Money Moments: 3 tips for planning an extended leave of absence
Before taking a break from your everyday income, take these steps to protect your finances.
At some point, you may need to take an extended leave of absence from your job. Whether it’s for parental leave or a book-writing sabbatical, consider these things beforehand to help maintain financial peace of mind while you’re away.
1. Try to hold off on taking a non-emergency extended leave of absence until you can afford it
Planning an extended leave of absence? Make sure you’ve saved enough money to fund all the required aspects of your leave. Tapping into your retirement accounts or maxing out your credit cards during a sabbatical or other non-emergency could have significant long-term financial ramifications.
If you don’t have enough money now, work with your personal banker to come up with a plan to save. With some dedication and financial discipline, you’ll be there before you know it.
2. Collaborate with human resources
Your job is your financial livelihood, so maintaining good relations with your employer is paramount. As soon as your need or desire for an extended leave is on your radar, approach your company’s HR person. If you work for a smaller company, go directly to your supervisor or boss.
Broach the topic respectfully, as leaves of absence often create understandable administrative headaches. Explain your wish to start the conversation early so that sufficient planning can take place. Ask what you can do to help the company prepare for your absence.
If you are collaborative before your leave, your entry back into work after your leave will likely be much smoother.
3. Get financially organized
It’s essential to get a crystal-clear picture from your employer about possible compensation and coverage during your leave of absence:
With those questions answered, take a realistic look at how much money you’ll be spending during your leave:
Carefully think through – and plan for – your extended leave from start to finish.
It’s important to understand if and how the federal Family Medical Leave Act (FMLA) will affect your extended leave. Key to know: not everyone qualifies for FMLA. Only government institutions and companies with 50 or more employees within 75 miles of your workplace are required by law to grant FMLA leave. Further, you need to have been employed by your company for 12 months or more. That said, be sure to research your state’s laws, as some require employers to provide paid leave beyond FMLA.
Taking an unexpected leave of absence? Consider a small personal loan to help cover cash flow gaps.