Taking a career break can be a liberating and fulfilling experience (trust me, we are lounging in the south of Italy at this point). That said, managing your finances during this time can be daunting, especially if you don’t want to miss out on the fun stuff. Fear not, for I have the money-saving magic you need!
In this blog post, I’ll show you how to budget for your career break without compromising on the things you enjoy. Get ready to discover practical tips and strategies for a stress-free financial journey, so you can fully embrace your time off work.
Why Take a Career Break?
This question has an obvious answer to most people (“um, work is hard and stressful and I’m tired”), but not everyone recognizes it might be a possibility for them with some simple planning tools and money management. It’s not uncommon to feel tired with the daily pressures of your career, especially after years of hard work and dedication. Taking a career break can be a great way to reset, recharge and come back stronger than ever before.
The Benefits of Taking a Break
Many people who take a career break report feeling less stressed and more relaxed. I can directly attest to this – it has been a tremendous weight lifted off my shoulders since I took a break from the daily grind. This is because a break allows you to step back and evaluate your priorities. It can help you gain perspective and a renewed sense of purpose. Other benefits of taking a break include:
- Increased creativity and productivity
- Improved work-life balance
- Opportunities to learn new skills or pursue interests outside of work
- Enhanced mental and physical health
It’s important to note that the benefits of taking a break may vary depending on your individual circumstances. However, it’s worth considering the potential positive impact a break could have on your life and career. Even Harvard advocates for career breaks!
At the end of the day, there is tremendous cost (financial, personal and career opportunity costs) that follow an extended career break. So, you’ll want to clearly understand the benefits you will get from time away before making the final decision.
How Long Should You Take a Break?
The length of your break will depend on a variety of factors, such as your financial situation, career goals and personal needs. Some people may only need a few weeks to recharge, while others may require several months or even a year. I can say from personal experience, in the stressors of daily life, our gut instinct is that we need as much time off as possible. It can feel as though we are so exhausted that no amount of time off will recharge our tank. In practice, a few weeks may be sufficient to get us back to a regular energy level, so it’s important that you really consider your unique personal circumstances to gauge what length is appropriate. In addition, when deciding how long to take a break for, here are some things to consider:
- Your financial situation: Can you afford to take time off work?
- Your family needs: Can everyone in your family benefit from the time you are planning? Will it be detrimental to anyone in your family to take an extended period from work / school?
- Your career goals: Will taking a break help you achieve your career goals in the long run?
- Your personal needs: What do you want to get out of your break? Are you hoping to achieve something specific, or just take time to relax and recharge?
- Your living situation: Is it an option to take a break away from your current place of residence or will you stay put? Will you be able to afford to stay in your current residence without your regular income? Can you rent your residence to relocate to a less expensive area?
Ultimately, the length of your break is a personal decision. It’s important to take the time you need to truly rejuvenate and come back to work with a fresh perspective. To take advantage of any time (a day, a week, a month) you have away from work, see my tips for deriving the most benefit from your time off.
Plan Your Finances
Planning your finances is crucial when preparing for a career break. Our goal was to take a break for a year, which entailed tremendous planning in all aspects of our lives, but financial planning was certainly the most daunting task. The more you plan your career break, understand the costs of taking a career break, and understand your current expenses, the easier it will be for you to plan the best career break possible, filled with opportunities for fun and play. Here are the steps we took to make our dream career break happen, follow along and you’ll be on your way:
Step 1 – Plan Your Ideal Career Break
Ah, self-reflection. Why does it matter? It matters because if you take a beat and think about how you would actually spend your time on a career break, you will have a much better understanding of what it will cost and the logistical steps which will be required to make this happen. Some of the questions you read above (assuming you haven’t skipped to this part) will help define what your break looks like. Are you planning on a lengthy career break or a few weeks? Do you want to live the same way you are living now or are you hoping for a completely new experience?
A big and important question you absolutely need to answer is where will you live? Can you get what you need staying at home or are you planning on travelling or relocating?
Consider geographic arbitrage, an awesome term I learned a while ago. There are lots of definitions out there, but geographic arbitrage is basically the practice of relocating to a different part of your country or a different part of the world where expenses are lower. If you were to say work remotely based on a New York salary but live in Mexico, your money would go much further. You don’t have to be working though, geographic arbitrage can apply on a career break. For example, taking your savings from a high cost of living city and spending your career break in a lower cost of living city can also help stretch your cash. This was our general approach, we moved from very expensive Canadian metropolis Toronto to much less expensive (in many ways) Puglia, Italy.
