Whether planned or unexpected, many of us will likely need to take an extended leave from work at some point in our careers, due to various reasons — whether it’s time off to travel, parental leave for the care of a newborn or elder-care leave for an aging parent. Here are some tips to prepare for a break in pay.
There are essentially two types of leaves of absence: mandatory and voluntary. Different circumstances may qualify for legal assistance from your employer. You will need to reach out to your employer’s human resources (HR) department to explore your benefit options and policies regarding extended time off from work. Your employer may offer bereavement leave or require you to use your accumulated paid leave first before offering assistance for extended absence.
The Family and Medical Leave Act (FMLA) entitles certain employees to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage for up to 12 weeks during a 12-month period. This law aids employees in balancing their work and personal responsibilities in times of crisis. Employees are eligible for leave if they have worked for their employer at least 12 months prior to requesting leave; plus, they must have logged at least 1,250 hours in those 12 months. Review your employment history with a member of your company’s HR department and find out if you’re eligible for the FMLA provisions.
Next, it’s crucial to be proactive and start planning for your leave as soon as the need arises. In order to ensure a smooth transition, you’ll want to give your employer as much notice as possible so your work obligations will be covered while you are away. Prioritize projects between those with urgent deadlines and those that are less time-sensitive and can potentially be postponed. Additionally, work with your team members to make sure that any necessary cross-training is completed before you leave.
If you find that you do need to take leave from work, it’s important to consider the effects of that lost or reduced income on your budget. It may be worthwhile to project a potential spending gap and estimate how much you will need to save before taking leave. Try to eliminate discretionary, variable spending and reduce outstanding debt as much as possible. If you’re married, you and your spouse may consider living on one earner’s income for a period of time and putting the other’s income into savings. This will help you get used to living on a lower budget and give you an idea of how practical your plan may be.
Time permitting, you may also be able to work part time or overtime in anticipation of your extended leave. If you can’t afford to take an unpaid leave of absence, you may want to negotiate a flexible work schedule with your employer, if at all possible. Some employers allow their employees to have the ability to work from home or remotely.
Don’t forget about any savings you usually put away with your regular paycheck. If you are directly contributing to a retirement account, such as your company’s 401(k) plan or an individual retirement account (IRA), it may make sense to think about increasing your contributions before the leave to make up for the lost contributions during your absence. Many employers will continue to provide health insurance for an employee during a leave of absence. However, you may still need to keep up with employee premium costs so make sure to take note of those expenses (if any), as well.
Regardless of the reason, your leave of absence will likely come with big changes to your lifestyle. Consider taking one less item off your plate and work with a financial advisor to get a plan in place. That way, you can enter your leave with peace of mind and confidence that you and your family will be taken care of, no matter how much time you need.
Ready to start planning for your leave?