Dear Aunt Sue
I am just about to take a career break for the birth of our first child . We have always been a double income family. Can you please give me some tips on how to manage our finances while I am away from work?
Anne, Mont Albert
Hello Anne
How very exciting for you and your partner. A new baby!! Rightly though, you are planning how to manage your finances while you are away from work. There are so many reasons why someone would have a career break. Maybe as you will be experiencing very soon, you are having a baby and need some time to care for your children, or you’re taking time off to study or travel, or you might be taking a redundancy.
Getting your finances under control will not only reduce stress about money but will also give you time to relax and actually enjoy your time away from work.
Whatever the reason you have for leaving work, your income will be substantially reduced. Therefore, it is important to be prepared for unexpected incidents and unforeseen circumstances.
First you need to ask yourself a few questions – how long do you intend to be on break? How much money will you need during your break? Do you want to spend your savings, or use your credit card? (wisely). Do you have the right insurance covers and emergency funds to cover you and your family? Planning will help you feel confident and will understand the adjustments you need to make.
Here are some awesome strategies to prepare for an impending change in your finances:
1. Get out of debt
Getting out of debt, before you go on your career break should be one of your top priorities!
High interest debts will eat into your savings quicker than anything else. Do whatever you can to pay off as much debt as possible before you go on leave, especially credit cards.
Consider ways to supplement your income now, while you’re still employed so you have more time to get out of debt
2. Revisit your budget
If you know that you will be taking a break in your career soon – you need to plan and make a household budget now. If your current budget was written with dual-income in mind, you will need to go back and analyse your goals knowing that you will be surviving on a single income.
Trim out all of the excess things in your life.
Do you really need unlimited data on your home internet plan or can you survive with much less?
Do you have Foxtel, Netflix, and other subscription plans? Figure out which subscription plan you use the most, and cancel the rest. Or even consider downgrading the plans you already have.
Do you normally shop at major supermarket chains? Make a list of all your household essentials and compare the prices against budget grocery stores. Most people find that buying in bulk or from discount stores can save them hundreds to thousands per year!
3. Fatten up your emergency fund like a Christmas ham!
Most finance experts would recommend always having at least six months of living expenses stuffed away into your mattress or the bank. But in today’s economy, and knowing that you’re planning a career bank – it would be wise to have enough stashed away for eight months.
Keep in mind that cars break down, mould can grow in wet places like the bathroom, you might develop a gluten intolerance and need to buy more expensive gluten-free groceries.
If you start now, then you can add as much to your emergency fund as possible to best prepare yourself for the future.
4. Sell or rent your non-essentials
In a world that revolves around the internet, it has become so easy to find someone who will absolutely adore your neon beer maid sign that has been gathering dust in your garage.
Have a look into buyer to seller websites such as Gumtree or eBay to sell most of your nonessential goods.
Do you have a spare room in your home, or an empty granny flat in your backyard, or even a holiday home? Have a look into Airbnb, on this platform you can set your own prices and rent out your spaces – creating your very own bed and breakfast!
Do you have a second car that is insured and less than seven years old? Consider using it for Uber or renting it out to someone to drive and splitting the profits. Uber drivers set their own daily hours and receive a commission for each fare.
Are you good at crafts? Have a look into Etsy to sell your little bits and pieces.
Have a knack for design and Photoshop? Consider signing up to Redbubble as an artist, upload your designs, set your own commission points and wait for people to buy your artwork!
Leaving or losing your job can be stressful or with good planning, a great break! Just remember that your experience is all up to you! You can look at this time on the break as a financial stressor or a relaxing time out. Plan, be confident in yourself and move forward.
So until next time girls and boys, as always keep those questions coming in by visiting our Contact Us page.
And finally, a quote from Elizabeth Stone Making the decision to have a child is momentous. It is to decide forever to have your heart go walking around outside your body.
Have fun and keep smiling – Aunt Sue
