Dreaming about or already planning an adult gap year? What is an adult gap year anyway? Adult gap years, sabbaticals, and career breaks have become increasingly popular, especially since the pandemic.
Traditionally, a gap year was defined as the year after high school where graduates would take a year to travel before starting university. Now, the adult gap year has become much more common. Also traditionally, an adult gap year either did not exist or it was in the form of a sabbatical in which, usually, university professors would take time away from teaching to delve into their field of research.
Fast forward to 2024 and the adult gap year, defined as taking a year away from work without necessarily having a plan to return to the same job, the same company or organization, or even the same field of work, has become quite a bit more common. The formerly dreaded resume gap has become much less of a red flag to future employers.
If planned well, an adult gap year can be a selling point for showcasing the new knowledge and skills you gained while taking time off to travel or engage in other studies. Keep reading for how to get started with planning your gap year.
At a Glance
If you read my article about 5 steps to take to plan your gap year, then you know I am, and have been, actively planning my adult gap year. The concept and practice is gaining popularity as younger generations don’t want to wait until retirement to travel and go on adventures when they are older and less physically capable of doing the adventures they would like to experience.
The process of planning and executing an adult gap year warrants a series of posts as there are many things you must take into consideration when planning.
You may be asking yourself many of the same questions I have asked myself: how will I save enough to live for a year without any or much income? How much money should I save before I go on my gap year? Where should I spend my time during my gap year? If you are from the U.S., you are likely asking how will I pay for health insurance when I no longer receive a subsidy by my employer?
These and many other questions are likely to arise.
Let’s focus first on what I consider to be one of the most important questions when you get started in your planning. How do you save enough for an adult gap year?
Saving for your adult gap year
As you begin planning your gap year, you will want to consider how to reduce your expenses and increase your savings rate to best position yourself to have a successful year.
Saving money comes down to spending less than you earn and putting the extra aside into a savings or investment account.
To save enough money while planning your gap year, it is imperative find ways to spend less and generate more income. To help guide you through that process, I believe it is also necessary to create a budget so that you have a tool to monitor your savings and expenses.
Create a budget
In my opinion, creating a budget is an essential step in planning for your adult gap year. The budget can either be very simple or as detailed as you would like it to be. I use an excel spreadsheet with expense categories that were logical to me. I then created a subcategory budget that further lumped certain types of expenses together. The subcategory budget information is also displayed in a pie chart so I can easily see the pertinent information when I review, at a glance, where I spent the most money over previous months.
While this may be far too cumbersome for many, it works well for me and doesn’t actually take that much time because the information displayed generated by formulas save for inputting the actual expenses.
If you prefer a simpler method like the one I used to do, you can write these expenses down on pen and paper and tally up your totals.
The intent of creating a budget is to track what your actual spending. After one or two months of tracking all of your expenses, you can begin to see a clear picture of where you may be able to spend less.
Additionally, by consistently entering your expenses into your budget, you will be able to generate a monthly average of total expenses. Applying this to a full year, you will have a much better understanding of the minimum amount of money you should save when planning your adult gap year.
Reduce expenses
Once you have a good understanding of your monthly expenses, start by analyzing one or two categories you may be able to reduce. Below are some suggestions on how to reduce your monthly expenses.
House hacking
If you rent your home or apartment and currently live alone, consider finding a roommate to share your expenses with. Even if you move into a bigger, slightly more expensive home that can accommodate two or more people, you will still greatly benefit from splitting the total rent and utility expenses each month.
Considering rent has skyrocketed in recent years, this house hack can allow you to save much more, and more quickly, than if you continue to live alone.
If you prefer to live alone, explore housing options to see if you could scale back your costs by living in a less expensive house or apartment. The money you can save on housing, which tends to be the largest monthly expense for most people, can buy you weeks or even months of time living in another country.
Gym memberships
Do you pay for a gym membership when you can do at home workouts and run or walk outside at no cost? Depending on the cost of you gym membership, eliminating that expense could save you $75 – $100 per month or $900 – $1,200 per year. Eliminating your gym membership for one year just bought you a month rent in a major city in a lower cost country, or more than a month’s rent in a smaller town in many places around the world.
Car payments
Are you making car payments on a new car? Consider trading it in for an older but reliable and less expensive vehicle. I personally have heard stories of those who have been able to eliminate their car payment completely by selling their newer car and purchasing an older one. Car insurance is likely to cost less as well.
Food costs
If you find you have already reduced the larger expenses to the extent possible, begin to examine your smaller expenses and/or those you consider essential.
Food is an essential expense. My logic was always that I need to eat and I want to eat well, so I didn’t worry as much about how much I was spending no food. However, eating well is especially expensive post-covid as food costs have soared.
