Knowing how much time you want to take off, where you’re planning to go and what you’re planning on doing when you get there are are all considerations.
It’s often good to start by setting yourself a concrete date to aim towards and begin discussing the idea with close friends or family. Seeking feedback from people you trust not only helps with making it real, – it can also assist in terms of building support and helping you plan.
Ultimately, there are three main things to focus on in planning your finances for an extended trip:
1. Covering any current commitments
You’ll need to look at what your current financial commitments are and how to cover these for the period you plan to be away. If you have credit card debt, for instance, you’ll probably want to clear this before you head off. And if you have a mortgage, you’ll need to make arrangements to continue with the payments while you’re away. If any rent you receive won’t cover the payments, you may need to dip into your savings.
Once you decide on a career break, it’s worth assessing how much you’ve got saved, and how you can boost this by adding in more from your salary each month. This could require cutting back on your lifestyle expenditure in order to build this up quicker.
You can use CommBank’s savings calculator to help you figure out how long it’ll likely take to get your savings to the amount you’ll need.
2. Daily expenses while you’re away
Even if you’re planning a working holiday, you’ll need to have enough to tide you over until you find work and longer-term accommodation.
If you’re not planning on earning any income while you’re away, one approach is to estimate what you’ll need each day for expenses including food, transport, accommodation and anything else you decide on doing. Work out before you go how much you’ll need to save in order to pay yourself a ‘salary’ to cover these costs during the time you’re away.
How much you’ll need will really depend on where you’re going and what you’ve got planned. If you’re going to sightsee for the whole time, you’re likely to need more savings than if you were planning to stay put for a while and volunteer, for instance.
You’ll also want to think about how you’ll handle any emergencies or unexpected expenses while you’re away. This will require not just having access to savings or a credit card, but also the proper level of insurance cover to make sure you’re not left stranded.
3. Your job
Think about whether you’re willing to give up your job to take the break you want, or if you’d prefer to try and negotiate an extended leave of absence.
Whether or not this is an option will depend on the policy where you work. How long you’ve been with the organisation, your position there and how long you’re planning on taking off may also be a factor.
You can start with checking out any documents explaining your work’s policy, and also have a conversation with your employer to explain what you have in mind and how much time away they might be willing to agree to. Focusing on any benefits you might be able to bring back to the job from your time away could help with this.
It’s also good to think about what you’ll do if your employer isn’t open to the idea of supporting extended leave and how that might impact your plans for getting ready financially.