How to Take Work Sabbatical and Stay Afloat Financially

Even the most rewarding careers can be mentally, physically, and emotionally draining. Taking time off for vacations, weekends, and holidays is essential to staying engaged, feeling refreshed, and bringing your best self to your role. But sometimes, employees could benefit from a longer leave of absence, such as a work sabbatical.

Work sabbaticals allow employees to take extended time off work without managing any job responsibilities but knowing they have a role to return to. Sabbaticals are common in education, but some corporations offer sabbatical leave as a way to attract and retain top talent. So how do you take a sabbatical and still pay your bills? You can do it, but it requires planning. Here’s how.

Are sabbaticals paid? Understand paid vs. unpaid sabbatical

Sabbaticals can be paid, partially paid, or unpaid. It all depends on your employer’s policy. If your company offers sabbaticals, the employee handbook or HR department can likely shed light on how they’re paid (full paycheck or a percentage of your paycheck) or whether sabbaticals aren’t paid at all. You should also research how a sabbatical affects benefits such as health insurance.

Company policies differ in more than just pay and benefit structure during sabbaticals. If your company offers sabbatical leave, review its policy on elements such as:

• How often you can take a sabbatical
• How long you need to work before you qualify for a sabbatical
• How long you can take off work for a sabbatical (often from a single month to as much as a year)

How to take an unpaid sabbatical from work and afford it

If your company doesn’t pay you during a sabbatical but you’d still like to take one—to do field research, to write, to travel, to pursue a hobby, to spend time with family, or simply to do nothing at all—you’ll need a solid financial plan to ensure you can afford your way of life. After all, money is important, whether we like it or not.

Here are our best tips to take an unpaid sabbatical from work and still pay your bills:

Save up before your sabbatical

The No. 1 way to take an unpaid sabbatical without affecting your finances is to save up enough money to cover all your expenses before you start your leave. Cut discretionary expenses or start a side gig, and funnel that saved or earned income into a high-yield savings account or certificate of deposit, and don’t touch it until it’s time to start your sabbatical.

How much do you need to save for a sabbatical? That depends on your monthly financial obligations, including your rent or mortgage, car payment, utilities, gas, internet, phone bill, groceries, and insurance. You’ll want to save enough to cover those expenses for each month you take off—and extra cushion, particularly if you pursue an expensive hobby during your sabbatical.

If your employer allows it (or you are self-employed), the first step is to determine the time off you want to take, estimate the monthly expected ongoing expenses that will occur (consider utilities, rent or mortgage, internet, and cellphone), the expected monthly sabbatical-specific expenses (including travel, activities, and food), and calculate a three- to six-month emergency fund to establish or maintain. 

Once you’ve determined this number, begin a savings plan to accumulate the needed funds. If the funds are available in investable assets you want to use, begin to identify which accounts to sell assets to move into cash.

Erin Kinkade, CFP®

Create a tight budget during your sabbatical

Once you’ve saved enough money for a sabbatical, be careful with how you spend it. Make a monthly budget, and cut out all unnecessary expenses, including streaming services and dining out. Only spend on discretionary expenses you’ve accounted for in this budget.

If you notice your funds are dwindling faster than expected midway through your sabbatical, consider tightening your budget more, finding a new revenue source, or arranging to return to work earlier than planned.

Make sure you can cover emergencies

Emergencies are never planned, but they can happen any time—even when you’re on sabbatical. Unexpected medical bills for you, your family, or your pets can throw a wrench in your budget, and emergency home or car repairs can eat away at your savings.

To ensure you can handle such emergency expenses during a sabbatical, consider one or more of the following:

• Have a separate savings fund for emergencies beyond what you’ve saved for a sabbatical.
• Have a high-limit credit card you can rely on, just in case.
• Make sure your credit score is strong before your sabbatical, just in case you need to take out a personal loan for emergencies.
• Apply for a home equity line of credit before your sabbatical so you can draw from it, if needed, during your time off work.

Opt for a shorter sabbatical

If you need time off work to recharge, spend time with family, or pursue a hobby, but you’re worried you won’t have enough money to get you through the full time allowed by your employer, arrange for a shorter sabbatical. If your company offers six months, you can work with HR to take only three months or even a month—still enough to return refreshed, but not enough to drain your savings.

Research grants and fellowships before your sabbatical

If you’re using your time off to do field research, especially if you’re in the education or science field, you might qualify for a grant or fellowship to help cover your costs during your sabbatical. 

If you’re planning to do volunteer work with a nonprofit or in another country, you may be able to find funding from a donor, or you can volunteer through an organization that covers essentials, including housing and food.

Pause savings and investments during the sabbatical

If you’re an avid saver or investor who takes a portion of your paycheck each pay period and puts it into savings or invests it in stocks and bonds, consider halting these healthy habits while your income is paused. You can resume your smart saving practices once you return to work and start collecting a paycheck.

While it is wise to save and invest as often as you can, I also think it’s important to live out your life goals. 

I think a few aspects outweigh savings and investing while taking a sabbatical: if the sabbatical is fairly short (no longer than six months), you’ve established an emergency fund beforehand, and taking a sabbatical will likely reap benefits afterward that will allow you to save and invest (possibly more than you were before!).

Erin Kinkade, CFP®

Rely on passive income during the sabbatical

If you own a rental property, manage a popular website or social channel that earns ad revenue, or license photos online, you might be able to depend on this money during your sabbatical. While these and other sources of passive income may not cover all your expenses, they can inject wiggle room into your budget.

If you plan on taking a sabbatical in five years or more, you could even start investing in a bond ladder, so every month of your sabbatical, you have a bond that matures and results in monthly income.

Consider part-time or contract work during or after your sabbatical

A sabbatical allows you to take time off work to refocus on whatever you’d like, but you may find yourself itching to do something. If so, look for part-time work, perhaps in something you find fulfilling—dog lovers might apply at a pet store, gardeners can look for work at a tree nursery, and people who love being outdoors might find a role with their city’s park service.

If you have a marketable skill, such as photography, graphic design, writing, coding, or teaching, you might be able to pick up contract work as a freelancer. You can choose how little or how much you do during your sabbatical so you can still focus on pursuing passions and allowing your brain to rest.