Welcome to Taking a Career Break with Katrina McGee, the show for high achievers who are feeling burned out or unfulfilled.
Hi there, I'm Katrina, your career break and sabbatical coach and author of the best-selling Taking a Career Break for Dummies.
And I'm James Hammond, your podcast host and producer. Are you ready to take a life-changing break that leads to a happier, healthier and more fulfilling life?You're in the right place.
I'm going to break down my proven framework that's helped nearly 100 clients achieve transformative breaks.Are you ready to change your life?Let's go!
Welcome to episode 4 and this week we are talking budgets.Katrina gives us some insights and tips into what to prepare for, for your budget, for your career break, how much you need, what she did twice,
and I throw in some anecdotes from my own personal experiences too.So a great episode, lots to take away.Let's get stuck in.Add your number, then brackets, and my notes here have got ad hoc, ongoing maintenance, buffer for emergencies.
This is quite important, right?
Hmm, yes.This is how my number went from 20k to 38k, right?Because I am as an actuary by training, I was an actuary for eight years, I like to de-risk, right?
And part of de-risking is being conservative with your estimate so that when life happens, like you drop your phone and freaking break your phone screen and you're without a phone and you might have to buy a new phone, not that I would know anything about that.
But when events like that happen, you want to be prepared.You don't want this to ruin your whole break.I mean, oh my gosh, can you imagine?
And if you're somewhere in a foreign country, and you have a health issue, or something breaks, or something gets stolen, and you have to replace it, or for some reason, somebody is sick, and you have to fly back at the last minute, which did actually happen to me on my break.
Luckily, I used some points for that.But I, you know, I would have had to come back regardless. you want to think about the different ways that you need to pad this number.So you have the estimate, right?You've thought about, am I slow traveling?
When am I fast traveling?You've thought about, you know, the various activities you want to do.If you're signing up for a retreat, if you are taking classes, if you're spending, you know, gas money to do a road trip,
When you've thought about those, you've thought about, you know, the different investments you want to pour into personal development, things like that.It's time to add the extras.So think about an emergency fund.
Given your life circumstances and the cost of living, how much money do you want to have aside for true emergencies? This is not your, like, oh my gosh, in the best case scenario, I have, you know, $55,000 in an emergency fund.
Like, great if you do, but I'm talking at a bare minimum.If stuff gets crazy, can you meet your copay?Can you meet your out-of-pocket deductible?Like, do you have money for a plane ticket home if the worst thing happens, right?
Thinking about that true emergency fund, whatever your comfort zone is, thinking about rounding numbers up.So that was something I did a lot of.So I had estimates for things.And if I was unsure, like what you just talked about, right?
Like I've never traveled like this before.And I'm not quite sure.I would always round it up to like the nearest thousand or add an extra thousand in just so in case I was wrong, there was extra money around.
You want to think about what expenses you're going to have.So ongoing maintenance, Think about, you know, are there insurances?Like, is it car insurance?Is it life insurance?Is it health insurance?
Maybe you are still paying some kind of rent or maybe you have a storage unit and you're paying to store your stuff.But thinking about those ongoing maintenance
expenses that you're going to have and making sure that your budget has now included those, right?
So even if it's something like I get my hair cut and it's $200 and I do that once every six months or once a year, making sure that things like that are included.So thinking about the regular parts of your life,
that are going to follow you right into this new chapter.
If you're going to get your teeth cleaned at the dentist and that costs something, right, you want to be thinking about your daily life on top of, you know, your career break life and making sure you've expanded that number to include that.
And the other thing is, you know, Some of my clients, most of them know I did not do this, but some of my clients want to continue making investments, right?
So if you have money that you want to put into your 401k or continue investing in some way, if that's something that's really important to you, you're going to have to budget for that as well and essentially incorporate that in there.
So those are all things that you want to be thinking about. Also, I will add for myself, I owned a townhouse that I was renting out.
