Financial Concerns: Start Saving
Deciding to go on a career break is difficult enough, but the tough decisions don’t end once you finally take that plunge and decide to do it. After making the decision to go, the first question most people ask is, “How much is this whole venture going to cost?”
A lot goes into budgeting for your career break. Where you go, how you travel, how much gear you need, how open you are to eating new types of food, and how much discomfort you’re willing to endure all have a major effect on how much money you will spend.
The good news is that you’re going to have plenty of time to practice budgeting. The budget and money-saving doesn’t begin the day you leave. It starts right now. The minute you decide to go on an adventure like this is the minute you need to start focusing on money.
Where to Begin
Sometimes the most overwhelming part of the budget is figuring out where to begin. If you don’t already track your spending, then start now!
– Open an account on Mint.com and start figuring out where your money is going.
– Break down your income vs. your expenses.
– If your expenses exceed your income, then you need to make changes.
- Cut back on things like eating out and drinking at bars.
- Stop buying new stuff. Chances are high that you are going to want to get rid of a lot of you clutter before leaving, so why buy new items now?
- Consider getting a second (or third) job.
- Think about selling off a lot of your stuff. You will most likely come home from your career break and realize that you have way too much clutter. Get rid of it now – sell it on ebay, Craig’s List, or have a garage or yard sale.
Once you get to the point where you are bringing in more than you are spending, then it’s time to go into saving mode. Open up a savings account somewhere. Research banks that offer high starting interest rates or specials for the first year. Any extra little bit helps. Then start paying that savings account, otherwise known as your career break travel fund, as you would your normal bills. Figure out how much you can start putting away each month, and pay it as soon you receive a paycheck.
Any little extra bit you earn or save, put it in the travel fund. Start getting into travel mode. Saving for a trip of this magnitude is difficult. You will have to turn down a lot of fun events before leaving on your career break. Going out to bars, dinners with friends, movies, shopping trips with the girls-all are things you are just going to have to say no to much of the time. It’s frustrating, and there will be times you question if what you’re doing is worth it. It is. It’s just all a manner of how you spin it in your mind.
Bypass a night out on the town with your buddies? Congratulations, you just bought yourself four extra days in Thailand. Turn down that shopping trip with your sister? Good job, now you can spend another week in Argentina. It’s all about priorities, and when you make the decision to take a career break and travel the world, it has to be the top priority in your life.
Changing Your Spending Habits
Tracking your expenses and spending habits can seem daunting, but it is the best way to start saving & budgeting for your career break. This is an easy exercise created by Man vs. Debt so you can see where your money is going.
Draft a quick easy budget and start recording your expenses. The toughest thing about the budgeting process is just getting started. People try to spend hours creating their first budget – perfecting every single category or angle. This is a formula for failure. Take 25 minutes and complete as much as you can. Next week, revisit it for another 25 minutes.
1. Estimate your income – Round down whenever possible to convenient numbers. If on an extremely inconsistent income, start by budgeting based on last month’s income.
2. Brainstorm fixed expenses – Brainstorm your fixed, regular expenses. Those bills you pay every month. Round these up to convenient numbers. Don’t worry about being perfect – get as many as you can.
3. Brainstorm irregular expenses – This is the hardest part for most people – and where most budgets fail. Think ahead to any non-regular expenses or bills that are coming up in the next 30 days. Gifts, repairs, holidays, supplies, taxes, etc…
4. Accept that you are going to fail miserably – Do not try to be perfect. Round income down and expenses up. Give yourself fluff room. Next time, at least you’ll have a base with which to start and adapt. Simplify when possible. Take notes when things come that were unplanned.
We cover more on saving and budgeting in Career Break Basic Training, which includes interviews and helpful homework assignments.