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You cant simply save up some random number.
There are many factors to take into consideration.
For most people, he said this translates to $30,000 to $60,000 in cash reserves.
For this, he recommended paying off high-interest debts and cutting discretionary spending before leaving your job.
Have a clear plan for how youll spend your time to avoidrestlessness or boredom, Rawal said.
By budgeting $15,000 per month for the trip, she returned with $10,000 leftover and priceless memories.
Now recharged, shes focused onnew career opportunities.
With discipline and planning, experts note that an extended sabbatical can be rewarding personally and financially.
Calculate Your Annual Expenses
The first step is clearly understanding your annual expenses, Shirshikov said.
For instance, if your monthly expenses amount to $4,000, your annual expenses would be $48,000.
Its crucial to be meticulous in this calculation to avoid any shortfall during your year off, Shirshikov said.
Additionally, consider continuing contributions to your retirement accounts to avoid losing a year of compound growth.
Suppose private health insurance costs $500 per month, an additional $6,000 per year, Shirshikov said.
If you contribute $5,000 annually to your retirement account, include this in your total savings goal.
Additionally, lifestyle changes like increased travel or pursuing hobbies may increase your expenses.
Adding another 5-10% to your total can help cover these potential increases.
If you plan to travel extensively, your expenses may be higher.
Its essential to tailor these guidelines to fit your specific circumstances, Shirshikov said.
The key, he emphasized, is avoiding debt.
Pay off high-interest credit cards and other debts before taking a break from your income.
Have a cushion for unexpected costs.
I also advise testing the waters first with ashorter 3-6 month sabbatical, Blain said.
This allows you to budget properly for a full year off and ensures youll enjoy an extended break.
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