisely. To make your money stretch further, you need to cut out luxury expenses.
Firstly, it’s worth identifying what a luxury expense actually is. It typically describes a product or service that we don’t really need; something that isn’t essential to everyday life.
Food, warmth and shelter are all necessities, whereas holidays, furniture, second homes, jewellery and gadgets aren’t – although life would be a lot duller if we didn’t have any of those things! So, it’s really about the smaller luxury purchases that we might often overlook. Before you pay for something, ask yourself, is this a worthwhile purchase, or is it frivolous? Do I really need that take-out coffee or new pair of shoes?
Enjoy free activities
We all need to break away from our daily routine at some point, and hobbies are usually a great way to do this. Some activities, however, can be costly, incurring an expense that as a part-time worker you could do without.
But this doesn’t mean that you have to give up fun activities altogether. In fact, you can enjoy a range of pursuits within your local area for little or no cost. Locations across the UK offer various free events, from sports, classes, cinema and more. Check the ‘What’s on’ section of your local council’s website, and keep an eye on social media for offers and events. And don’t forget your local parks and nature reserves, these are a fantastic way to spend a day enjoying nature for free.
Going from full time to part-time work can be exciting, and a real chance to focus on what matters most to you. Prepare your finances well for it, and you’ll be able to enjoy the opportunity to the full.
Have you ever gone from full-time work to part-time? What’s your top tip on how to budget for the change in salary?