One clear difference between self-employment and a salaried job is the lack of paid vacations. I am paid hourly so when I don’t work, I don’t get paid. Without a bit of advance planning, it is easy to feel like I can’t take time off or relax without feeling the financial burden.
Having just spent a Christmas without that worry, I thought I’d share how I balance work and time off.
My secret is simple: I plan to complete the necessary work in 20 working days per month. Every month (except February) has more then 20 week days. This allows a few extra days per month for time off. I don’t have to wait for the end of the month for those extra days. I use them during the month as convenient. As long as I get 20 working days in during the month, I know I’ll make enough money. If I don’t need the vacation days, I’ll work like normal and save the billable time/money for days that I do want to take off.
Using this method, 2013 provided 21 extra week days: enough for a full month off. I’ve used that time for sick days, birthdays, holidays, “mental health” days, and if I choose to work, “bonus” money.
This math also makes it easy to figure out how much money I need to bill each day: I calculate my pre-tax monthly required income (paycheck + income tax), and divide by 20. That is the dollar amount I need to invoice each day. Divide that amount by my hourly rate and I get how many hours I need to work on each work day.
Should I want additional time off, I work more than my hourly requirement on days where nothing too exciting is happening. There are some days I settle in and work 8-9 hours instead of my normal 5-6. This allows me to get ahead and build up some extra vacation days. I bill monthly (see my How We Travel Without Being Independently Wealthy Post) to allow me the flexibility to average my hours over a longer period of time. Billing every two weeks would shorten that time span, but can also work well.
Time easily converts to money: If I want a bonus instead of time off, we bill for the extra hours I work instead of saving that time for vacation.
Because I know my plans rely on a 20 workday month, I’m free to enjoy my days off without stress and worry.
Questions? Confused? Please ask!