Step 2 – Understand Your Current Expenses
Once you have figured out the plan, now you need to understand how much it will cost. This may seem counterintuitive, but trust me, your best bet is to start with mapping out a few months of what you spend in your current location and life. It will help you appreciate your spending habits generally, understand if there are areas you could tighten up while you prepare for a career break and get an approximate dollar figure you need to save before you take your break whether you are staying put or travelling.
There are many ways to track your current expenses, apps work marvellously or if you prefer tracking to be automatic your banking app can likely track your expenses for you.
I am a huge nerd though and prefer the most comprehensive way of expense tracking – spreadsheets! I track expenses through an app and then record them in my spreadsheet monthly, or since I never use cash in Canada, I can also sit down on the first of each month and take a look at my debit and credit transactions and put them in the ‘ol spreadsheet. Fun.
If you are also an Excel or Google Sheets aficionado, download my FREE expense tracking template with budget planner, just click the “use template” button. Put everything in the tracker, even expenses you say are “unusual this month” and don’t judge yourself or curb your spending to track better numbers – that serves no purpose in this exercise! After a few months, you’ll have the picture you need.
Done? Cool. Now you know what you spend on average each month, let’s figure out what your career break is going to cost you.
Step 3 – Understand Your Career Break Expenses
If in Step 1 you said “I’m staying at home and won’t be changing anything except not going to work…booyah” then this step is super easy. What will be required for your career break is exactly what you calculated in Step 2 multiplied by the number of months you intend to skip the office.
If, however, you’re looking to travel, spend time in another city (thus leaving your current residence unoccupied with its mortgage or rent payments, taxes, etc still due) or take advantage of geographic arbitrage à la me, then you need to determine a realistic budget for your career break.
Using the budget planner tool above (if you’d like), you need to set what it will cost for your basic living expenses plus discretionary expenses (dining out, entertainment, shopping, fun stuff) for your career break PLUS any costs that will remain at home while you are on the road. For example, you decide to move out of the condo you own, and travel for 6 months then plan to move back into your condo afterwards. This means you will have rent expenses (hotel costs, Airbnb, apartment rental fees) related to travelling PLUS your mortgage, condo fees, and any bills you can’t pause back home. If you are renting our said condo, you will likely need to factor in costs of a property manager, cleaning service, maintenance etc.
Make sure you add expense lines for everything and do your research on the cost of living in the places you’d like to travel to in order to get a most accurate picture of your future expenses. As an aside, if you’d like to move to Italy, here’s what it’s going to cost you.
Pro Tip: Costs go up so if you are a year or more away from your career break, add 10% to your researched amounts. Also if you can anticipate future expenses, like say how interest rates skyrocketed recently and anyone attempting to renew a mortgage is in for a substantial financial surprise (sigh), reflect those in your budget sheet.
Step 4 – Reduce Unnecessary Expenses and Save
Good job! Now you know how much this amazing career break you are looking forward to will cost you. Total the amount up and this is how much cash you will need to survive your career break and not go into debt. If you have savings already in place, wow, you rock and you don’t need me. If, like most of us, you need to save for this event, then now is a good time to calculate how much you need to save each month to make this happen.
Let’s use an example, say you are planning on your career break of 6 months to start in two years’ time and you currently have $0 of savings. Your 6-months off work will cost you $5,000 per month x 6 months = $30,000. You have two years to find the money to make this happen so you need to save $30,000/24 months = $1,250 per month until you leave.
To do this, take a close look at that expense tracking you did in step 2. Is there anything you can reduce, like lowering your phone bills or saving money on internet charges? Or perhaps there are a few subscriptions you rarely use and could do without for a few months? Only you know what you can sacrifice and what is important, no one can judge that for you.
Your best bet is to automatically transfer the amount you need to save when you get paid each month to a high interest savings account (let’s make you money off your money, snap) so the remainder of the money in your account is yours to spend as you desire.
Step 5 – Consider Additional Income Sources
If you are a boss and already have a means of additional income (passive income from investments, rental income, a side hustle like Instacart, Etsy sales, etc) then you can reduce your monthly expenses for your career break by the income you expect to receive during the break.
You have time before your career break starts to try your hand at new income sources which can be continued on a career break.
My fav sources of extra income are rental income and investment income, but these take a while to build so if you’re starting from scratch and not sure where to start, think about your hobbies and interests. Do you enjoy writing? You could start a freelance writing business. Do you love animals? You could offer pet-sitting or dog-walking services. The possibilities are endless! The podcasts and blogs talking about side hustle opportunities are equally endless. Here are a few you may enjoy:
Step 6 – Career Break Time (and Financial Reflection)
Woot! You’ve saved up, you’ve planned your ideal career break, you’re ready to go! Kudos to you! Enjoy your much needed break. If you dare, track your expenses on your break to see if you are close to the budget you set. You’ll also know what it will cost you to take a second career break 🙂.
