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Planning a Sabbatical

Are you contemplating a sabbatical to explore life outside your workplace? Well, that’s good thinking as sabbaticals are a great way to take a break from the routine life, rejuvenate and, maybe, learn something new. But as good as that sounds, these breaks are not paid for. So, if you are planning one, gear up to pay for it too. It is important to financially secure your sabbatical for a hassle-free and enjoyable break.

EXTRA SAVINGS

A sabbatical comes for a price that you should start saving for early on. But in no way should this exercise disturb your existing investment portfolio earmarked for various goals. So, start by cutting down on existing expenditure, especially on yourself. It is best not to make other family m e m b e r s sacrifice their well-being for yours. If you have extra savings, park it in 10-12 months’ recurring deposits with a bank or a post office. And deploy lump sums in debt funds. But before you venture out on a sabbatical, redeem all the proceeds and park them safely in a savings account at least a month before.

MANAGING TIMES

Unlike a single-income household, managing finances for a double-income household during the period when one member goes on a sabbatical is comparatively easier. But having said that, planning in advance and creating a buffer helps nonetheless.

To keep one’s finances uncomplicated, one should avoid depending on debt to meet his or her sabbatical expenses or to tide over the unpaid period. In fact, ensure that high-cost, short-term debt, such as credit card dues are cleared before a sabbatical.

ANTICIPATE EXPENSES

Besides provisioning for your regular household expenses during the non-earning period, make provision for other discretionary expenses too. And while you are at it, factor in the money outflow towards payment of insurance premiums, debt repayments and other regular payments. Also, do keep some money aside for your children’s education related expenses.

However, when on a sabbatical, the biggest expense could be on travelling and exploring various locations. So, it is important that you keep aside a big chunk of money for it. If you have already saved for it, that’s even better.

MEETING LIQUIDITY

If your spouse is dependent on you, it is best to update your bank account and change the mode of holding to ‘either or survivor’ before you venture out on a long sabbatical. Doing so will help your spouse withdraw cash or issue cheques as and when required, even if you are away.

BE ON TRACK

No matter what, stay on track with your goals. Your sabbatical should not disturb your long-term goals, such as your children’s needs and your own retirement. Make sure you have adequate balance in your accounts so that mutual funds systematic investment plans (MF SIP) earmarked for these purposes is not held back. Do not dip into your emergency fund, such as deposits or savings account, or liquid or short-term MFs to pay for your sabbatical. Also, make sure your commitment towards existing outflows, such as insurance premiums or home loan instalments, are not impacted.

CONCLUSION

Review your goals after a sabbatical. It is possible that some of your career and life goals will change after the break that you took to enrich your professional life or for personal reasons. In that case, realign your financial goals in the light of new realities. The most difficult part after you are back to the humdrum world is adjusting to the grind with minimal impact to your finances. However, a well-financed sabbatical can help you make the perfect transition.

Next To Come: Getting to Your Goals