Economies worldwide are dealing with the effect of the pandemic and the reality that the virus has come to live with us, and we as a people must come to terms with the new reality. Almost all sectors of the economy have experienced the negative effect of the pandemic, with some being hit more than the others.
There was a general loss of jobs across the board. With economies opening gradually, many are still struggling to get back into the rhythm of things. While some find it challenging to find new jobs after losing the previous one, others are deliberately taking time off work to figure out what to do with their career going forward.
Our world as we know it is going through some exciting phases, especially in the past two years, which has led to drastic changes in the way we live our lives. One area of our lives that has experienced some massive changes is the way we work.
My focus in this piece is on taking time off work or taking a career break if you like. I would love to examine how this can work and the possible financial implication of taking up to 6 months off work.
From time to time, we have seen people take time off work for some months for several reasons, and it is okay to do so.
If this is something you want to try, here are some reasons people take time off.
- To travel around and see more of the world
- To master a passion or to learn new skills
- To get a perspective on what you want to do with your life going forward
- To pursue an abandoned dream
- To take care of a mental health challenge
- To learn a new language in another country
- To road-test another career before a final decision
- To reaffirm your life and give it a possible boost
- To pursue a charitable course
- To prepare and sit for a professional exam
The reasons why people take breaks from work are endless, and it could be that you are out of a job now. However, I have also noticed that the terms “career break” and “sabbatical” are interchangeably thrown all over the place.
While they both mean taking time off work to do something completely different, they are different in how they work.
Difference Between Sabbatical and Career Break
What is a Sabbatical?
This is a more formal or official system of taking a break from work. Some top corporate organizations have sabbatical policies for both male and female workers in their organizations.
So, if you work with one, you may need to check with your employers. Under this arrangement, you may be allowed some time off your routine 9-to-5 work with some adjustments.
Most of these organizations that offer sabbatical as part of their policies come with some adjustments like suspended company pension contribution for the time you are away from work.
Others go as far as non-payment of salary for the period of your absence. Still, you are guaranteed your position if you return within the time agreed.
The length of time allowed off work and the benefits attached to that could also depend on the level of the individual in the company. Senior management level staff tend to enjoy more benefits than the lower cadres.
Also, your length of stay in the company can affect your qualification for a career break. Sabbatical is mainly available to employees who have spent eight years or more in the organization and full-time staff.
Sabbatical is a great way off taking time off work and perfect for those who intend to return to the same job or company.
For example, 52-years-old Debbie Norman, who had been working for a commercial bank for more than ten years, applied and got approval for a 6-months sabbatical.
Debbie spent her time off work traveling around the country while sailing Queen Mary. She covered most of the West Coast of America before eventually returning to her country of birth, England.
While away, Debbie’s position was left open; she was paid in full for the time she was away, but the company suspended its contribution to her pension for six months.
When Debbie was done with her sabbatical, she returned straight back to her position, feeling fresh and more productive.
The story was slightly different for 38-years-old James Sullivan, an insurance manager in an insurance firm. James got a 3-months Sabbatical with a promise of having his job back but only for half the salary for the period of his absence from work.
Like Debbie, James spent his time traveling and hiking, and on his return, he settled right back into the position he left fr three months like he never left.
Organizations are fast changing their attitudes towards releasing their workers for some months. They are fast realizing the importance and coming to terms with the fact that even the company will be better off by releasing employees to go on sabbatical to travel, learn new skills, or do any of the things we mentioned earlier.
If you work in an organization and have been around for some years, recheck the company policies and determine if you qualify for a sabbatical.
If they do, find out the maximum duration you are entitled to, then have a meeting with your boss and see what you can get and when you can start.
What is a Career Break?
If your company doesn’t have a sabbatical policy or you don’t qualify for one, your only option, if you need a break from your regular work routine, is to take a career break.
In this case, you will need to resign from your job with no guarantee of getting it back when you are done holidaying.
Resigning your job gives you the freedom to take as long as you like to do things you need to do, mainly because you are not tied or bound by contract to any organization.
Career break worked well for 28-years-old Railey Kings, whose employer had no sabbatical policy. Railey had to resign from his job to enter for mental illness treatment for a couple of months and take time to reflect on the type of job he wants to be doing going forward.
Many people like Railey are out there taking career breaks in these challenging times for various reasons, including the ones we mentioned above.
