Amid evolving employment lifestyles, the concept of a sabbatical is gaining traction as more professionals prioritise work-life balance. An extended break from work, sabbatical can often last weeks or months and is often taken by employees for rest or to pursue personal goals.
Unlike a paid vacation, sabbatical is typically longer and may not always be paid for. While some companies do offer partial or fully paid sabbatical benefits, the access remains limited for the larger workforce, particularly in the private sector.
Regardless, many employees choose sabbatical in order to improve their productivity, explore new career opportunities, spend time with families or simply work towards mental well-being.
This planned time-off from work cannot be stress free unless the financials are taken care of. So, it’s crucial to plan ahead and ensure that the finances are in place before stepping away from one’s regular income stream.
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Create an emergency fund: Ideally, this step is supposed to be a general part of the financial savings. Emergency funds, with up to six months of expenses, should be prepared in advance to deal with any unexpected incident such as a medical emergency or layoffs.
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Set a savings goal: If one doesn’t have their emergency funds, they can start targeting a savings goal to cover at least a couple months of expenses. May use a portion of emergency funds or create a new one entirely depending on what suits them. This new fund should ideally contain expenses for bills, groceries, insurance and EMIs to ensure one doesn’t lapse on their financial commitments.
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Cut non-essential expenses: A few months ahead of the planned sabbatical, there is a need to review spending habits. Cutting down on non-essential expenses such as OTT subscriptions, dining out, impulse purchases, can cover some of the expenses for the leave period.
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Monetise extra skills: A smart way could be to earn through a side gig and save the extra income ahead of the sabbatical.
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Short-term fixed deposits: Putting the money in short-term fixed deposits will help generate guaranteed returns on the savings, ensuring that this money is locked-in for the specific period. Several banks offer FDs ranging from a few weeks to a couple months and even more.
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Sell unused assets: To earn extra income, an individual may also consider selling unused assets. It could be a home appliance, clothes or even old furniture. This can help get rid of old, unused stuff while generating money for the sabbatical period.
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