Having a break from your career path can become quite a significant life experience. Many Australians dream about leaving their jobs to spend a year travelling, volunteering, or getting rest and recharging their batteries. The process of taking a sabbatical will let them have such a unique chance.
It may be frightening to leave behind a steady source of money. However, proper budget management turns a tense experience into a refreshing one. It is necessary to create a financial strategy in order to avoid problems and feel comfortable during the sabbatical.
Assessing Your Current Financial Position
Before you ask for a sabbatical from your employer, you need to thoroughly assess your current financial position. First, calculate how much money you have saved up till now and check your liquid assets. You need to find out what kind of amount of money you have and can use during the break. Then you should estimate your monthly expenditures in order to find out your basic expenses. To do this, study carefully your bank statements for the last six months.
One more point to keep in mind is superannuation. When you are not working, there won’t be any additional payments from your employer. Perhaps, it makes sense to pay the voluntary contribution before your departure in order to increase your savings for the retirement. Knowing your actual net worth will give you a clear understanding about how to finance your sabbatical.
Budgeting for Your Sabbatical: Main Issues
Creating a realistic budget is the most crucial part in preparing yourself for the break. Estimate all your expenses which can arise during the break – travel expenses, accommodation expenses, food, and insurance. Remember about those bills you need to pay for your house in case if you prefer to stay in Australia. Also, remember ING offers competitive interest rates if you’re looking for a car loan or another loan during your break.
Include a considerable reserve fund to be ready for any unexpected costs. If you plan to spend your sabbatical abroad, don’t forget that the fluctuating currency exchange rate can have certain consequences. In order to save some extra money and at the same time have easy access to it, deposit some amount in the high interest bearing savings account or the mortgage offset account.
Managing Debts and Investment During the Break
Your responsibilities won’t stop even when you stop working. It is very important to solve the issue related to the mortgage loan. Speak in advance to your bank about the possibility to suspend your payments or switch to interest only payment system. As far as other personal loans and credit card debts are concerned, it is better to deal with them before taking a break from your work.
If it is impossible to completely close all your debts, you have to make sure you have sufficient savings for at least paying minimum instalments. With regard to the investment portfolio, you should decide whether to continue financing it with the same amount or freeze it. The automated payment system will help you not to skip payments and damage your credit history.
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Financial Reintegration After the Sabbatical
The process of return to real life also demands some attention from you. When you return to work, you won’t receive salary until the beginning of next month. Be sure to include this period into your budgeting.
After resuming working activities, analyse your financial situation thoroughly again. Probably, you should change your weekly budget a bit because you’ll need to restore your savings or pay the overdue bills. Moreover, it would be useful for you to reconsider your strategies of gaining wealth.
Safely Enjoying Your Sabbatical
Taking a sabbatical is an interesting life event that cannot pass unnoticed by anyone. But at the same time, it demands considerable efforts in terms of financial planning. Assess your current financial standing and draw up a thorough budget. Don’t forget to think over the management of your banking affairs. You deserve to spend this year in comfort!
