Savings plan for a sabbatical

I’d like to plan to take a sabbatical within the next five years. However, with current living costs and inflation rates, this is difficult to plan for. How much should I be saving, and what are the best ways to save for a long-term goal like this?

Name withheld

Magdeleen Cornelissen, wealth advisor at PSG Wealth, Menlyn, responds:

Sabbatical leave is an exceptional method to regain your work/life balance. This time of rest can have an impact on your finances, which is why a financial plan should be the starting point of your journey.

Analysing your existing budget can provide you with guidance on what to expect in five years' time. Your current obligations are already known to you.

Hindsight gives you the ability to know how your expenses will change over time. You will be able to identify the most important items in your budget and have more certainty on the amount of capital required to ensure that you do not neglect your responsibilities during this time of rest.

You should also consider your retirement goals. Remember that regular contributions to your retirement plans remain a necessity and are important for your future.

You might want to set aside a little bit extra for travel and entertainment, as you will have more time on your hands. Combining these items in a goal oriented financial plan will provide you with a clear vision of the additional monthly savings required to build a portfolio, which will eventually be used to pay for your expenses during the time of your sabbatical. You will benefit from a product that provides you with the ability to make regular contributions, as well as regular withdrawals when required. As you only need to access the capital in five years, you can afford to take up some risk when setting up this investment. Acquiring the assistance of an accredited financial adviser will help you achieve these goals with more certainty.