6 Tips for Funding a Year off Work
Have you ever thought about taking a year off from work? It might seem like a big financial risk, but these six tips can help you take the leap with confidence.
1. Envision What You Want
Before you decide to leave your current gig, you have to set some personal goals. What do you plan to do with your time? Will you be going back to school, starting a new business or taking that round-the-world trip you’ve always dreamed of? What do you hope to accomplish? It will be easier to create a financial plan if you know the answers to these questions.
2. Create a Budget
Decide what you can comfortably spend once you’re no longer working full time. Do this by taking a look at your current finances to see how much wiggle room you have. What are your fixed expenses, such as rent or a mortgage, which you’ll still need to cover? Do you have enough savings to pay those recurring bills and the expenses of your new venture? If the answer is no, how will you fill the gap?
3. Start Saving Early
You should make saving money your top priority after committing to the idea of taking a year off work. Are there areas in your personal budget where you can cut expenses? This might require you to make some changes, like forgoing that gym membership and finding free exercise classes online, or bringing your own lunch to work instead of eating out during the week. You’ll likely have to plan to continue working until you have enough money saved to take this extended time off.
4. Seize Hidden Opportunities
Do you have a profitable skill or hobby? If so, it could provide you with an extra source of income. Selling handmade crafts in an online shop or licensing photos from your travels to a stock agency can be creative ways to boost your cash flow. Look into part time freelance work you can take on to help cover your expenses. You might also consider subletting your rental and living with a family member if possible, or renting out a room in your home for extra income.
5. Make Sure You’re Still Covered
If you’re no longer receiving health and other insurance coverage through work, how will you protect yourself and your loved ones? You’ll have to manage your benefits on your own. Health insurance, life insurance and disability insurance coverage are critical when it comes to protecting yourself, your family and keeping your financial future secure. Remember to include monthly payments for insurance coverage as you plan your budget.
Learn more about how to create your own benefits package.
6. Think Long-Term
What happens at the end of your year off from work? If you plan to start working in a new field, will you need to work with a career coach and update your resume? If you plan to go back to school, can the program help you find an internship or full time position based on your new certifications? If you’re not sure what’s next, give yourself a set time before the year is up to start thinking about your next step, and assessing your financial situation.
Leaving your full time job and devoting a year to personal pursuits can be life-changing — you’ll likely gain a better understanding of your career and personal goals. But it’s important to take the time to plan ahead and make sure you’re financially prepared to take this step.