Going part-time is often seen as a negative move, both career-wise and financially. So much so that so many people are put off even considering how it could work for them.
I worked part-time for 13 years in the full-on energy trading sector in London. It was a leap but it was also the best financial decision I ever made.
I know others will be weighing up their own pros and cons. So here’s my story of what happened and how it actually helped me retire early at 43.
What No Kids?
I am assured no animals were harmed in taking this photo…
…you do have to wonder what they were dangling behind the camera though??!
For those of you not familiar with my back story, I used to work in energy trading in a variety of roles, first in my home town before commuting to London when that company went bankrupt.
It was a tough industry and very male-dominated when I started out. One of those environments where the HR policies didn’t exactly always line up with the reality on the floor.
In 2006, after almost 3 years full-time with the company in question – they decided to move offices. I already had a lengthy commute in to the office and this move was going to take it to over 90 mins each way. As such, I officially qualified to request a move to part-time hours. So I did, for reasons which will become apparent in the rest of this post.
What was interesting was the response. From straight-up and very sincere warnings of the impact to my career through to outright disbelief. In particular, with no children or plans to have them – most people just didn’t understand why I would want to do such a thing.
It made no sense to them. Only a select few knew of my long-term FIRE plans and even they wondered why I would do such a thing. How was a part-time career going to help – wasn’t it going to add years to my time-line?
So – why would I do such a thing?? And did it end up helping or hindering our FIRE plans?? Let’s see…..
It's Not A Straight Line...
Rarely are decisions straight forwards…
..Or as simple as this graph..
..At least it’s orange eh, fits in well..
Anybody on the FIRE path will be smart enough to realise that having a part-time career rarely means a linear corresponding cut to your actual take-home pay.
Pretty much every country I’m aware of (admittedly not all by a long stretch..) has a tax regime that involves different thresholds for different rates. The UK is no exception here, with four bands. Ranging from the first £12.5k tax-free up to the 45% tax rate above £150k.
As such, on the assumption you are earning over the tax-free band, your take-home pay is not a linear equation. Working one day a week less does not equate to taking home 80% of your pay.
By working three days a week – in effect I gave myself somewhere in the region of a 10% pay-rise!
Yes, obviously your overall take-home pay is less than before – but not in proportion to time worked. Your personal pay rise will all depend on where you sit in relation to the tax-bands but it’s worth working out your own sweet spot.
Not All Benefits Are Equal
I was also fortunate to have a job which came with a variety of other salary additions on top of the base salary. HR liked to talk these up a lot. Whereas it was always pretty obvious they were a helpful way of, probably sensibly, limiting the final salary pension liability for the company.
What’s interesting about going part-time though is that not all benefits are created equally. As George Orwell might have said in Animal Banking? The point being that most, like bonus payments and pensions, were quite rightly also pro-rated in line with time worked.
But a lot weren’t. Car allowance, inner London allowance, private health insurance, life cover. All of these continued as if I was still full-time. Bumping up my equivalent hourly rate again.
As ever, the devil is in the detail. So when considering whether part-time is an option for you, it’s worth going through and working out exactly how much you are working that extra day a week for. I’ll pretty much guarantee it’s for less than you think..
Does It Damage Your Career?
Getting a promotion at work could often feel like a maze…
Sometimes you didn’t even know if the cheese actually existed…
….or if it was worth taking the bait!
One of the best pieces of advice you will often see people share about how to help speed up your FIRE journey will be about maximising your income. Going part-time can seem a pretty sure-fire way to do the opposite.
Despite what official policy may and will say – in my experience there is still plenty of bias about part-time workers, especially in the financial city sector. You don’t see many part-time role models on leadership teams, let alone at the top of the shop.
And to be fair, I understand that. Not all roles can work part-time. Hell, pretty much every city job I’ve had has never been a 9-5 job. That’s just the reality I’ve found. But I have also made roles work that would never have advertised as part-time.
I was pretty proud to be a role-model of what could be achieved on a part-time basis. It doesn’t have to be the death-knell of your career by a long stretch.
What I have found though is it takes two things to make a success of a part-time career. You need to recognise it’s as much, if not more, on you to make it work. To be flexible. To swap days around when needed for meetings with difficult diaries ( read: pretty much any actual decision maker..).
You also need to build a strong reputation, backed by a small army of people who will speak up for you. To be fair, this helps anyway – but it’s pretty much essential when you are trying to convince someone who doesn’t know you why you are worth taking a chance on above someone who will be there all the time.
