Economics of Part-time vs Full-time work at a desk job?

Hi folks,

My husband and I live on half an acre in the suburbs. He is a small business owner (off-site) and works full-time. I've just cut down my work hours at a desk job from full-time to part-time in order to study a PDC.

As part of one of my projects for the PDC, I want to look at the economics of working off-site part-time vs full-time. Now I realise that many (most?) of the benefits of not working full-time are not easily quantifiable (eg. mental and physical health benefits, positive outcomes of spending more time with family, etc etc), but I specifically want to look at the financial pros and cons of reducing off-site work hours. Not on a societal scale, mind you, but from a singles/couples/family perspective, and how this affects your personal finances.

I think in general, it all boils down to a 'money vs time' equation, and ways in which you can use your extra time to offset the income that is lost when you reduce your working hours.

I'm hoping you can all share your thoughts and experiences on the matter (and feel free to include your non-financial pros and cons as well!).

One thing to bear in mind is the hours a job consumes, vs the hours you get paid for. A few long shifts can be substantially more efficient than a greater number of short shifts, once you account for necessary overhead; changing clothes, commute, etc.

Another thing to consider would be any increased costs from having a home occupied more of the time. Are power hungry appliances like air conditioning/heat going to be needed more often? Is retrofitting the house for greater efficiency a possibility?

As far as using the extra time; anything you can produce for your own use/consumption is likely to be a bigger help than a similar amount of product sold. A dollar saved is much better than a dollar earned for quite a few reasons, not least because the dollar saved isn't taxed both coming and going! Here, a dollar earned is more like 66 cents for the average person after income and sales tax...

Taking a period of time off to focus on infrastructure and food forest establishment, then going back to work while putting in minimal maintenance as it grows... could be a very interesting experiment.

Good point about taxation!

I've just done some quick sums based on my full-time income last financial year and the current tax rates in Australia.

On average, I pay $0.25 in income tax for every dollar I make (taking the stepped thresholds and Medicare Levy into account). That means, for every dollar I have in my hand to spend, I have to earn $1.34. Then, when I spend my dollar, 10% of that dollar goes to the taxman (due to our Goods and Services Tax). So that sort of means I pay $1.34 for something worth $0.90. I get the item, the seller gets $0.90, and the government gets $0.44. Or, in other words, I have to make $1.47 in order to buy something worth $1.00. Nearly half as much again as what the item is actually worth.

Now, there's not a whole lot I can do about the Income Tax Thresholds. But for every item that I produce for myself that's worth a dollar, I save $1.10, because I don't pay for the item, and I don't pay tax on the item.

Also, according to my sums, if I earn $20,000 less per year, I'll actually be less than $13,000 out of pocket, because I save just over $7,000 in tax. This also means I'll only be paying an average of $0.19 in tax for every dollar that I earn.

So let's pretend that I decide to work less, and I earn $20,000 less per year. If I'm able to reduce my annual expenses by $13,000 I will be in the same financial position as I was when I worked full-time. I wonder if that's easily achievable?

This is something I know a fair bit about since my husband and I both work full time in town.

So, the breakdown.
1k goes to daycare every month.
I budget anywhere from 5-700 for food a month. Part of this is eating out. Sometimes I just get worn down and do not want to cook. Then we eat out. Also, husband and I meet on our lunch hours and tend to spend money on coffee or something every lunch. So I'd say that's approx 50-100 a week we spend willy nilly just because we are in town.
Then gas, of course. This varies for us. I have a KIA Rio that gets great gas mileage but during the winter I have to drive our Dodge Durango because of snow. It is an estimated $400 a month for our 2 cars. We work different hours in different locations so we both have to drive.

So that's a lot of money just so I can work.

However, not working increases other expenses.

I believe food costs would go up because right now our kids eat breakfast and lunch plus a snack at daycare.
Heating and electricity costs would go up if I were home with the kids. We keep the house at 60degrees when we are not home.
Also, benefits. As we plan on both of us making a living from the land we realize that health insurance and retirement will be on us. Right now my work pays a lot into my retirement and we have excellent health coverage through my husbands work at a decent price.

So when I think about staying home I see it as evening out. I do not believe we'd save any money if I stayed home. In fact, we'd be out money. I make a fair paycheck. I haven't quit my job to farm full time yet as we require some infrastructure investment still. I need my paycheck so I can buy that stuff. I'm spending probably 500 a month on farm stuff. sure, I could cut that down if I took more time to grow things other ways or scavage but I have put myself on a timeline and to stick to it I have to work.

Marie, I apologize that the following information is US-relevant only, but I think it's worth sharing since a large portion of the readership here is US-based.

There's an awful lot of misinformation out there around Obamacare/The Affordable Care Act/ACA.

I dug in and did my homework when my HR lady mentioned in passing that she though our premiums might double between 2014 and 2015 (they ended up going up only a little).


The ACA works by letting some people get a a subsidy on their health insurance premiums.

Some people means people who don't have access to an "affordable health plan" through their employer.

A subsidy is just what it sounds like- your health plan still costs what it costs, but the government pays part of it for you.


This is relevant to the topic at hand, because your health care costs could change dramatically if you move from a plan through your job to a plan subsidized by the ACA. That's not surprising, but whether the cost changes upward or downward might surprise you. I was very surprised to find out that mine would go down significantly.

So me personally, I'm a family of five.

My current health plan costs $17,600/year. I pay $6,700; my employer pays $10,900. (About 40%/60% split.)

A similar plan (none matched exactly) on the ACA Exchange would cost $11,500/year. I'd pay $4,100; the gov't would pay $7,400. (Coincidentally, also about 40%/60% split.)
(I got these prices here; as far as I can tell, they're real prices.)

So for me, health insurance would be, net, about $2,600 cheaper per year if I were self-employed.
The subsidy is largest at low incomes and smallest at high incomes, a sliding scale, so if I became self-employed AND I didn't earn as much, my net health insurance cost would be even smaller.
(Watch out, there's an income level where you can get screwed in some states- too low for an ACA subsidy, too high for Medicare.)

The point is, common sense will not serve you here. It's imperative to do your homework and find out for your specific circumstance what your health insurance bill might be if you quit your full-time job. In my case, it will be good news. For people in other states, at other ages, at other income levels, and who are currently paying a different share of their employer-sponsored plan, it might be good news or it might not. Do your homework!

Living in a country with a universal healthcare system healcare is not something I worry about .
But I do think working part time is the way ahead for many people .
Trying to be self sufficient is never going to work as I can never grow bananas or make a telephone nor will I ever be able to sell enough goods or food to make a living but I can produce up to about 80 % of my food and energy and that's a big bite out of anyones budget .
As someone said time is money but for me money is also time even applied to things like making bread . We use about 6 small organic loaves a week and that costs about 4euro ( flour raising agent elect ric ) plus my time or we could buy them at a cost of about 12 euro so my time doing stuff I enjoy is worth about 8 euro an hour
Each thing I make or grow or glean or ....... Obtain in another manner means that the money my GF makes can be spent on other stuff we enjoy

David

And you will NEVER watch your children grow up again, or have the opportunity to experience what you enjoy doing most. Then you could have quality time w husband because you aren't both tired.  I dont regret one hour of not working while my child was younger. I dont think anyone has laid on their death bed and said "Oh, if I had only worked more!"
That said, perhaps you truly enjoy your job, like your independence, and dont want to be a home body. Good questions to be asking and how wonderful to have a choice. Good Luck!