Question:
How would you advise people who want to go on sabbaticals / mini breaks but are too afraid to do so?
How do we know when we have “enough” or can “afford” to warrant a short pause on our careers, and what factors should we consider? It’s often not as straightforward as saving $x amount for retirement – so looking for guidance on how to approach calculations. Thanks!
Answer from our CEO, Christopher Tan:
Thank you for participating in this AMA and for your questions.
This is indeed a tough question. But you know at Providend, we always believe that it is important to first make life decisions before making financial decisions that are aligned to your life decisions. In this case, going on a sabbatical or mini break is a life decision and a very important one because, as the Chinese say, “休息是为了走更长远的路” which means if you want to go further, you need to take a break; you need to take a short rest.
Instead of thinking about what will happen to your life, your career, and your finances if you take a short break, think about what will happen if you don’t. Things will most likely get a lot worse. So, think of the sabbatical as an investment in a better tomorrow.
Of course, after you have made this important life decision, you now need to make wise financial decisions to support your life decision.
- If you have saved up a decent sum of money (cash) already, then use this money to fund your sabbatical. It may mean that your savings will go down. It may mean that it will affect your savings for retirement a bit, but it is not going to be disastrous. And like I said, you are making an investment, an investment in a better future because “you can go further” and likely do better in every area of life.
- If you do not have sufficient cash, you may want to see if you can raise cash from some of your investments. This may seem unwise, but nothing is unwise if it is to protect your mental health.
- Of course, if taking a sabbatical is not so urgent now, then you may want to plan towards it by saving towards an amount that is enough for you to take the “no-pay break.” So, if you plan to take a break for 3 months, then you may want to provide for another 3 months’ buffer by saving up to 6 months of pay loss.
Remember, you have a long road ahead. 10, 20 years down the road, when you look back, you will realise that the financial impact you “suffered” for taking that few months’ break is so small compared to all the benefits you will gain from the break.
I hope the above helps and all the best.
Go for that break. You deserve it!
Our CEO and Founder, Chris, noticed interest and questions on the SingaporeFI subreddit for some time and had the opportunity to conduct an “Ask Me Anything” (AMA) session in October 2023. The above question was selected from the list of many questions that were asked.
If you are interested in viewing the full Reddit list of questions, you can visit this link.
Christopher Tan, is Chief Executive Officer of Providend Ltd, Southeast Asia’s first fee-only comprehensive wealth advisory firm and author of the book “Money Wisdom: Simple Truths for Financial Wellness“. He is also a Certified Ikigai Tribe Coach.
For more related resources, check out:
1. To Live the Good Life, Make Life Decision First Before Wealth Decisions
2. The Providend Conversation: Living the Good Life with Jeshua Soh (Part 1)
3. The Smallest Paycheck That Will Keep You on Track for Retirement
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