I could go on and on about this – and perhaps I will in another post on another day. For now – let’s just say whilst it made it harder – it didn’t make it impossible. Just be prepared for the reality, not the HR policy view.
Earn Here, Spend There..
This one just made me smile…….
She needs a bigger suitcase…that globe is going to be awkward to carry….
And you know, not to be picky or anything – but get out of the road!!
Geographical arbitrage is another often discussed topic about how to help your FIRE journey. Essentially, it’s taking advantage of being paid in a high-earning location or role whilst living somewhere with a much lower local cost of living. Something we’ve taken advantage of at times in our part-time digital nomad lifestyle.
However, it also comes into play in your own country. Whilst statisticians may like to quote average house-prices and the like – everyone knows there’s a huge range in the cost of living even within a single country. Often cities like London have more in common with other large cities than with the rural parts of the UK, for example.
And this is something that working part-time allowed me to take advantage of for sure. London wages are far higher than the rest of the UK. Various Google searches will show you London ~50% higher than rural England, but as ever that wasn’t the whole story. My industry was specialised, those jobs didn’t exist anywhere but in London.
By the time I left, I was apparently earning more part-time in London than the average CEO full-time back in Norfolk!!
Slightly crazy really. As is the cost of living in London and the lifestyle a lot of people fall into. Not just housing, pretty much everything else that goes along with it. Private schools, expensive nights out. We’ll often use the price of a pint as our yardstick – and ouch!
Put the two together and you have the classic combination of earn more, spend less that is the FIRE mantra. Working in London and living in Norfolk really maximised the gap, knocking years off our path to FI.
But a hefty commute each day is a tough ask. As is staying away from your family during the week, another approach I’ve known people use. By working part-time, I was able to keep the commuting time per week just about bearable. It wasn’t great – but working part-time meant it was doable.
Maxing The Value Of Time
Cai Rang floating market on our way through the Mekong Delta…
A perfect example of people hustling..
Less so of diversification – this boat was the melon boat, another would be pineapples..
Continuing on with the financial reasons for having a part-time career, this next one is a little different. It’s all about how I used the extra time.
A lot of FIRE blogs will talk about their various side-hustles. It’s interesting how they’ve changed over the years too. These days the vast majority are related to the internet in some shape or form. Whereas at the risk of sounding ancient now, that really wasn’t an option on the table for us in our early FIRE days.
The best game in town ‘back then’ was property. DIY shows were huge, Sarah Beaney was a house-hold name. Anybody who could raise a deposit and get a mortgage was jumping on that band-wagon.
And with good reason. Property prices in the UK were as good as a one-way bet as you were ever going to see at that point. And the entry gate was far lower than today – our first flat cost S a stunning £12k. Not the deposit – the entire thing. 4 years later my first house cost £66k – selling for twice that 5 years later.
Your Money Or Your Life?
The draw-back is – it all takes time. Anybody who ever thinks investing in property qualifies as ‘passive income’ has never tried it. But the returns were worth it. Especially if you found the right “do ‘er upper”, as they were (are still?) called. A run-down property in a good location was our favourite target.
But it was only through having a part-time career that we had the time to invest in this side-business. It allowed us to renovate, rent and eventually sell our way through four flats and four houses, two of which were let as rooms. Harder work, greater return. A story for another day, another post.
Likewise, the only way we had enough time to design, create and build our own home mortgage-free, was through having a part-time career. We were very (very) hands on with the build and it simply wouldn’t have been possible on purely a week-end basis.
I returned to four days / week after the bulk of the DIY was complete. Three days in the office, one working from home. It was a good balance. The idea of a side-hustle is all about maximising the value of your time. And that day/week that I wasn’t working in London sure paid its way!
So Many Good Reasons ...
So there you have it – many good reasons why a part-time career made sense for me financially. It can be eye-opening to step back and think about what really is best for you. It’s not always obvious.
Like anything good, it took a lot of effort to make this choice work for us. Persuading people at work I was still serious about a career was not always easy. Using the extra time gained to invest in earning more money takes thought and commitment to a financially independent future.
But it can be done and it can be a very lucrative solution if you make it work. It was definitely one of my best financial decisions for me.
As it turned out, a part-time career also helped for a number of other non-financial reasons too. Especially when it came to our post-FIRE life. But that’s a story for another post….
For now – as ever – let me know what you think about my part-time career choice. Is it something you have tried? Are you considering it? Would love to know!