This is a guest column from travel and personal growth enthusiast, Lily.
This past spring, I made a huge investment in my happiness. I left my secure corporate job to pursue my interests in travel, web design and personal growth. My entire year off would be funded from hard-earned personal savings. The financial implications were initially hard to swallow. Not only would I be using a huge chunk of my savings, I would also be sacrificing a year of steady income.
Why I quit my job anyway
I had a great management-level position, a knowledgeable boss, respectable responsibilities and a good salary. On the surface, everything looked great. Yet there was something nagging me from the inside. I didn’t feel passionate about what I was doing and I knew I couldn’t live with myself if I didn’t try to explore what I might find more fulfilling.
I was my own biggest asset, and if I was to generate more income and wealth in the future I would have to tend to myself first. Giving up money now might feel hard, but not doing what felt right for my personal growth would be even harder.
In thinking about how I arrived at my position and salary level without being completely passionate about my field, I believed I should be able to achieve at least the same amount of success and income if I pursued something I was more interested in.
How I funded my time off
I’d been working for just over 3 years as a young professional and through frugal habits I had saved a decent amount of my income. I hadn’t purchased a home yet, didn’t drive, so the majority of my assets were cash or cash equivalents spread among various savings accounts, RRSP accounts, and TFSA accounts.
Initial budget for the year, $25,000
This amount was based on my current living expenses, the cost of classes I wanted to take, and my guesstimate of reasonable travel costs.
Living expenses: $15,000
Funded through personal savings (cash)
- Housing costs: $1,000/month of (for 7 months)
- Housing costs: $700/month of (for 5 months)
- Utilities, phone: $80/month
- Food: $300/month
I was sharing an apartment in downtown Toronto that had 7 months left on the lease and planned to find a lower cost room farther from downtown once the lease ended.
Full-time web design classes: $5,000
Funded through my RRSPs via the Lifelong Learning Plan, which lets you withdraw up to $10,00 per year (max $20K) to fund education costs without having to pay income tax on the withdrawal.
Travel budget: $5,000
Funded through personal savings (cash)
- Trip to Europe: $1,500 (staying with a friend)
- 2 month trip to Asia: $3,500 (backpacking)
I actually had enough personal savings to fund more than a year off, but one year felt long enough to explore, but short enough to force me to focus on finding an income stream at the end of the year.
7 Month Budget Update
Budgeted costs for the first 7 months: $16,200
- Living expenses: $9,660 (Housing $1,000 + Utilities/phone $80 + Food $300) * 7 months
- Full time classes: $5,000
- Trip to Europe: $1,500
Actual costs to date (7 months): $17,700
- Living expenses: $9,660 (on budget)
- Web design classes: $5,000 (on budget)
- Trip to Europe: $1,600 ($100 over budget)
- Unplanned/unbudgeted costs: $1400 (includes increased utility costs for the summer, mini weekend trips, and wedding and birthday gifts)
Actual costs were about $1,500 over the budgeted amount ($17,700 – $16,200).
Because I knew I had enough funds to cover the entire year of expenses plus cushion room, I probably wasn’t tracking my expenses as rigidly as I could have. I gave myself some flexibility to deviate from my budget and also had a peace of mind knowing I’d be okay if any unexpected costs came up during the year.
Projected Costs for the Next 5 Months
4 month trip to Asia (India/Southeast Asia): $7,300
- Flights: $2,800
- Food, lodging, activities: $4,500
Housing and utilities: $0 (see note below)
Re-forecasted expenses for the year: $25,000 (overall, still on budget.)
In my initial budget, I was planned on paying rent during my last 5 months of my year off. This expense is now $0 because I decided to spend my last 4 months traveling and living with friends/family for a month prior to departure. The last 5 months of budgeted housing costs of $3,500 ($700 * 5 month) would be used towards my travels.
- Sale of furniture and belongings: $2,100
- Possibly small amount of income from basic freelance web design/marketing work, as I will have my laptop with me while I travel.
After deciding to travel for the remaining months of my year off, I debated between storing my furniture/belongings and selling everything. Once the moving and storage costs were considered, clearing all my possession made more sense for my situation.
Reflecting on the Last 7 Months
It’s been just over half a year since I quit my job. I was nervous when I left, but now I can’t imagine having made a different choice.
In the last 7 months, I’ve traveled to Europe, got a Certificate in a new field, dedicated more time to my health, self-directed my learning, spent more time with friends/family, and met more people and attended more events than I could have if I was working. I’m looking forward to my upcoming extended travels, which will be a whole new experience for me.
It’s not about money, but it’s not not about money either
I was lucky that I saved diligently in the few years I worked. I was never accumulating money for the purpose of taking time off so I’m grateful that I had enough savings to comfortably fund a year off to explore my interests. While money isn’t sufficient for happiness (as I found out during my employment), money can open opportunities to great experiences.
What do you think?
Have you ever wanted take extended time off from your 9-5? How much money would you need to cover your expenses on your time off?
About the Author: Lily has a background in banking, finance and marketing. She is on her year off from working to pursue her interests in travel, web design and personal growth. She writes about personal development, clarity and happiness at Explore for a Year.If you would like to read more articles like this, you can sign up for my free weekly money tips newsletter below (we will never spam you).