This video discusses provides smart tips to prepare financially for time off work for reasons like doing a mid-career course or prepare for a new career.
Edited highlights
0:14 This video will discuss things that you need to do prepare yourself financially when you plan to take time off from work
0:21 It could be for a variety of reasons such as studies, preparing for a different career or a family situation
1:13 When you take time off from work or take a sabbatical, you regular income will not be coming in
1:29 Remember, expenses for you and the family will go on
1:43 The first question regarding planning to take time off from work is to ask yourself whether you really need to do that
1:54 Lot of time people want to take a break from work but the problem is actually with their work-life balance
2:01 They might not be enjoying their present job and that's why they end up feeling the need for a break. Here, you need to look for another job
3:05 If you want to a mid-career course or study, find out if you can afford it? This is not only going to cost you but you will not be having any regular income. And then, you are used to a certain lifestyle
3:17 In such cases, you will need to manage with your accumulated savings
3:27 You will need to managing the requirements of your family and kids
3:43 The next question that you need to ask yourself is can you recover financially from your time off work
3:58 Apart from using savings, you might need to repay an education loan
4:05 The question that you need to as is that if you are investing in a new career, will it pay off?
4:15 In any case, you will not get educational loans for studies that will not enhance your earnings
4:51 The next question to ask yourself if what are going to be doing in the period that you are out of work?
5:47 As a preparation for the period of time off work, you could start moderating your expenses. The idea is to get used to life where there will be little more caution on expenses
6:02 You could also practice moderation of expectations
6:26 This will help you get through a period of low or no income
6:47 You need to not increase your commitments. This includes your credit card outstanding and consumption loans since they make for substantial fixed expenses
7:07 Reduce your existing commitments like home loans by prepaying them
7:26 Have an emergency fund which will take care of regular family expenses. It could 6-9 months, going up to 11 months and may more, if the need be
7:33 Keep the emergency fund money parked in easy to access investments like liquid funds
8:00 Emergency funds help you cushion your long investments from any distress selling
8:19 Since you will continue to need protection even during your break from work, you need to ensure that premium payments will get paid then
8:39 You also need to have a plan about what you will be doing with your regular investments like systematic investment plan (SIP) in mutual funds