So it was important for me to have an emergency for me buffer, but then to have a secondary emergency for this house that I own with people who depend on me to fix stuff budget. And that was like a whole separate thing.So that was $5,000.
My true emergency, I think, was $5,000.But I needed money to replace the HVAC if it broke or to just fix whatever was going on.
So I highly encourage you to think about the things you need to plus up in your budget so that you are prepared for life to be lifing.Now, the one thing I'll end with on this is it doesn't mean that you're going to need to spend it.
My original break was a 12-month break. My actual break was a 20-month break.The difference, all that rounding up, meets a person who was very intentional and thoughtful about how she was spending her money through her whole break.
And I had a lot more money than I thought at the end of a year, and I said, you know what?I could go back, or I could keep going.And of course, I chose to keep going, because why wouldn't I?
And I spent all of it except for my emergency fund, and then decided to get a job.But I just want you to know, you're just preparing yourself, but it doesn't actually mean that you'll need it.
So interesting.I think last year was a lesson for me in terms of budget.And we did have a startup fund again, if you like, maybe like to cover deposit for rent, bills, bit of car stuff.But
But looking back, I think I'd have a few more pots on the go, and you mentioned them already.I would have the travel pot exclusively for travel.I'd also have a pot for finding a job.That'd be a separate thing as well.
That could be going into your freelance ideas, self-employment, business, whatever you're thinking. I'd also have another pot to get set up if you're renting or don't have anywhere to live and resettling again.
That could be in the storage unit in there as well.So I'd have these different pots, which I didn't set up last year and I should have done.But on reflection, you're right.You've got these little pots and stick to them.I think that's key.
The key word here I keep hearing is discipline.If you're disciplined in your spending and to your structure and to your rules about what each pot is for, then you should be okay, right?
But we are human and we do want a pair of sunglasses sometimes, or we do want to go out for an expensive pass in Italy, you are going to sometimes dip into other budgets, aren't you?Or credit cards maybe as well, or debt.
James, I'm so grateful for you, buddy.Like you've pointed out three really important things that I feel like I kind of glossed over.And so thank you.And I just want to like give you kudos.
And I want to go through each one and just underscore them for the audience.Okay.Yeah.So number one, you talked about separating that those buckets of money. You don't have to do it, but I highly recommend that you do for the reason that you said.
So I didn't explicitly say this.I believe it's outlined better in the book, right?Like where I have more time and go into like lots of detail.But for me personally, I did have a travel bucket.I did have an ongoing life maintenance bucket.
I had this emergency fund bucket and I had my townhouse bucket. so that I was always aware that these things that had very specific reasons for existing were still there for those specific reasons, right?
So that I wasn't accidentally spending emergency money on travel and then realizing it way too late.So to the point of you don't have to break it down into like 25 different buckets,
but truly understanding those separate seasons of your break or those big different purposes that you've got.
I think it's very helpful to be in control of your money and to see what's happening in case you have to end early or in case you want to keep going.So that's number one.So thank you for pointing that out.
Number two, I also didn't explicitly say this, but this is key. Part of the plan when you're setting your break and creating that estimate needs to be setting money aside for your re-entry period, which is what you talked about.Absolutely, right?
I go into that in a whole entire section in the book, how to set up an account time and money for your re-entry period.But absolutely, you can't come in hot from a break and try to be finding a job the next day.It's
Catastrophic setting yourself up for just a huge disaster emotionally, logistically.Good luck to you getting a job with that desperate energy like wreaking off of you.So I just want to like underscore that like 14 times.
Thank you so much for bringing it back to that.Part of your budget does need to include that re-entry period, right?It can be the original estimate that we talked about, or maybe it's a whole separate thing, but you need that money.
And the last thing, you said a word, and I'm gonna offer a different word, but the same sort of intention behind it.So you said discipline.And yes, discipline.
But for some people that can feel really restrictive, like deprivation, like, God, I'm on this budget and I can't do what I want.You can do anything you want to with intention.
