Do you need a career break? Here’s how to plan for one and make the most of it.

Liz Weston

Saving time, budgeting and planning is very important. There is also the option to quit.

This article is reprinted with permission from NerdWallet. The investment information provided on this page is for educational purposes only. NerdWallet does not provide advisory or brokerage services, nor does it recommend or advise investors to buy or sell any particular stock, security, or other investment.

In 2016, Jamie Clark, a software engineer in Seattle, was taking a year off work to pursue her master’s degree in computational linguistics. He turned one year into three and he made a career change to financial planning.

Clark, who now uses the they/them pronouns, believes this experience will make him a better advisor.

“One of our jobs as financial planners is to help people prepare,” says Clarke, now a certified financial planner and who recently launched her own company, Ruby Pebble Financial Planning. . “And I want to help people build that flexibility.”

A career break is extended and usually followed by a period of unpaid leave. Such a vacation can be an ambitious way to set aside time to travel, pursue a degree, change jobs, or start a business. Or it may be facilitated by life events such as caring for children, nursing a family member, or coping with illness or burnout.

Whatever the cause, planning can help you get the most out of your breaks.

Learn more in this podcast: How to plan your sabbatical

Save and budget diligently

Henry Hoang, CFP of Irvine, Calif., believes most people don’t need detailed budgets as long as they’re saving enough for their goals. But career breaks are an exception, he says. When my paycheck runs out, I need to have enough savings to sustain my life. It starts with figuring out exactly what you’re spending today and estimating what you’ll spend on your break. Some expenses, such as commuting and childcare, may decrease. However, if your current coverage is subsidized by your employer, there may be additional costs, such as higher health insurance premiums.

Once you’ve figured out how much you need to save, consider adding a fudge factor of 2-3 months’ worth of expenses in case it takes longer than expected to get your next job. . One of Hoang’s friends didn’t and raided his 401(k) to pay the bills.

When it comes to retirement, longer breaks can mean you’ll need to work beyond your normal retirement age or significantly increase your savings rate in order to retire on time. If you plan to take more than two years off, use the retirement calculator or talk to your financial planner to see how it might affect your plans for retirement, Hoang said. says.

Clark saved enough money from his well-paying job to cover two years of living expenses, which he was able to extend to three years after his marriage. and qualified for the financial plan, so my spouse paid the bills.

Clark says that careful tracking of spending and thoughtful budgeting not only helped keep his savings going longer, but also alleviated some of Clark’s stress about not having a paycheck.

“There will always be surprises, but it’s good to minimize them, or at least minimize the financial impact,” Clark says.

plan your time

While you may feel like you need a break from your demanding schedule, lack of a plan means you might end up wasting this precious time you’ve saved by preparing.

Huang shares another cautionary tale from a client who began his vacation with a strong desire to change careers and spend more time with his young children. His days quickly fill up with parenting duties. Hoang says he had no time to look for another job. When his savings ran out, he returned to the same field.

“Clarifying what you really want on this career break can make a big difference to the overall experience,” says Huang.

The details of your plan will depend on your career break goals, but consider scheduling lunches with professional colleagues about every month to keep you networked and keep abreast of developments in your field. Please give me. If you’re considering a career change, create a timeline for when you’ll complete certain steps, such as meeting with his career counselor or determining the education and qualifications you need.

Plus: About 75% of Americans surveyed jump into a solar, wind, or EV “green” job.

consider alternatives

A long-term career break may not be possible. Too many debts, too many bills, too many people depending on you, and you can spend months and years without a paycheck. It is only natural to be cautious about quitting your current job without it.

But that doesn’t necessarily mean you’re stuck.

Some employers offer paid sabbatical leave, while others offer unpaid leave for workers who need a break. Up to 12 weeks under the Federal Family and Medical Leave Act if you have a newborn, are adopting or caring for a child, are suffering from a serious health condition, or are caring for a close relative are eligible for unpaid work-protecting leave. children, spouses, or parents with serious health conditions.

See also: Is it a good or bad time to ask for a raise? Job market strong but layoffs on the rise

Given the tight labor market, your employer may be happy to adjust your workload, move you to a less responsible job, or cut your hours. That could free up the time and energy you need to focus on what’s important to you and what you want next in life.

Learn more about NerdWallet

Liz Weston, CFP(R) contributor to NerdWallet. Email: Twitter: @lizweston.


(Closed) Dow Jones Newswire

01-04-23 0502ET

Copyright (c) 2023 Dow Jones & Company, Inc.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *