Don't forget to cancel the milk
Fancy a career break? Jeremy Davies looks at how you can stay in pocket
Sunday 06 September 1998
The first step is to work out how much to save - a process Kate Gill, the chief executive of the Institute of Financial Planning, calls "costing your aspirations".
This means estimating your travel, accommodation and living costs for the whole period you want to be away, and adding in all your commitments at home, such as mortgage payments, pensions and insurance policies. The total you arrive at should help you set a target for how much to set aside each month.
The longer you give yourself to save for your career break, the better. A preparation period of five years or more can allow you to maximise earnings from your savings by investing in unit trusts, PEPs or, after April 1999, individual savings accounts.
For most people, however, a two or three-year plan is more realistic, says Julie Lord, managing director of Cavendish Financial Management in Cardiff, who is a certified financial planner.
"You'll get a good return on your savings and have time to sort things out with your employer, perhaps even to arrange for a return to work when you get back, and to look into how leaving will affect things like health cover, life insurance and your pension situation," she explains.
If you want to get away within a year or less, a building society deposit account in which to stash short-term savings is probably the best bet.
Owning a house or flat commits you to monthly mortgage repayments while you are away, but can also help you fund a career break. Many people find it is possible to cover the mortgage or even generate income by taking in a lodger and/or renting out their home while they are away. Talk to local estate agents and scan the property pages of newspapers to work out a realistic rent.
At some point you will need to tell your employer of your plans. Some people are able to negotiate sabbaticals or return-to-work packages. Others find themselves facing what can feel like professional suicide, says Dr Wendy Hirsh, associate fellow of the Institute for Employment Studies.
Sabbaticals or "preferential reinstatement" mean staff can return to their own job or receive special consideration for other vacancies.
Some blue-chip private employers like Sainsbury's and NatWest allow for career breaks. Other firms may consider deals with individual employees - assuming, that is, they want to keep you. But many employers, a typical example being big City firms, are oblivious to the concept.
Even those that have a formal policy might still have a culture that militates against career breaks.
Dr Hirsh warns: "Just because employers have enabling policies doesn't necessarily mean it's easy for employees to take them up without damaging their careers.'
If you have saved enough for a break and you decide it is worth the risk, there are a few financial details it is sensible to sort out before picking up your passport and jumping on the next plane to paradise (see box).
Whatever you do, don't forget to cancel the milk and newspapers.
career break checklist
You must stop contributing to any personal pensions or freestanding AVCs if your eligible earnings stop. Write to the pension provider to explain your plans and ask for a contribution holiday. Remember any life insurance linked to the pension will also stop.
Check the conditions of any income-protection policies you hold. Some packages will allow you to take an extended break, but certain policies, such as critical illness insurance, can be invalidated if, for example, you travel into a war zone.
If you have any savings you are unlikely to need while away, you may want to transfer them into longer-notice accounts earning higher interest rates.
Make or update your will and arrange for someone at home to act on your behalf where financial matters are concerned.
Inform your local tax office of your plans. If you will have a proper address while away, give it to it. Remember you will face a fine if you are liable for tax but fail to fill in the necessary forms. Tax forms IR20, IRSB and IR140 summarise the tax situation for people travelling and working abroad.
Think about how you want to carry your money while abroad. Travellers' cheques might be the safe choice, but a debit or credit card might be more convenient. Talk to your bank about the various options.
If you are planning to be in one place for a long time, you may even want to set up an offshore banking facility.
Thanks to Frank Kionowski, a certified financial planner in Leeds.
taking a mortgage holiday
Flexible mortgages allow you to repay your loan at your own rate by increasing your monthly repayments or adding in lump sums as you go along. You can use the loan as an overdraft and, once you have built up sufficient capital, miss payments altogether. Payment holidays may be limited to six months. Most lenders offer only a variable rate flexi-mortgage, but some have a fixed option.
Flexible mortgage lenders include Bank of Scotland, John Charcol, Legal and General, Market Harborough Building Society, Mortgage Express, Mortgage Trust, Scottish Widows, Royal Bank of Scotland, Virgin and Woolwich Direct.
Thanks to Ray Boulger, manager at John Charcol mortgage advisers.
- 1 Revolutionary lost Caravaggio painting 'Mary Magdalen in Ecstasy' identified
- 2 McKamey Manor: This 'extreme' haunted house is the stuff of nightmares
- 3 Russell Brand says he will 'probably' give up acting to focus on his revolution
- 4 Watch what happened when food critics were unknowingly served McDonald's
- 5 David Beckham's Haig Club whisky is exactly what’s wrong with the Highlands
Eleven members of same family hospitalised after eating deadly pufferfish
Phone-hacking: The Piers Morgan connection - Mirror admits some stories during Morgan's tenure may have been obtained by illegal means
Tony Blair 'says Ed Miliband will lose 2015 general election'
Russell Brand says he will 'probably' give up acting to focus on his revolution
McKamey Manor: This 'extreme' haunted house is the stuff of nightmares
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Tony Blair 'says Ed Miliband will lose 2015 general election'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Putin: The US is to blame for almost all the world's major conflicts
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...