You might be ready for a sabbatical, but are your finances?
(NC) Many professionals wish they had more time to dedicate to personal goals, like furthering their education, travelling or dedicating time to a passion they've longed to explore. Taking an extended break from work to focus on personal aspirations, otherwise known as a sabbatical, can be a great way to recharge, and something many employers are willing to accommodate. While taking a sabbatical can be a rewarding time, it takes careful planning and a smart savings strategy to make it a reality.
“A short leave from work, like a six-month sabbatical for example, can have an impact on your day-to-day finances, as well as your long-term savings plan,” says Crystal Wong, Senior Regional Manager for TD Wealth Financial Planning. “To make sure your financial goals don't take a backseat, understand the true cost of a sabbatical and consider speaking with a financial advisor to create a plan to help you save for it.”
Wong suggests the following advice for those who are thinking about taking a sabbatical in the near future:
Map out a plan – Sit down with an advisor to take a close look at your spending habits and determine specific solutions for a budget while on leave. It's also important to determine your needs vs. wants to see which areas in your life to cut down on spending if you will be earning a decreased salary.
Look for ways to make a small income – If you plan on venturing abroad to study, consider renting or subletting your place. This can help to partially offset your housing costs while away or pay for other costs, such as rent or bills.
Continue investing in your future – While on sabbatical, it's important to maintain a long-term savings strategy to stay on track with your retirement goals. If you're unable to make contributions to your RRSP, an advisor can help you adjust your savings strategy accordingly.
“Taking a realistic approach to your sabbatical and putting financial steps in place that are achievable, can help you stay on track with your savings and investing goals, too,” Wong adds.
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