I hope you're having a great week! I'm writing this on a three-day holiday weekend. Believe it or not, it's been about 20 years since I had a job that observed major holidays. You would think that being your own boss would make it easier, but – like many self-employed professionals – I often feel internal pressure to catch up on work when everyone else is off. This year, though, I'm treating myself to some three-day "bank holiday" weekends.
That got me thinking: what would it take to make a three-day weekend a more regular occurrence, let's say once every other month?
The first thing that comes to mind is to increase average daily income, earning as much in just four days as one usually does in five. If we assume a five-day work week, then increasing revenue by 5% per day could buy an extra day off (a 5-day work week means that each day represents 20% of your income; with 4 work days per week the daily percentage is 25%).
There's a big problem with this solution, though: increasing income almost always depends on other people's decisions – finding new clients, taking extra freelance jobs, asking your boss for a raise, etc. But who knows when (or if) those other people will cooperate?
Alternatively, you could to change your schedule to fit all of your work into fewer days (going from an 8 hours per day, five days a week schedule to 10 hours per day, four days a week, for example). That's certainly an option that a lot of people enjoy, though longer days are not necessarily the goal. My preference is for more time off, which is not the same as jamming the same number of hours into a smaller number of days.
There's another side of the equation, though. Instead of trying to earn more to buy extra days off or cram more work into fewer days, you could keep income the same but reduce spending – which reduces the obligation to work.
This is an obvious point, but for the sake of clarity: there is a direct correlation between the need to earn income and the need to cover expenses. (If you can pay for expenses without working, then a job is optional.) Increasing the gap between what you earn and what you spend increases the potential to do other things with your time besides work.
Let's say that the average person works between 48-50 weeks per year (with 2-4 weeks used for vacation). That means that each work week represents about 2% of your total income. (1 week ÷ 50 workable weeks = 2%)
Furthermore, your income from all those weeks worked is used to pay for 100% of your expenses. Therefore, a portion of each week's income is used to cover about 2% of your total annual expenses. (100% of expenses ÷ 50 workable weeks = 2% of expenses per week)
Let's look at that again, but from a different perspective: if you could lower your annual expenses by 2%, you could afford to work 2% less – or about one week per year – and maintain the same standard of living. That could mean an extra week of vacation or five extra three-day weekends scattered throughout the year. (Not quite enough for one every other month, but pretty darn close!)
Here's a quick way to figure out your own 2% monthly spending reduction target: add up all the money leaving your bank accounts for the last 12 months, divide by 12, then multiply by 0.02. (Don't worry about categorizing or itemizing; just knowing the amount going out and target reduction is enough for now.)
For example, if you spend an average of $5,000 per month, a 2% reduction works out to $100 per month. If your monthly expenses are $10,000, then spending $200 less per month reduces expenses by 2%. That works out to about $25-50 less each week or $3.60-7.20 less each day. That's not so bad, right? Could you identify a daily, weekly, or monthly expense in that range that you would be willing to forgo for an extra week of vacation each year?
To get the most bang for your buck, automate a monthly transfer to a savings account for that 2% target. (Remember: reducing the amount you spend increases the amount you can save – so make sure to move that money into an interest-bearing savings account.) You can treat this as your "sunny day fund" – money set aside specifically for doing something nice for yourself (like extending a vacation or taking an unplanned day off).
Please let me know if you try this for yourself! I'd love to hear what strategies you use for your own sunny day fund. Thanks!
Timothy Iseler, CFP®
Founder & Lead Advisor
Iseler Financial, LLC | Durham NC | (919) 666-7604
Iseler Financial helps creative professionals remove stress while taking control of their financial futures. As both advisor and accountability partner, we help identify current strengths and weaknesses, clarify and refine your long-term goals, and prioritize understandable, manageable, and repeatable actions to bring long-term financial well-being. Reach out today to take the first step.