You’re tired and burnt out. Work has gotten untenable. You need a break. How about a one year sabbatical?
A sabbatical is a period of time off work. Traditionally it’s been common in the academic space; professors received a year of paid time off for every seven years worked.
With rising rates of worker burnout and general dissatisfaction with how the corporate structure only benefits those at the very top, more and more people are taking sabbaticals of their own. I’m sure you’ve seen the headlines that Millennials and Gen Z “don’t want to work” (which: eye roll. People want to work for pay that allows them to afford life!!!)
Work might not pay for it, but more and more people are saving and giving themselves the gift of time off throughout their careers. But what financial steps do you need to take to make this work?
Saving for a One-Year Sabbatical in Just 7 Steps
We’ve got a 6 step plan to help you save for your sabbatical. But to be honest, before we get to that we need to determine what you want from your one-year sabbatical.
Are you burnt out and want to spend the next 12 months sleeping and re-watching your favorite comfort show?
Do you want to backpack Asia for six months and then eat your way through Greece for another six months?
How you want to spend your time is what will guide your spending, so answer these two questions first:
- What do I want most out of my one year sabbatical?
- What do I want to end this experience having done or accomplished?
Step 1: Talk To Your Work
Your job might work with you for your sabbatical and it might not. Talk to your HR department and see if your company offers any kind of paid or unpaid sabbatical leave. This is your starting point for your own sabbatical; if your company will hold your job for you for six months, that might impact how long you decide to take a sabbatical for.
If your work offers no paid or unpaid leave, that means you’ll need to fund your one year sabbatical yourself AND plan to find a new job when you return.
Here are a few questions to ask HR:
- Does the company offer any kind of sabbatical leave? Who is eligible for it if so?
- Does the company have any programs I qualify for that grant unpaid leave?
If you’re self-employed, let clients know when you’ll no longer be accepting work well in advance. Then ask yourself if there is any low-lift labor you might be willing to do. Are you willing to spend 10 hours a month on freelance work? (It’s ok if the answer is no!)
Freelancers and self-employed folks might also want to consider canceling services you won’t be using, such as a Zoom account or an invoicing service.
Step 2: Review Your Current Spending
Your first step is to review your current income and expenses.
Sit down with your budget (grab our 8 chapter and 2 pre-made spreadsheet budget workbook here!) Determine exactly how much you bring home every month after taxes. Then tally up your expenses and divide them into two categories: needs and wants.
Needs- rent, mortgage, childcare, healthcare, utilities, groceries, transportation. The things you need to live.
Wants- streaming services, restaurants, new clothing, DoorDash. Basically, the fun things that you like, but don’t need to live.
You can also use a FREE app like Empower to aggregate your financial data. I use Empower because I like robots doing the work for me.
Next, highlight the areas of spending you can cut back in and BY HOW MUCH. For example, if you cancel your Netflix plan and decide to cut back on going out to eat by half, how much does that actually save you? Netflix costs $15 a month and the restaurants cost $100 a month, so that’s $115 you can redirect toward your sabbatical savings.
Additionally, consider how you might be able to make money without working during your time off. No, that’s not the start of a scam pitch, I promise. Rather, if you own an apartment, can you rent it out while you travel and use the rent money to offset your travel costs?
Being precise with your financial review will give you numbers you can use to calculate how long it will take you to reach your sabbatical savings goal.
Remember that budgeting is the key to freedom. It gives you control over your finances and thus, flexibility in life!
Here are a few posts that could help you stick to a smaller budget during your sabbatical:
- How to Live on Only One Income
- 12 Tips to Live Below Your Means
- Minimalism Tips to Help You Build Wealth
Step 3: Outline Your Sabbatical Spending
Speaking of that sabbatical savings goal, how much do you need to actually save? There is no one-size-fits-all answer because there is no one-size-fits-all sabbatical. Scuba diving for a year in Bali costs a different amount than backpacking across Europe for a year.
