How to Use Money as a Tool for Burnout
Last year nearly half of female employees reported feeling burnt out.đ„đ”
Women are feeling burnt out from personal expectations, a lack of resources, and outside stigmas that make it challenging to put mental health first.
Some women have felt so burnt out that leaving the workforce was what they needed to do. 2 million women left the workforce between February 2020 and January 2022.
Prioritizing your mental well-being is vital to your overall health and has a direct impact on your personal and professional life.
While you might feel that taking a career break isnât something you want to do, it canât hurt to plan for one as life can be unexpected.
We will review what steps you can take to financially prepare to take time off work (whether your company pays for it, or you will take a career break).
Identify why you might need to take time off
So why exactly might you want to take time off work? It could be for various reasons, some women have taken career breaks for:
To process the loss of loved ones
To recover from overworking or toxic workplaces
To care for loved ones (kids, your partner, elderly family members)
To travel
To pursue additional education
To focus on themselves
To pursue personal growth or passion projects
Itâs also important to think about how long you might want to leave the workforce. There is no wrong or right answer, just what will work best for you and your finances.
Some women will take a few weeks, others have the means to take a year or longer!
Research your options for your time off
Before considering taking a break it is important to know what options are available to you.
Some companies have sabbatical policies! You can take a break from work, and come back based on the policy. Typically it is based on your tenure at the company and is an amazing perk if available. The policy will usually outline how you become eligible, the duration of the sabbatical, and the benefits you retain during your break. Reach out to your HR department to see if this is an option for you.
If your company does not have a policy in place, you want to evaluate your healthcare coverage options while you take a break. Additionally, understand your retirement savings and any other benefits you might be losing by leaving your job.
The last consideration would be to see if you could potentially negotiate a leave of absence with your employer (if you wish to return). You could also see if they have an option where you could reduce your number of hours. Again it is important to understand what benefits you may or may not have by doing so.
Assess your current financial situation
Once youâve determined the best way for you to take a career break, you need to understand your financial situation to see when you can actually take one.
You need to understand your expenses, income, savings, and debts to determine when and for how long you can take a break.
Review your expenses by taking a look at your last 3-6 months of spending to get a clear picture of exactly how much youâre spending, saving, and investing.
Find areas where you can cut back spending (for now) to help lower your cost of living and increase your savings rate. (Your savings rate is the amount of money you save divided by your gross monthly income multiplied by 100 to get a percentage).
Get creative and think about how you can cut back on both small and large expensesâmaybe you sublease your apartment and stay with family during this time.
In the Wealth Circle, we call this lifestyle analysisâand we have a tool that helps you easily see where your money is going each month and identify areas where you can cut.
Set a budget
After reviewing your current financial situation and figuring out how long you can afford to take a break from work, create a budget.
You want to do this by determining your average monthly cost of living and multiply that by the amount of time you plan to take off. Really cut down on those unnecessary expenses and prioritize the essentials you determined above when you assessed your financial situation.
Once you have this calculated, you'll need to either save enough to cover these costs or confirm with a partner/spouse/family member/etc. that they're comfortable supporting you financially during this time.
Create an emergency fund
This one is a must whether you're planning to take time off or not, but is especially important when planning for a period of lower to no income.
This number will look different for everyone depending on things like your cost of living and risk tolerance, but a typical emergency fund is 3 - 6 months of living expensesâstored in an account that's easily accessible like a high-yield savings account.
A high-yield savings account (HYSA) is just like a regular savings account but gives you a higher interest rate on the money you store there. To find an HYSA you can google âbest HYSA the month and yearâ. Nerdwallet typically has a good list of recommendations and will show you the pros/cons to each bank as well as the APY on the HYSA.
Hereâs an example for the best from April 2023 per Nerdwallet.
One last important note about your emergency fundâif you plan to take a break for longer, it could be wise to go beyond the 6 months of living expenses, this will really depend on your comfort level.
Pay off high-interest debts
While you continue to save up for your break from work, it is also important to pay off high-interest debts, think consumer debt or credit cards. Anything with an interest rate of about 8% is considered high interest. Try to prioritize paying this debt off before your break if possible. This will give you more peace of mind, more financial flexibility, and less stress when you are on your sabbatical.
Consider alternative sources of income
If you're able to take a true break, amazing! But it doesn't hurt to have a backup plan and alternative sources of income to not have to rush your break from work.
Leverage your skills
Consider using your skills to generate additional income while you take a break. We arenât talking about a full-time job, but maybe something part-time or a passion project to help you get by.
Here are some ideas:
Work as a contractor or consultant in your field and set your own hours
Start a side hustle
Get a part-time job
Leverage your assets
Maybe you donât desire to work at all and have other assets to leverage like a property or investment accounts.
Consider renting out your home, either part of it or all of it if you plan to travel. You can use the profits to offset your living expenses.
Sell a property. If you have an investment property, or no longer want to live in your primary residence, you could consider selling and take the proceeds to help you get by during your time off
Sell off some of your stock market portfolios in your brokerage account. If you have funds to spare in this type of account. Be sure to understand all the tax implications of doing so.
Take out a HELOC. If youâre a homeowner, you could take out a Home Equity Line of Credit or HELOC. This is a line of credit secured by your home that gives you a credit line to use for large expenses. Think of it as a credit card for your home.
Open a Liquidity Line of Credit. This is a loan that allows you to borrow against your brokerage account. Interest rates can be locked in for a certain amount of time, but can become variable after that fixed period.
Sell off another asset. Be it a car, jewelry, art, crypto, or something else you no longer need. This can help bolster the cash you have on hand to get by.
Make it Count
By taking these steps and creating financial stability before taking time off work, you'll be able to take the break you truly need, without stressing about money.
But you want to be sure to make it count. Determine what exactly you want to accomplish with your career break. Consider setting specific goals for your sabbatical and checking in with yourself weekly to make sure you are getting the most out of this time off.
Some ideas include personal growth, travel, education, research, and spending more time with friends or family.
Prepare for your return to work
The last important thing to think about is if you plan to return to work in some capacity.
If returning to your old role since your company offered a sabbatical or leave of absence, truly evaluate if the role is still right for you. Also, consider that there may have been changes since you left. Connect with your old colleagues and manager before you get back to work to ensure a smooth transition.
If you left your old job completely, be sure to give yourself plenty of time to search for a new role. Keep in mind this can take a while depending on your field and experience level! While on sabbatical connect with your network and tell them what you are looking for and you are open to work. Also, update your resume so you can apply to jobs that are interesting to you while on your leave of absence.
Want to learn more?
Check out this episode of the Coffee & Coin podcast: How to Use Money as a Tool for Burnout.
Two Factora Members open up about how they set up their investment strategies to:
Take a step back from their careers
Destress and heal from burnout
Put their mental health first
Create space to live more intentional lives
Each approached it completely differently and for different reasons. Once needed time to grieve, the other needed time after a high-stress job. Each has creatively used their assets and talents to bring in some additional income while they left the workforce. And both had different end goals for their time away.