How Moms Can Budget for a Career Break, According to Financial Experts
Two finance experts share the basics of budgeting and saving to help ensure you’re financially prepared to pause your career.
What is a Career Break for Moms?
A career break can be many things, from an opportunity to relish family life to a chance to reset priorities, and essentially anything in between. For many women in the Mother Untitled community, pressing pause on a career offers an added benefit–the clarity, confidence, and time they need to pursue their next calling. All across our community, mothers have leveraged their career breaks to launch new businesses, gain skills for new careers, hatch plans for creative projects, and so much more.
“Taking time off from your career to stay home with kids is more normalized than ever before,” says Kate Hutson, a career coach with Shattered Glass Coaching. In fact, the cultural narrative around career breaks has experienced such a significant about-face that a 2022 LinkedIn survey found 62% of professionals had paused their careers at some point, while another 35% were considering a break.¹ But dreaming of a career break and knowing the logistics needed to confidently take the leap are two very different things.
To help get you started, we tapped two finance experts to guide you in taking the very first steps—budgeting and saving to ensure you’re financially prepared to pause your career.
Meet the Experts
Diana G. Yáñez: Certified Financial Planner practitioner.
Raya Reeves: Personal finance coach and the founder of City Girl Savings.
How Do I Determine if I Can Afford a Career Break?
The first step to planning financially for a career break is to understand your cash flow and cash cushion, says Diana G. Yáñez, a CERTIFIED FINANCIAL PLANNER™️ practitioner. Diana encourages her clients to track expenses by categorizing their spending into three buckets: must-haves, goals, and fun & enjoyment. Take note of all your major expenses, such as groceries, tuition, and children’s activities, as well as the one-time purchases, such as car registration and life insurance. If you need help getting started, Diana suggests reviewing your credit card statements from the prior year, as they often summarize how much you’ve spent on expenses like travel, gas, and food.
“Having expenses grounded in reality will make it easier for you to relax knowing that you planned for your real life and not an imaginary one,” Diana adds.
Once you understand your cash flow, you’ll be perfectly positioned to make adjustments as needed, whether that’s moving to a smaller home for a lower mortgage payment, or cooking at home more, says Diana.
When planning for your career break, she also recommends building an emergency fund to cover unexpected expenses, like medical bills, car repairs, or emergency trips to visit far-flung family. “When you know your average expenses, then work toward building a six-month reserve, especially if you are transitioning to a one-income household,” she says.
How Much Money Do I Need for a Career Break?
Once you have a firm understanding of your expenses, you can determine how many months of expenses to have saved for your career break, says Raya Reaves, a personal finance coach and the founder of City Girl Savings.
“If your monthly household expenses total $5,000 and you’re looking to take a break for six months, you’ll need $30,000 to cover your expenses during the six-month break,” she says, noting that you may choose to save that money ahead of time or have a plan to bring in income during your break, whether it comes from your partner or a side hustle.
When Should I Start Budgeting for My Career Break?
While everyone’s financial situation will be different, Raya says the sooner you can start planning and saving to press pause on your career, the better. “If you plan to reduce your expenses during the break, start ahead of time,” she notes. “You’ll want to be comfortable during the break, not stressed about cutting back.”
Once you know your savings goal, Raya recommends adjusting your day-to-day budget to help you save as quickly as possible. “If you currently save $1,000 every month and your goal is to have $10,000 saved, it will take you 10 months to reach your goal amount,” she adds. “Use this information to help you plan accordingly.”
To give you a savings boost, Raya suggests looking into a high-yield savings account. “These are savings accounts, often with online banks like Synchrony or Ally, that pay out more in interest than savings accounts at regular banks,” she explains. “Because your money is just sitting there, it may as well earn as much interest as possible!”
Raya also recommends canceling subscriptions you no longer use and reallocating those funds toward savings. To understand where your money is going, she encourages clients to review up to three months of bank statements for unused subscriptions and unnecessary charges.
How to Get Finances in Order When Managing Money Makes Me Anxious
While money looks like math, Diana says the way we spend and save has a lot more to do with psychology. She assures MU readers that most people experience negative feelings about their finances, whether that’s guilt, shame, or anxiety. The first step to diving into money management then is to have compassion for yourself, Diana adds.
“If the thought of looking at your expenses and income feels like it might inspire a panic attack, then slow down… You don’t have to do any of this alone,” she says, noting that a close friend, money coach, or financial therapist may be what you need to guide you.
“Don’t ever feel bad about seeking help,” Raya adds. “There are plenty of resources out there that can offer guidance and support—blogs, podcasts, books, influencers, and more!”
References
¹ LinkedIn Members Can Now Spotlight Career Breaks on Their Profiles. LinkedIn. Accessed 3/26/2023.