So what I mean when I say that is that your consciousness, you're aware, and you're making a decision that's in alignment with what you really want and what's best for you.So to your point, right?
If there's some extra amazing thing that you want to do, intention is, okay, that's outside of my budget, but I have this other pot of money or I have underspent in these other ways.I'm going to redirect those funds for this and justify it that way.
Or I'm at my budget.I'm going to invest in this you know, $1,500 retreat, but now I'm going to cancel those hotels, I'm going to downgrade to a hostel or a homestay to like make up this difference.
You can do anything you want to do if you do it with intention.And that is the thing, right?Be aware, be tracking it, be keeping up to date with what's going on.
And you can make any decision, but make an empowered decision that is conscious, where you're sacrificing and trading things off, and you know that you're doing it, and you're doing it for a reason that is meaningful and valuable to you.
So thank you for bringing me back to all of that, James.
No, it's key.And also, this comes from a bit of experience from me.This might stress you out, and it might stress the listeners out.But I have literally gone on a break, so a travel break, if you like, and spent all my money with no backup.
I've done that two or three times and let me tell you that is stressful.Little tangent here don't you think about this but uh some people will tell you I've got no money.
Now that does annoy me that because that has different levels for different people.Someone might say, I've got no money, but actually they got 20 grand for like a house deposit in an account somewhere.
So I'm like, in my mind, Oh yeah, I've got money.It's just over there.My eyes, no money means literally nothing.And you're relying on probably debt, which is like a credit card to get yourself out of it.I've done that so many times.
that those days and that phase is over.I can't do that again.Even this year trip was a bit close for that, too close for my liking, right?But we got through it and I would never do that again.
But it's key to come round to that because I think it's easy just to jump ship and go and, you know, I've done it.It's exciting, but it can get stressful at the end.
Yeah, absolutely.I mean, I, like I said, I went all the way down to my emergency fund.
And even that was stressful because, you know, then I needed like first month's rent, a deposit, all these things that you have to pay up front, even when you do have a job while you're waiting for that first paycheck to come.
So for me, that was kind of like my red line number where I knew at that point, I basically just had the money for a true emergency and to set myself up for the next, you know, like the next stage of life.
So that even felt to me like I was running pretty hot on that, like running pretty close.
Yeah, I think the next topic and probably the last one to end this episode is we're discussing all these things, you put plans in place, budgeting things out, etc, etc.But the question is, can you afford a break?
That's a good question to ask yourself, isn't it?
So it's a great question.And I'm going to offer that you shouldn't trust your first answer.So really consider the question.If you're listening to this and you're like, Oh, my God, I couldn't even afford that.But you have
lots of money in investments and savings in your emergency fund.In different pockets, you find lots of money that you're diverting.
I want to offer a reframe about what it means to afford a break because I have so many clients or people that come to me and say, I don't know if I could even afford to take one and they absolutely can.
But it's reframing this expense as an investment, as an investment in you, your well-being, and honestly, your happiness and your fulfillment.Let's just be real, right?You've been grinding it out. You've been working really hard.
You keep siphoning the money to all the places that good, smart people siphon it to.But in the meantime, a lot of times we're preparing to live the worst case scenario of life.
Like, what if I got really sick and then I couldn't work and I couldn't do these things?It's important, right?It is important to be prepared.
But I've seen people spend their whole life being prepared for the worst case scenario, and that is the only experience that they actually put their energy into.And therefore, where is the joy?Where is the fun?
Where is the investment in the well-being and the happiness and the fulfillment?So think about how much money you're spending on vacations, plane tickets, right?A couple thousand every pop, especially if you have a significant other.
And then some of my clients have kids, like, oh my gosh, that expense. Think about how much money you're spending on a new car when your car breaks down, or you decide this car is like six years old, it's time to get a new one, it's time to upgrade.
