Would accountants really choose time over money?

Time and money
Philip Fisher
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Philip Fisher tackles the thorny issue of work-life balance and asks, given the option would accountants really choose to work less and receive less pay?

A few weeks ago, this column addressed the problem of NHS doctors, who were literally paying for the privilege of working excessive hours due to a clash between their pension scheme and tax legislation.

Pleasingly, relevant ministers must read AccountingWEB, since last week the government announced its intention to correct the anomaly.

However, if initial suggestions are correct, their solution is going to be inadequate. If the proposed changes are limited to doctors, other staff members with the same problem may still work-to-rule, limiting or even negating the benefits.

To be just and fair, surely anybody who is obliged to make pension contributions which will leave them worse off or little better off should be given the chance to opt out.

However, that is a sideline to the main issue of today’s column. In response to my previous article, one comment suggested that given the choice between working full-time for a salary of £150,000 or half-time for £75,000, everybody would choose half the work and half the pay.

In doing so, that respondent has raised an issue that either consciously or otherwise influences many accountants throughout their careers, particularly those in senior posts.

Before they even start work, many of our younger colleagues now take one or more years out to travel the world, do unpaid charitable work or just sit at home watching reality shows on the iPad.

Once employed at junior levels, this issue takes on the title of work/life balance and is particularly important to those with young families. The choice of extending maternity/paternity leave at low or no pay is challenging, as demonstrated by the different solutions regularly put into practice.

Once someone is master or mistress of their own destiny, as a partner or sole practitioner, they get into the territory addressed by the correspondent above who was certain that everybody would rather have £75,000 than £150,000, ie they would happily buy the free time.

That is an unexpected response to come from an accountant. Most of us fully understand and are motivated by the benefits of having greater wealth, whether to spend immediately or invest in a longer or happier retirement. We have seen this quandary in our own lives then mirrored in those of so many clients, with the vast majority choosing the money.

Looked at slightly differently, most of us have certain living standards that we want to maintain. If you halve your income, then that probably comes at the cost of downsizing your property.

In addition, it may necessitate giving up the BMW or Prius and settling for a Fiat 500, just at the time of life when your friends are going for those age-defying sporty little numbers that tend to be painted bright red.

Again and again, most of us see clients to struggle to live on incomes four or five times our own but able to fritter away unbelievable sums of money.

I know very few London-based accountants in senior positions who would happily halve their income in return for twice as much free time.

There are a number of reasons. Obviously, most could not afford to take a 50% pay cut. In addition, an awful lot of accountants are workaholics and would actually find themselves at a loss, should they take say Thursday afternoon, Friday and Monday to extend the weekend to 4½ days.

Their partners might also have a word or two to say about that, particularly when the irritating extra presence is attached to a massive diminution in the joint bank balance.

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16th Aug 2019 14:46

Is this not decreasing marginal utility at work( wait long enough and these economics lectures come in useful)

Income, like any commodity, has diminishing returns re motivation once we get past a certain threshold, once we already have sufficiency the utility decreases for each extra unit, we are satiated ( something like extra roast potatoes on Christmas Day);the threshold for each of us re this is different.

So as you buy your first house, take out the mortgage you worry about, lose an income or half an income when you hear the pitter pattter of tiny feet, you will do nearly anything for the extra £1 of salary. Fast forward thirty years, mortgage no longer exists or frankly is costing not much more in interest than the TV/Internet bill, your house is worth five times what you paid for it, your pension funds are worth more than the house, at least one parent has died and you have inherited money, and frankly why should you scrabble for the extra pounds.

I grasp this, I am 59, I have been a three day week employee for the last two years and dabbled in practice the rest of the week, given MTD I decided life was too short and the practice is now being wound up. Next April I am 60, as will be my wife next year, she can then decide to take her local authority pension if she wishes (though I think she will keep going) and in June I sit down with my employers to commit or otherwise- last time in 2017 I committed to doing three more years, I suspect I will do so again taking me to 63 and in 2023 probably a last commitment to take me to 2025 or 2026 (age 66) when I likely will call it a day.

My father did the same sort of think, but earlier, age 55 he dissolved his partnership, he went for three years to another firm initially as a partner then as a consultant, they sold the offices (in hindsight a terrible decision given they were in Edinburgh's Heriot Row) and he sold the family home and with the money ingathered and invested he retired, never to practice law again and to spend all his summers at his Borders cottage muddling around the garden for nearly twenty five years

He taught me the world's universal truth, "what is the most valuable thing in the world." Time

There are of course the Monopoly players, money being a method of scoring in the game, the thrill of the chase etc, to them it may be a means of saying "look at me ", proving themselves.

Others are keeping up with the Joneses, wannabees insecure in themselves so the dosh is their only reflection of their worth. They are the middle class equivalent of the working guys when I was younger, these were the guys who came into the pub in which I worked in the 70s on a Friday or Saturday night, sharp suit and tie and their wallets holding a wad of dosh, their status symbol.

