As we head into spring, you may be looking forward to taking a week or two off work for a trip to warmer climates or a great adventure.
But what about taking a longer break – perhaps a few months, or even a year?
It’s a popular idea. Research from travel website Opodo found 71 per cent of people would consider taking sabbatical leave if the option was available to them.
Persuading your boss to agree to the idea will be a challenge for many. However, an increasing number of companies in the UK now offer long-term employees a sabbatical as part of their benefits package.
Over 70% of people in the UK would consider taking sabbatical leave, according to Opodo
Sabbatical leave is an extended period of paid or unpaid time away from work, the exact details of which are agreed between the employer and employee.
People often use this as an opportunity to travel, or go on a ‘grown-up gap year’ – but other common pursuits include studying, volunteering or pursuing a side project.
Employers including the NHS, Tesco and HSBC all offer these breaks to people who have worked at the company for a certain amount of time – known as the ‘service requirement’.
But even if your company doesn’t have an official policy, it does not necessarily mean that you can’t take a sabbatical. Ben Reeve, founder of website The Sabbatical Guide, says there are often ways you can negotiate a period off with your employer outside of the formal policies.
‘It’s important to do your prep, and work hard to support the needs of the business as well as your own,’ he tells This is Money over email from his current travels in Australia.
‘For example, when I took my first sabbatical I offered a plan of how to cover my leave – with two of my team stepping up to cover half the role each while I was away, giving the company two new leaders to deploy when I returned.’
But getting sign off from your boss isn’t the only thing you need to think about when planning your dream trip.
Financial planning for a sabbatical is crucial to make sure you can make the mot of your time off without going over budget or having to dip into your savings.
We spoke to wealth planning experts to find out the areas you need to think about when planning your dream trip – and what impact a mid-career break could have on your future finances.
Planning is critical if you want to make the most of your time off and use your holiday allowance effectively
‘A sabbatical could be life-changing but also vastly expensive depending on how you spend your time’, says Anna Stoughton, personal finance analyst at Charles Stanley.
‘The “you only live once” approach is certainly an extremely tempting way to go, and to leave your sabbatical with absolutely no regrets is encouraged.
‘But with a sensible forward-planning hat on, you can also have a lot of fun in your retirement if you plan, invest and save properly in the accumulation phase of your career.
‘So, like many things in life, it’s all about balance. Go for the run, but also enjoy the cake afterwards.’
What you need to consider when planning a sabbatical
1. Time away: How long are you going for and what can you afford?The two come hand in hand. Whilst taking time off work is beneficial for a huge number of reasons, don’t completely overdo it at the expense of your longer-term finances.
Ensure that you have a consistent emergency fund in place – as a loose guide, three to six months’ expenditure is generally recommended- and be ruthless with your budgeting.
2. Impact on your career: You will need to sit down with your employer to thrash out the full details of your time off and what it may mean. Things you should be thinking about include whether the company will guarantee you a job to come back to; the maximum time off you will be given without impacting your current position; and whether the time off would impact any review process or opportunity for promotion.
3. Right to work abroad: If you’re thinking of spending at least part of your sabbatical abroad it is worth exploring your right to work. It may be useful if you want to work remotely or are looking to pick up part-time jobs as you go.
4. Existing holiday allowance: It may also be worth looking at ways you can maximise your existing holiday allowances. Can you accrue holiday to put towards your sabbatical, so you get paid for part of it? Or could you time your trip to straddle two holiday years to utilise more paid time off? It is worth bearing in mind that many firms will have a limit on how many paid holiday days employees can take consecutively.
5. Current financial obligations: Do you have any major debts that need servicing? If this is hanging over you, try to get rid of it before your break. If not, devise a plan to pay back little and often during the time off. At the very least, don’t land in bigger, scarier debt due to your trip.
Similarly if you need to make mortgage payments while you are away, have you budgeted enough to do that on unpaid leave? On the other hand, if you are a tenant can you sub-let your room for the time you are away to cover the rent?
The key thing, says Saltus’ Mike Stimpson, is to think about it in the same way as any other significant spend in your financial plan, and apply the same rules you would for saving and spending.
Funding your trip
There is no right answer to how you fund a trip, says Alexandra Loydon, director and partner at St James’ Place.
She says those taking a sabbatical need to look at the whole trip in the round: how much will it cost, what earnings they will lose now, and what the compounding impact of that over the rest of their working life.
Charles Stanley’s Stoughton warns against using a pension to fund a sabbatical, as it could lead to problems further down the line.
Putting away more everything month can help grow the savings pot for your trip
‘I would suggest using existing savings or investments that are currently in place, but also saving on top – putting away an extra amount each month leading up to your time off where possible,’ she says.
A good starting point for this is to try and squirrel away a bigger chunk of your salary on payday.
If you have sufficient lead-in time (at least five years) and risk appetite, you could consider investing the money you plan to use to pay for your trip, or sourcing a good fixed-rate savings deal, so that your money has all the chance to grow.
It may seem obvious, but costing your trip sensibly and taking advantage of cost-saving options once you’re travelling can also have a big impact on making your money go further.
The Sabbatical Guide’s Reeve suggests opting for trains and buses instead of planes, and trying to eat where the locals do as it’s generally cheaper and still tasty.
Finally, make sure you’ve got a card that doesn’t charge fees for spending or withdrawing cash abroad.
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