Think about weddings, right?Tens of thousands of dollars.Think about hundreds of thousands of dollars in your education, in your home.You're investing a lot of money in a lot of things.And some of them are very meaningful.
But your wellbeing should be at the top of that list. And it's not.It's not.But for a lot of us, it's not.And so I offer, when you think about, can I afford a break, really consider, can I afford to invest in my well-being?
And if the answer is no, that was my case.I had $1,500 in my bank account and tens of thousands of dollars worth of MBA student loans. I went on to save $40,000 in 18 months because I needed that money.I had my budget, right?
I did the thing that we talked about, estimating that cost and padding it out.But if you have access to the money, think about what's really at risk if you don't take a break and view it as this investment, as improving your life,
Not just for now, not just for the break, but for the whole rest of your life.What if the whole rest of your life felt more peaceful?You weren't burnt out.You were doing a whole new career that you love, that brought you joy.
You weren't in a toxic environment.You weren't feeling bored out and uninspired.You were feeling excited.You were creating something new.And what if you weren't spending all your money on self-soothing behaviors?
to make yourself feel better about the fact that you hate where you're at, or you're bored out of your mind, or you're just super burnt out?And what if you weren't spending it on a bunch of healthcare supplements?
I have some clients that spend hundreds of dollars on supplements, because they're in adrenal fatigue, or, you know, like they're experiencing some symptoms. that they can't address because they don't have time.
So I really urge you to sit with that question in a new light.And if you can't, truly can't afford a break, great, start saving.And we can talk about this, but it's also a whole entire section of my book.How did I save $40,000 in 18 months?
Taking a career break for dummies.You will find it in there.
Yeah, and I'm sure an episode we'll do will be on that, or different sections in that chapter.I'm sure we'll get around to that later in the series.
And I just want to say that I think a lot of what I find, and especially with you who worked in corporate before, I've never really worked in corporate in a hardcore environment, so I can't really relate, but I've worked in jobs that have been tough.
is that a lot of people put a lot of investment and money and time into tangible things, but also to later in life.I think where my biggest worry for people right here today is they don't ask the question, well, what do I want to do now?
Because who can guarantee in 30 years you're going to be able to enjoy it, you're going to be tired. You're probably going to be just want to sit in your house and that's fine.That's what you should be doing at 60 or 70.
And if you're thinking you're going to travel the world, then that's a big problem because you're not going to be as young or energetic.And I think you'll be even more tired, especially if you work 40, 50 years in a corporate career.
That's going to burn you out even 10, 20 times what we're talking about today.If you're sort of similar to us and you've been working 20 years already, imagine 20 years time.Crikey.
Right, James?Cranky.Exactly.And you know, I'm 44.I took my break when I was 32.I didn't feel like I was super young at 32.
But in hindsight, the way I traveled, the like energy level, I have the ability I had to stay in hostels and be completely fine with that.Like so much has changed in my physical self and how I can navigate travel.
I'm so grateful I did it the way that I did it then.Right?Because now I would have to do it differently.
Yeah, and imagine if you can separate what you think you need, which is probably the bills, the house costs, the vacations, the weddings, all the stuff we listed earlier, to what you actually want.
That's a big question, because if you start answering that question honestly, and not what you think you should be answering, I reckon you might find out a lot of new things you're going to learn about yourself and also the environment that you're in currently.
Amen.Well said, James.Look at you being the best co-host.We make a good pair.
Is that a good way to end the episode?
Okay.So yeah, get thinking.Can you afford it?Do you want it?Put plans in place.Budgets.Do you want a little plan?A little spreadsheet?And then, yeah, I think it's good to draw a plan, right?
You can then put things in place, draw it up, have some goals, some dates.Yeah.It's a good episode to really get thinking about that.
Okay, and we'll see you next time on the next episode, which I think is going to be anecdotes about creating a more desirable lifestyle.So a bit more friendly, anecdotal story vibe in the next one.And I think we've got a few stories each as well.
We can add to that.Yeah, looking forward to the next episode.
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