Then there are those afraid of boredom, I understand them but do wonder how they had the ability to earn millions but do not have the imagination to enjoy it.

Maybe I have spent too much time in Sweden, but to me the Swedish idea of Lagom resonates.

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16th Aug 2019 11:00

There speaks a baby boomer! The younger ones will not be so lucky.

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to Susan Keane
16th Aug 2019 14:41

Some will.

My son and some of his university friends earn seriously large sums of money for twenty somethings, his roomate from university bought a house two years ago age 26 (albeit outside Edinburgh) and I expect my 27 year old son to have saved £60-80k for his deposit etc by next year (plus having fully repaid his student loans) when if he has any sense he will buy a New Town one- two bed at circa £400k.

I am afraid I have little sympathy for the, " we will never afford x or y" and that includes my own daughter, we grafted pretty hard when first married, we had the wonderful time with my wife on maternity leave with my daughter when I lost my job and was scrabbling around with my first foray into practice on my own account and working from the flat seven days a week 10-12 hours a day, and still we had no money as we had to wait to get paid by clients.

Maybe the concept of saving, no VHS player until we saved the money to buy one,no holidays abroad and fitting in all the DIY on the house by oneself- hanging wallpaper at 1.00 am then leaving the house at 8.00 am to drop the kids at nursery.

And of course no working family credits, relief for childcare costs etc (these peaked at over twice the mortgage cost per month for the two kids when my wife returned to work) and certainly no employer childcare vouchers.

And secondhand furniture- apparently not good enough these days, I visit one of my married nephews and everything is new, the TV is massive, the offer or our secondhand furniture spurned.

I am afraid I am touchy re this subject because I was delivering newspapers when 9-11 (sister's being true entrepreneurs subcontracted their rounds to their stupid younger brother and skimmed the difference) , I was growing and selling veg when I was 11 or 12, I was working in a bar age 16 collecting glasses, doing cellar work and clearing vomit ,and from age 18 to 24 was a barman circa 20 hours a week (50-60 in summer/easter/christmas hols) whilst taking my degree- I had a father who despite our middle class upbringing remembered his own childhood and made us all earn our own spending money- no handouts.

So sorry, the idea that life was a picnic was never my experience.

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16th Aug 2019 14:49

I can only but agree. The current lot, millenials, Z generation, whatever catchy name they invent expect it all now and the thought they must actually work at it horrifies them.

But hey there is a money tree at the bottom of the garden is there not. But for the nasty Tories we would have access to that.

But AI will take a lot of jobs away and most likely ours as lets be honest accounting can easily be done by a smart AI (or not even smart)

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to Rgab1947
16th Aug 2019 15:09

According to my father the money tree was not in our garden; maybe the neighbours had one.

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16th Aug 2019 09:59

Great if you've got the choice but most of us have to work full time to keep a roof over our heads and our kids fed. Maybe if you're being paid £150K you get that choice but the vast majority of accounts earn a fraction of that and most of it goes on the mortgage and associated bills. My dad was the same and so was his so this is nothing new.

What's probably newer and more trendy is the entitlement the new generation feel to have everything whilst only having to work a fraction of the hours. No wonder the productivity statistics in this country are going through the floor....

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16th Aug 2019 10:49

How many people are earning £150k to start with? Of course people would be happy to work half-time for £75k a year!

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16th Aug 2019 11:00

Work/Life/Money balance depends mainly on how much you have already accumulated, or how much less you need in future, depending on how you look at it. It is easy for somebody who has paid off their mortgage, received a decent inheritance, already has the BMW gleaming in the drive, and with their 2.5 kids already long flown the nest ... but if, like many, you still have a monstrous set of expenditure to meet each month, then the question really becomes redundant. As one superwealthy film star once said, I've been dirt poor and depressed and I've been very wealthy and depressed, and on balance I'd always opt for the latter.

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By tedbuck
16th Aug 2019 12:44

It all comes down to how much do you value your family as against your career.
I spent time with the children weekdays and weekends so that they had a reasonable shot at being able to cope with the rigours of life without fainting at the thought of hard work.
I earned less because of it but still we had enough to manage comfortably and live at a reasonable standard. We just had to be less ebullient about holidays etc.
Both children did well (in another profession) and I am still working but with a much better work/life balance. I really don't feel inclined to work harder to pay enormous amounts of tax to HMG for them to throw at the wall in their incompetence. So I take a relaxed view of the whole issue and try to help the little clients to survive the mayhem which HMRC's MTD czar seems to think is helping business. Is dysfunctional a synonym for HMRC?
If Commy Corbyn gets into power I shall retire because I certainly wouldn't work to keep him in comfort.

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