So get into as much detail with your planning as possible. If you want to spend six months in LA but you currently live in Buffalo, NY, consider costs like: flights to LA, renting an apartment for six months, utilities for that apartment, increased grocery store costs, and the cost of any LA-specific experiences you want to have.
If you want to spend six months traveling from Spain to Turkey along the Mediterranean, do research on the cost of flights to Spain, getting from Spain to France and then onward from there, cost of food and hostels in each country.
It’s impossible to know exactly how much you’ll need, but we need some sort of starting point to orient ourselves towards. The more details you can plan for the more of a concrete number you will arrive at. If you come up with $30,000 for your year in Asia, I would pad that a little and aim for $35,000 so you have breathing room.
Step 4: Apply For Grants or Support
Now if your number is bigger than you expected, don’t freak out! There’s lots of money, housing, and travel help out here to make your one year sabbatical cheaper.
For example, you can use sites like Helpx to find housing in exchange for your work. WOOF-ing is a popular way to travel without needing to pay for housing. A great place to find more organizations and websites is actually Reddit- people share their experiences and tips!
Step 5: Consider The Return & Job Search
When your time off comes to a close, you may land a job right away- and you might not. So let’s consider the time you spend job searching in addition to the actual sabbatical itself.
I would plan to save at least another two months of living expenses that you can use while looking for a job when you are no longer actively on sabbatical. I would also plan to network HEAVILY during this time, both in person and online.
Getting a well-paying job today in the US is very much so about your network and who can connect you to a job or a company. It’s not fair at all, but it is the truth.
Planning for your one year sabbatical also means planning for your smooth return to work.
Step 6: Utilize Points to Pay for Things
Credit cards are famous for their rewards programs, so IF you are a responsible credit card user, you can consider using one for your year off.
PLEASE HEAR ME: credit cards are designed to make you feel like you’re not really spending money, and most people struggle with credit card debt in the US. If you already have credit card debt or don’t think a card is a good tool for you, skip this section.
For those wanting to travel on their one year sabbatical, a credit card with rewards can help pay for hotels, flights, and things like car rentals.
The Venture from CapitalOne is a good long-term option to have. It offers 2x miles on ALL points. So your groceries, gas, and DoorDash spending will all build your rewards up as you prepare for your sabbatical. Plus, there is a 75,000-point bonus for spending $4,000 in the first three months!
Listen, I hate Chase Bank, but there is a reason that the Sapphire Preferred card is one of the most popular travel rewards cards in the US. It has an amazing reward structure, including a 60,000-point bonus for spending $4,000 in the first three months. Plus, you get 5x points earned when you book through the Chase travel portal, 3x points on streaming services, restaurants, and online groceries, and 1 point per any other purchase. I personally don’t use Chase but as your financial bud, I feel like I have to let you know all the options out there.
Step 7: Store Your Money in a High-Yield Savings Account
A high-yield savings account is best for this money if you’ll take your sabbatical within the next three years. You don’t want to invest it since you’ll be using it sooner rather than later, and investing comes with the risk of loss.
A high-yield savings account is exactly like a “normal” savings account in that it is FDIC-insured so your money is safe. The major difference is that banks that offer HYSA tend to be online only, so there’s no physical branch.
And of course, they offer much higher interest rates! Right now Chase Bank is offering 0.01% interest. That’s essentially nothing. An HYSA can offer you 4-5% interest on your savings, which REALLY adds up once you have a few thousand in there.
Some accounts I like are:
Atmos– This climate-friendly fintech company offers high-yield savings accounts that are FDIC-insured. They don’t invest in fossil fuels, and instead fund solar energy projects around the US!
Wealthfront– Wealthfront is another FDIC-insured institution that offers some of the highest interest rates around.
So, as a recap:
Talk to work and see if you can get them to give you paid time off.
Sit down and review your current expenses. Use a financial app like Empower to make this review easy and to determine your needs vs your wants.
Hone in on your one-year sabbatical plans and how much you think they will cost. Pad your savings by a few thousand dollars.
Apply for grants, housing, or work programs to offset your costs.
Best of luck with your sabbatical! I hope it’s everything you want it to be.
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