You may have heard of the trend: employers are shifting to a 4 day work week instead of 5.
What’s significant about this shift is that this comes without a reduction of pay or holidays!
However, this applies to the minority of companies; many employers are not yet on board.
So where does this leave the rest of us: Can I afford to go part time and work 4 days a week?
When going part time, this will result in a reduction of salary and holidays i.e. 80% if 4 days.
You’ll need to calculate what the difference would be in salary if you were to go part time.
You’d also need to consider whether you’d be happy with the reduced pay or fill in the gap.
To fill the gap you would need a side hustle to make up the difference or with investments.
In this article, I go through calculating how much you would be making if you work part time.
I also talk about how you could go part time if you have a side hustle or through investments.
Finally I talk about why you may want to go part time and your other early retirement options.
How much would you make working 4 days a week?
So first of all: how much are you making currently? i.e. what is your existing take home pay?
For example, let’s say you are working full time (5 days) and have a salary of £45,000 per year.
Using a salary calculator as shown above, your take home pay would be £2,885.20 per month.
For simplicity, I’ve not included pension or student loan deductions, but you can for yourself.
So the question is: how much would you make if you worked part-time i.e. 4 days per week.
Using the salary calculator, I can see by working 4 days, you would make £2,375.20 per month
So working 4 days a week instead of 5 would result in an income reduction of £510 per month.
Something to note is that your holiday allowance would also reduce i.e. 80% of your holidays.
However, because you would be getting more days off anyway, I think this makes up for it!
So, having seen the figures, the question is: what are your options with the reduced salary?
Option 1: Do Nothing and Take the Reduced Salary
Having seen what the difference in take home pay would be, you may realise it’s not that bad.
“£500” you may say to yourself “I could live with an income of £2,375 instead of £2,885.”
Maybe you don’t spend that much or decide you can spend every month to make it work.
It really comes down to your priorities: do you value the extra money or the extra time off?
Although an extra day off a week doesn’t seem like much, it actually makes a huge difference.
Every week, you could have a 3 day weekend or a 4 day weekend during public holiday weeks.
If you rotate your day off between Friday/Monday, you’d get a 4 day weekend every 2 weeks.
So if you’re happy with a reduced salary, there’s nothing to stop you from starting right away.
However, many people may not be happy with a reduced salary of £500 a month – it’s a lot.
Which is why they may take another approach: start a side hustle to make up the difference.
Option 2: Start a Side Hustle to Make Up the Difference
Having seen what the difference in income between both would be, you may say to yourself:
“Before I decide to go part time, I want to have a side hustle that makes me £500 per month.”
That way, you wouldn’t be in full time employment, but you’d still be making full time income.
Thankfully, there are plenty of side hustles you could start to make an extra £500 per month.
From freelancing, to consulting, to Youtubing, now a days the options are endless for people.
The thing to note is: which ever venture you decide to pursue, it will take time for it to work.
Not only that, but you need to work on your side hustle in the evenings/weekends after work.
Eventually you may reach a point where your side hustle is making £500 per month regularly.
At that point, you can happily go part time – but you still have to maintain your hustle income.
What if there was another way: to go part time yet make the same income without working?
Option 3: Use your Investments to Make Up the Difference
Knowing what the difference in income is between full time and part time, you may think:
“Before I change to part time work, I want my investments to make me £500 per month.”
Unlike a side hustle, investments give you passive income whether you are working or not.
There are many investment options you could have: business, property, stock market, etc.
For this example, let’s assume that you have a stocks and Shares ISA invested in Index Funds.
To make £500 a month, that means that you would need to be able to withdraw £6000 a year.
And to withdraw £6000 a year without depleting your ISA, you would need at least £100,000.
To understand how I came up with this £100k figure, check out my explanation of the 5% rule.
While this sounds great, this may take you much longer to accumulate than just a side hustle.
However, once you accumulate it, you will not have to work to make that extra £500 a month.
Which Option will You Choose?
As you can see, there are no right or wrong answers, each option has its own pros and cons:
- You could accept the reduced salary, make £500 less a month, and go part time right away. Although this will give you more free time, it will give you less money to enjoy that extra time.
- You could start a side hustle in the evenings/weekends that could make you £500 per month. However, this will take time for it to work, if it works, and delays when you can go part time.
- You could start investing such that one day your investments would pay you £500 per month. However, this will take even longer to implement, delaying when you can start part time work.
At the same time, it’s not binary: you can mix/match between the options that work for you.
E.g. you may decide to go part time in 2 years after working on your side hustle and investing.
Choosing to go part time is a part of lifestyle design – choose the lifestyle that works for you!
If you are interested to find out more about early retirement, check out: Quit Like a Millionaire.
In the book the authors talk about how they were able to completely retire early in their 30s!
To find out more about ISAs and early retirement strategies, check out my investing articles.
I talk all about which platforms to use, which funds to invest in, and which accounts to have.
Are you on your way to early retirement? Do you have an ISA? Let me know in the comments!
