Considering a career break? Here are some money-saving tips for you

It is extremely commonplace for Indian women to step out of the workforce when domestic responsibilities like marriage and motherhood kick in. This is no easy feat, especially from a financial perspective. A career break demands immense financial planning and foresight, which can be an extremely challenging and scary process. However, it is not impossible.

So if you are looking to take a sabbatical from work too, here are some tips to help you save up:

A career break can be a period of immense financial uncertainty, so you should start saving up for that phase at least a year or two beforehand.  The best practice here is to plan your career break well in advance and start your emergency fund as early as possible to generate maximum savings

Start by tracking your expenses and taking stock of your existing assets and liabilities. Then, create a separate bank account where the money accumulates so that you don’t feel tempted to overspend it. Ideally, you want to save enough in your emergency fund that you can easily cover all obligatory costs like food, rent, house repairs, salaries for your support staff, etc. for a minimum of 6 months. But if you are the sole earner in your family and you have dependents, it is advised that you save up more than this to account for any unexpected medical bills, etc.

Switch to a sustainable lifestyle: An environmentally friendly life is also a pocket-friendly life if you play your cards right. The smallest of lifestyle changes — like washing your clothes once a week instead of multiple times — can save you a lot of money over time. You can also cut out discretionary expenses like new clothes by restyling the ones you already have. Your local tailor will mend your old kurtas and turn them into t-shirts for a fraction of the price of a new t-shirt. Not only this, you can also make more significant cost-effective changes like switching from private to public transport.

Invest in mutual funds: You may not be working or earning much during your sabbatical, so it is important to make your money work and earn for you in the meantime. Investing in mutual funds is a great way to do this, because it generates higher returns than most conventional investment avenues. They also offer a lot of flexibility in terms of risk and mode of investment. However, make sure to avoid high-risk investments like chit funds and equities driven by the stock market.

For example, you can consider investing in a Systematic Investment Plan (SIP) before your career break because it can help you make more money through simple compounding. Later, when you are on your sabbatical and might need some extra money, convert your SIP into a Systematic Withdrawal Plan (SWP) to bring in some additional funds. Many banks offer savings schemes for women,

Find freelance work: If you are planning to take a long break from your professional life, you should plan ahead and start looking for freelance projects that you can take up during that time. Not only will this help you make some extra cash to sustain your sabbatical, it will also give you a chance to upskill yourself and stay relevant in your industry. Additionally, freelancing offers a lot of flexibility in terms of time commitment and location, which is why it’s a great idea for women who are taking a hiatus from work.

Account for additional costs: It helps to have an idea of what your career break might look like from a finance perspective. Make sure while establishing a budget for your break, you also keep additional unnecessary costs in mind. For example, if you are taking a sabbatical to become a mother, don’t forget about the cost of diapers and baby supplies when planning out your finances. Or if you are taking a break in order to care for a sick family member, then try to budget for unexpected medical costs.