Money Saving Tips for Travelling During Your Career Break
Travelling can be expensive, but that doesn’t mean you have to break the bank to experience new places and cultures during your career break. By being savvy with your travel choices, you can save a lot of money while still having a great time. Here are some ways to find affordable travel options:
Travel during off-season
One of the easiest ways to save money on travel is to travel during the off-season. This is the time when there are fewer tourists, and prices for flights and accommodation are lower. For example, if you’re planning to travel to Europe, consider going in the winter when the weather is still pleasant but the crowds have thinned out. The “shoulder season” in Italy (April, May, September, October) is an incredible time to both beat the heat and save money. You’ll find cheaper flights, cheaper accommodation, and fewer lines at popular attractions.
Use travel rewards and points
Another way to save money on travel is to use travel rewards and points. Many credit cards offer travel rewards that can be redeemed for flights, hotel stays, and other travel expenses. If you’re planning your career break well in the future, consider signing up for a travel rewards credit card in advance (pay off any charges – don’t incur debt) and use the card rewards bonuses to book your flights, hotels and other expenses incurred during your career break.
Choose budget-friendly accommodation
Accommodation can be one of the biggest expenses when you take a career break. There are plenty of budget-friendly options available. If you are staying in one place for your entire career break, consider renting an apartment or subletting. The cost of hotels or Airbnb stays in Italy, for example, is substantially higher than a monthly long-term apartment rental.
If you plan to move around, consider staying in hostels, lower-cost Airbnb rentals or use a program like Home Exchange. Or you can try house-sitting to save on expenses. Finally, choose a destination outside major city centres where costs will be higher. So long as you can access public transport, you’ll save money which can be used elsewhere.
Save money on activities
There are plenty of free activities that you can enjoy during your career break to add fun without spending money, plus meet new friends. Check out local parks, museums, and galleries that offer free admission. Go for a hike or a bike ride or join a local walking group. Pack a picnic and hit up a local beach. Pay attention to posters, still a great way for communities to advertise events. Join local Facebook or What’s App Groups which can help you identify free community events like concerts, festivals, and fairs.
Take advantage of discounts and promotions
If you plan to do paid activities, always look for discounts and promotions. Many businesses offer discounts to students, seniors, or military personnel. Consider purchasing tickets in advance online to get a better deal. Also, check out group-buying websites like Groupon or LivingSocial for discounts on activities and experiences.
Save discretionary spending by eating at home
If restaurants are your thing, hopefully you planned for regular dining out expenses in your initial career break budget. Otherwise, you can take advantage of local markets and regionally produced food to reduce your food costs and prepare meals at home. That will free up any extra cash for more expensive activities.
Stay Connected Without Breaking the Bank
Staying connected with loved ones while on a career break is essential if you are travelling, yet it doesn’t have to cost a lot. Here are some tips for staying connected affordably:
Use Affordable Communication Options
Free communication apps such as WhatsApp, Viber, or Skype will allow you to make voice and video calls, as well as send messages and photos for free, as long as you have access to Wi-Fi. Free Wi-Fi is readily available in cafes, restaurants, parks and other public places when you travel so take advantage of those opportunities to talk to loved ones.
Another affordable option is to use a pre-paid international SIM card. These cards provide a local number and can be used for calling, messaging, and data use at a lower cost than using your home-country SIM card. Ours is 10 Euros a month for more GB than we could possibly use, 300 minutes of international calling and unlimited national calling.
If you plan to keep your home phone number for when you return, you can either switch to a pay-as-you-go plan, use a dual SIM (home and international) or port your original number to VOIP (Voice over Internet Protocol). I use VoipMS which costs less than a penny to send SMS messages and I can still receive voicemails to my Canadian phone number.
Stay Connected with Social Media
Before our career break, social media was the last thing I thought about. But while away, Facebook and Instagram have become great ways to both stay connected with friends and family back home and establish social networks with new friends we’ve met. Even better, jump onto free Wi-Fi to save your data while you upload those photos of you sipping cocktails on a beach mid-week.
Conclusion
Your career break is closer than you think. If you have an option to take time away from work, I would highly recommend you consider it. Start planning your finances now and take advantage of these money saving tips to have a fantastic career break without sacrificing the fun.