Some want to set up their businesses and start testing the waters already, and others want to go into freelancing or a different route from what they have been doing all the while.
How Do You Finance Your Career Break?
Whether you are working or not, bills will not stop because some expenses can’t be stopped or paused, and this can lead to financial stress and a possible mental breakdown while on a break from work.
Before you take six months off work, you need careful planning and strategizing to stay afloat for the period in question.
So how best can you prepare for your time off work?
Save Money on Major Expenses Like Mortgage, Cars, and others
The monthly mortgage payment is one of the reasons why people find it challenging to take a break from their job.
One way out of this is to consider switching mortgage providers or, better still, speak with your mortgage providers and see what compromises you can reach. If you don’t ask, you may never know what you can get.
If you need to speak with independent financial advisers, ensure you are not spending too much on that because you need to save as much as you can and not increase your expenses.
You can check websites and newspapers or ask friends who have been in similar situations how they managed.
Additionally, you can consider switching your house to make it available for rent.
That might also require you to switch your mortgage arrangement to a buy-to-let or interest-only mortgage arrangement, but ensure you understand the full implication before you make the switch.
For other expenses, fish out your last three bills, make a price comparison with other providers and see if you could save some money on electricity and gas supply.
Also, see if you can get a better deal on telephone bills and even broadband providers.
You can even call your current provider and ask for a better deal. Don’t forget your vehicle insurance, make some site comparison, and see if a cheaper and better package is available.
Cut Down on Luxuries and Occasional Items
To avoid all forms of financial stress during your career break, you need to cut down on the amount you spend on luxury items.
We are not just talking clothes and fancy gadgets here; it includes facials, cocktails, and eat-outs. For instance, you don’t have to buy new clothes all the time: you only need to start treating the ones you had properly so you can use them again.
If you never paid attention to items on sales before now, you need to start doing that so you can get the best deals. Consider adjusting the cost of your online rental services and movie subscriptions.
If you were on premium, consider complete cancellation or a possible reduction to something lower.
Save Here and There on Everyday Items
Take out all the recent supermarket receipts you can find, then take a closer look at all the items you bought and, in the process, circle out those you bought on impulse, then add them up to see how much they cost.
The next time you need to go shopping, out a list of the things you need to buy and follow it strictly. Before you spend money on anything, check if there are offers for discounts without compromising on quality.
Wherever and whenever possible, buy things on special offers so you can save some. Every penny counts towards your money-saving goal for your career break.
Cut Down on Your Social Life
Depending on the purpose of your taking a break off work, you may need to cut down on the cost of your social life, especially if you must save money because you will not be earning as much as you were while on a full-time job.
Your friends will always invite you out, and there will be times when you need to foot the bill. So, why not inform your friends of your need to save due to the new phase you are going through.
Another option is to invite them to your house for home-cooked meals instead of eating out at expensive restaurants.
Furthermore, you have had it repeatedly; smoking and vaping are not only dangerous to your health, but they are also expensive habits.
However, if you find yourself lonely and in need of a nice time, occasional treats are allowed, but be careful not to destroy the progress you have made in one night. The purpose is to stay motivated and inspired to make the most of your career break.
Save and Earn from Your Bank Accounts
If you have a reasonable sum of money lying in your regular savings account where it’s not making you much money, consider moving a good portion to an account that pays higher interest.
Take note that such an account will require you to leave the funds for a more extended period. Consider putting some money in other investment accounts where your funds can grow without you adding any effort.
Taking a career break is not the challenge, as we have established that it is all right to do this from time to time, but the more significant challenge is the plan and financial implication of this career break.
Unless you want to go back to living in your parents’ basement and depending on them afresh like when you were a toddler, you will need a solid financial plan before you take that break from work; otherwise, you could end up more miserable than when you were on a bad job.
You need to know how much you need to embark on this time off work, especially since you will hardly earn any income.
A quick review of your expenses in the last three months will give you an idea of what to expect so you can plan better. Even though you are on a career break, find other ways to earn money and at the same time embark on a massive cut of your expenses.
Even the best plans experience challenges.
So, expect the unexpected, like unbudgeted costs, emergencies, and others. Try all you can to resist the urge to break your investments, especially your retirement savings.
If you had taken a career break before or planned one, I would love to hear from you in the comment section.