Willing to quit your Nine-to-Five routine job?
Several people want to quit their shift job, either to enjoy things in life which they have always wanted to do, or to start their own enterprise. Choices such as a long vacation with the family, pursuing higher studies, babysitting during their kids in initial years, starting your own business or taking care of your aging parents, are difficult to do while continuing your job. So, your choice should depend on your priorities. And if your priority is to discontinue your day job, then there are a lot of things which you need to set up before you quit.
The period of a career break cannot be defined as it is an individual decision completely. Some may prefer for a short break while some may need a long break as in one or two years. Planning this much is never enough, apart from the time period you need to analyse your potential expenses, and then you need to plan your finances accordingly.
Your planning is very important before the final call. This will help you live a comfortable life without any compromise in the future.
How to Plan your Finances before you take a Break?
Estimate your Expenses
The first step towards planning your finances starts with analyzing your expenses. Calculate your approximate expenses for the time period for which you are taking the break.
Suppose you are taking a break for higher education, then your tuition fee and living expenses are the only one where you are going to spend, you can leave the miscellaneous one here. However, if you take a long break you need to plan for many more things. Your expenses will vary based on your responsibilities, and if you have a family dependent on you, then you need to be much more careful.
Plan for Emergencies
Unexpected emergencies and unforeseen circumstances like accidents, health issues or the need to travel urgently can come at any time. You need to be well prepared for all of these. The fact is we can’t see the future so, we don’t know what kind of emergencies are going to come and how much they can cost. So, for being on the safe side, you need to plan for such which means you need to save for emergencies. If you have a family dependent on you, your emergency fund should be more. In case you are single, then you can plan with less emergency funds.
Have Insurance & Policies before you take a Break
Insurances & policies provide cover to you and your loved ones.
So, if you are planning to take a break from your job, have insurances such as life insurance, term insurance, health insurance, and car insurance. Once you have these insurances or even some of it, you can be relaxed.
Suppose you quit your job and at the same time your parents are diagnosed with a major disease. What will you do then? How will you bear the medical expenses if you don’t have enough funds? There will be no other option for you rather than getting back to your job or starting a new job. Having health insurance or term insurance can make things much easier, and you will not have to bother about money in such a situation.
Make Investments before you Quit
If you are planning to take a break in the future, you should have adequate investments made in the past to bear your future expenses.
Compared to keeping money in the savings account investing them can earn you more money. FD/RDs are the common investment options which can be used to invest and grow money. However, for getting higher returns with a minimal of risk low-duration debt funds without any lock-in period, shares, mutual funds or mutual fund SIP can be the best option.
Investing in SIP helps you save money systematically every month, which can give you higher returns in the future. The best part regarding SIP is investment can be started with a minimum amount of ₹500.
Following the above-mentioned points will help you to prepare yourself financially for the break.
When planning to go on a long break, the best thing will be drawing a rough sketch of the monthly income from all your investments and it is equally important to analyse your total savings. During the break, you can stop your long-term investments, and start using the returns of your investments. Before taking the break you must get prepared for the worst, buying term and health policies are very important.