By meal planning and buying food to make specific recipes and to fulfill certain meals, I have greatly reduced my food expenses. Additionally, I rarely go out to eat. Not only is it generally healthier to prepare your own meals, restaurants are especially expensive. I have been surprised at how much money I have been able to save for my adult gap year by meal prepping and planning.
Entertainment
Lastly, for entertainment, consider finding free or low cost activities. Going for a walk in a park and sharing a bottle of wine with friends is less expensive than going to the bar. Cooking with your friends is similarly less expensive, arguably healthier, and also quite fun. For example, I joined a sushi making party with a group of friends which was incredibly fun, creative, and a much lower cost for everyone than going out for sushi.
You can also go to free or low cost museums or art galleries, free summer music series events, or do outdoor activities such as running, hiking, or paddling down a river or around a lake.
By all means, don’t cut fun out of your life entirely, but if you are serious about planning an adult gap year, especially one in which you will not necessarily be earning any money, you likely will need to make at least some minor sacrifices for sake of your budget.
Increase income
We all know that there is a limit as to how much you can reduce your monthly expenses. Paying rent or a mortgage, utility costs, cell phone plans, and transportation costs are generally pretty non-negotiable and tend to be the biggest monthly expenses everyone incurs.
Once you have reduced your expenses, look into way you can increase your income.
House hacking
If you have reduced your monthly expenses to the extent possible, there is only one way to save more money for your adult gap year and that is to earn more money. By far the most helpful way I have increased my income is by renting a room in my house.
Because rental income is taxable income I am differentiating it from the housing hack discussed above. Nonetheless, I still think of it as a way to subsidize my housing and living expenses.
As most of the U.S. is experiencing a housing crisis, many people are in need of a place to live. Also, if you live in a college town like I do, then typically there are students, both undergraduate and graduate, who are looking for a place for one to two years at a time. This is a great way to have a shorter term commitment of sharing your house while increasing your income and thus savings for your adult gap year.
While many people give up their home base entirely when they go on a travel-based gap year, by renting a room in your house, you may be able to afford your mortgage while you travel regularly. This would allow you to keep your home base which, for many, is very important.
Pick up a part time job
I worked a second job for almost the entirety of my career. I finally quit my part time weekend job when the pandemic hit. However, up until that point, I spent just around 4.5 to 5 hours many Saturday mornings working a second job. It was work I enjoyed doing and there were months I was able to pay for a couple of utility expenses with the added income.
These days there are many more, and likely more lucrative, ways to earn additional part time income. YouTubers and bloggers tout the financial gains that are possible with creating content. I can attest that the start up is cumbersome and time consuming, however the reward apparently can pay off. I certainly cannot speak to that as my blog has only cost me money to this point.
While you are indeed sacrificing your time in the short term by picking up a part time job or other side hustle, the pay off of having the freedom and flexibility to travel and enjoy your time as you see fit for a year or more is worth it in my opinion.
Maximize credit card points
Using a rewards credit card for purchases you plan to make anyway is a great way to generate value to either apply to your statement balance or to use for travel purchases. This, of course, is only beneficial if you are able to pay your credit cards off in full each month. If you carry a balance and pay interest, the interest will much more than offset any gains made by points.
I personally prefer Chase credit cards. I now have several and use each for different purposes. The sign up bonuses especially valuable and I can apply the points to statement balances or transfer points to use on partner hotels, airlines, and more. As I mentioned in my 7 days in Mexico City article, I could have stayed in the Hyatt across the street for $0 for the entire week by using points.
My favorite of the Chase cards is the Chase Sapphire Preferred. Right now you can receive a 60,000 point sign up bonus which is the cash equivalent of $600, or a $750 value if redeemed through the Chase travel portal. However, if you know much about Chase credit cards points, or Ultimate Rewards points as they are called, you know they can be easily transferred to partner hotels and airlines and can therefore be worth much more than the $0.01 per point cash back option.
What I like most about the Chase Sapphire Preferred is that there are no international transactions fees. However, there are many other perks such as an annual $50 hotel credit and various types of travel insurance coverage such as auto rental collision coverage, trip cancellation insurance, and baggage delay insurance among others. The benefits of this card have far outweighed what I consider to be a fairly nominal annual fee.
You can explore the Chase Sapphire Preferred (and Reserve) cards here using my referral link.
Conclusion
Planning for an adult gap year presents its challenges but I think the sacrifices are worth the reward. The process is long as it generally takes at least months, but usually years, to prepare yourself financially to take extended leave from paid employment.
As you begin to think through planning your adult gap year, I hope these financial planning tips can be of use. While I am not a financial advisor, nor am I intending to give financial advice, these tactics have certainly have proven to be effective for me during my adult gap year planning process.
Questions?
Do you have any questions about the methods I have used to plan my gap year? Or, do you have gap year planning strategies that I missed? If so, please let me know in the comments!
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