23 November 2013
When you take a career break, we always advise you have a money cushion in case of emergencies.
This isn't a cushion stuffed with cash (useful though that might be), it's a bit extra in your budget for unexpected expenses.
So to help you plan how much to save in your money cushion, you need to consider 2 things.
Thing 1: Your present circumstances
These are some of the factors that will influence how much money you want to put in your cushion.
- Your age. The older you are, the more money you'll probably want to put by.
- Your sabbatical circumstances. If you've taken a sabbatical (ie have a guaranteed job to go home to), you'll be financially more stable than someone who's quit their job.
- Whether or not you own your home. If you do, you might consider that to be a cushion in itself - or alternatively, you might want money put by in case of house expenses.
- Whether or not you have children.
- If your parents are old or in other situations where they might need money and/or care (or for you to return earlier than planned).
- Whether or not you are married or have a long-term partner - and how rich they are!
- How long you're planning to be away for - because the longer the trip, the more likely it is that you'll need to dip into your extra funds.
- How well you have budgeted - let's face it, not all of us are good with money, so the more rubbish you are with it, the bigger the cushion you'll need.
- Your back-up plans. Good insurance will cover a lot of costs, and some airlines and organisations are better than others at waiving fees in special circumstances.
- FInally, your own attitude to risk. Some people will have a better trip knowing there's extra emergency cash, others don't really care.
Thing 2: What might happen
Obviously, unexpected demands on your wallet are hard to predict, but your current circumstances and your planned career break will at least make some things more (or less) likely to happen.
- You have trouble finding a job on your return. This depends on loads of factors, but obviously, if there aren't many jobs around at the moment, you'll need more money to tide you over.
- You find you're not entitled to benefits. Going away affects what you can claim.
- You come back early from your sabbatical but your job is not available until your contracted return date, and you're not allowed to do paid work elsewhere (this does actually happen, we get calls about it).
- Your insurance won't pay out. Please read the small print (yeah, it's boring but it's got to be done) and make sure you're properly covered for everything you want to do.
- You haven't got insurance at all. It's so important if you get ill or have an accident - and it's cheaper than paying your own medical or repatriation expenses!
- There are lots of unavoidable extra expenses on your career break. Reputable organisations (like the ones on this site) will make sure you know of any extras well before you leave.
- Paperwork delays affect your ability to work either on your career break or when you get back (eg working holiday visas, background checks, etc). Again, this is something we get calls about.
- There are sudden expenses at home such as your tenants breaking things, your house needing repairs, or the person looking after your cat telling you it's run up a huge vet's bill.
- Your budget is unrealistic or poorly planned - you might find you hate hostels, or you just can't live on what the Lonely Planet tells you is possible. Or you might have simply made a mistake doing your maths.
- You don't think through the bad stuff. This is totally understandable, as you want to be excited about your trip, not all doom and gloom. But at least if you have a money cushion, you can relax a bit more knowing you can cope with the unexpected.
How much money do you save for emergencies? Have you found this to be enough? Tell us in the comments!