Considering a vacation? Learn practical tips for planning your professional vacation without destroying your money.

Americans are quitting their jobs to take extended vacations at more than double the rate they were five years ago. About 0.14% of employees were furloughed in January 2024, up by just over half from just 0.9% in January 2019, according to Gusto, a human resources services company. What most people don’t realize is that the biggest obstacle is not getting approval from your boss; It’s saving enough money to actually get it done without financial panic. For a three-month vacation, try to set aside enough to pay for your usual expenses for at least that length of time, advises a certified financial planner. One way to prepare is to save 5% of your salary annually for five years.

How much should you save for a sabbatical?

The general rule is to save enough to at least cover the number of months you will be out of work. For example, if you want a six-month vacation, save at least enough to pay for six months of living expenses (plus an extra amount for any surprises that may arise). Many academics are better prepared financially because after a period of entitlement, such as six years of service, they are entitled to six months leave on full pay or a year leave on half pay.

Experts agree that it’s also a good idea to keep a separate emergency savings fund to deal with unexpected disasters that arise, such as medical crises and home repairs.

But in practice, achieving this goal can be difficult. Barely half of Americans have managed to put aside three months’ expenses in 2024 as an emergency fund. This year, only 27% have six months of savings. So, if you’re not there yet, don’t get discouraged. All you have to do is start planning and saving specifically for your sabbatical. Figure out how much money you’ll need each month to live the lifestyle you want, then multiply it by the number of months you want to take away from work. Don’t forget to calculate special costs related to your plans. For example, a travel vacation might include international flights and accommodation, while a writing or research vacation might include course fees, equipment, or just an extra coffee at local cafés. Follow this common sense rule: It is better to overestimate costs than to underestimate them. And if you’re lucky enough to have a paid leave grant from your employer, adjust your savings needs accordingly.

Tips for financing your vacation without going bankrupt

Start your Sabbatical Fund now. The sooner you start saving specifically for your vacation time, the easier it will be to reach your goal. Even small amounts add up. Consider automating transfers to a dedicated savings account called a “sabbatical fund” so you’re not tempted to dip into it. Treat this just like any other important financial goal.

Also take a hard look at your current spending and see where you can cut back while saving for your vacation. Every dollar you don’t spend now is a dollar you can use to buy yourself a vacation later.

Since most people rely on savings to fund a sabbatical, finding ways to earn more can speed things up. Some people take on side projects or freelance projects specifically to build their sabbatical fund. In fact, about 36% of aspiring sabbatical recipients plan to take on freelance work or side hustles during their time off to supplement their savings.

One thing that people often overlook is health insurance and other benefits while they are out of work. If your job doesn’t provide benefits during unpaid leave, you’ll need to budget for things like out-of-pocket health insurance premiums (or explore options like COBRA, the Affordable Care Act (ACA) marketplace plans, or short-term travel insurance if you’ll be abroad).

A vacation can be a life-changing break, but it works best when you build savings to support it. Figure out how long you want to stay away and how much that vacation will cost, then start saving to achieve that goal as soon as possible.