Sabbatical Emergency Fund: The 3-Bucket Plan (2025)

What pros wish you knew about sabbaticals (and cash)

So, here’s the thing about sabbaticals and cash in 2025: the number you need isn’t “six months of expenses.” That’s a vibe, not a plan. What pros actually build is a Sabbatical Number with three distinct parts, your sabbatical living costs, your re-entry runway, and a separate, do-not-touch emergency fund. Three buckets. Three different jobs. If you mix them, you’ll overspend or panic early. I’ve seen both, more than once.

Your Sabbatical Number = (1) Sabbatical living costs + (2) Re-entry runway + (3) Emergency fund. Simple equation, but the inputs matter. Treat the sabbatical period like a project budget, line items, not guesses. Health insurance (COBRA or ACA), travel you’ll actually do, rent vs. house-swap, child care changes, professional courses or certifications, temporary moves, gear, visas, taxes on any side gigs, the whole list. Build it bottom-up. If you budget from the top down, you’ll shave the wrong corners. I have, and it hurts.

Look, 2025 reality check: daily life just costs more than it did before 2020. The Bureau of Labor Statistics shows the CPI index is roughly 20%+ higher than late-2019 levels by 2024, and prices this year are still running above pre-2020 norms. Translation, your “old normal” budget is probably too low. At the same time, cash isn’t dead money right now. FDIC data shows the national average savings account APY around the 0.4-0.5% range as of this summer (2025), but online high-yield accounts are typically offering about 4-5% APY, and short T-bills earlier this year were hovering roughly 4.5-5.0%. Where you park your sabbatical cash, laddered T-bills, HYSA, or a mix, can add real dollars without taking equity risk. Set it up before you start your break so you don’t scramble.

On the employer side, assume your sabbatical is unpaid unless HR explicitly says otherwise. Paid sabbaticals are rare in the U.S., SHRM’s 2023 Employee Benefits report showed roughly 5% of employers offered paid sabbaticals and about 11% offered unpaid. That pattern hasn’t exactly flipped this year. I occassionally see tech and academia exceptions, but don’t plan your cash around being the exception.

Here’s how this section will help you, in plain English:

• Anchor your number in 2025 prices, not nostalgia. We’ll size a realistic monthly spend for the sabbatical period.
• Turn the sabbatical budget into a project plan, line items, timing, and a small contingency. Not just vibes.
• Build a re-entry runway for job search or client ramp, think 2-6 months of basic expenses after your return date, because paychecks rarely restart on schedule.
• Keep a separate emergency fund. Many advisors still use the 3-6 months rule of thumb, but for a sabbatical I like true emergencies in their own bucket so you don’t raid them for plane tickets. I’m still figuring out the perfect ratio for myself, but separation keeps you honest.
• Place your cash smartly, HYSAs, T-bills, or short CDs, so you actually earn while you rest.

Quick gut-check: If your sabbatical budget and re-entry runway are in the same account as your emergency fund, you don’t have an emergency fund, you have a big, leaky checking account.

Anyway, the goal isn’t perfection; it’s clarity. A clean, three-part number gives you permission to take the break, and the confidence to come back without financial whiplash. Actually, let me rephrase that: it buys you time, and time is the whole point.

Build the baseline: what life will actually cost while you’re off

Here’s the thing: your “normal” budget doesn’t map 1:1 to a sabbatical. Some costs shrink (no commute, fewer work lunches), some balloon (healthcare, travel, that course you swear you’ll finally finish). Start simple and honest.

1) Lock in your fixed costs first (the bills that show up no matter what):

• Rent/Mortgage: Include HOA, property taxes, and insurance if they’re not escrowed. If you’ll sublet or house swap, net that out, but be conservative.
• Utilities: Power, gas, water, internet, phone. If you’ll be away, drop streaming tiers or pause services (most folks forget this).
• Insurance: Auto, renters/home, umbrella. If the car sits in storage, call your carrier, “comprehensive only” can cut costs.
• Debt payments: Student loans, credit cards (aim to clear these before you leave), personal loans.
• Childcare: If care hours change, get it in writing. Providers raise rates mid-year, seen it too many times.

2) Adjust the variables to match how you’ll actually live, not how you wish you’ll live:

• Groceries: If you’ll cook more, great, still budget snacks/coffee. Food inflation eased from 2022 peaks, but staples are still sticky this year. I round up by around 7% for wiggle room.
• Transport: Fuel/parking drop without a commute, but add trains, rideshares, or long-haul buses if you’re slow-traveling.
• Discretionary: Subscriptions, hobbies, social stuff. Be honest; downtime breeds “little treats.”
• Travel: Airfare, lodging, visas, phones/SIMs, trip insurance. Price flights you’d actually book, not fantasy deals from 3 a.m. blogs.

3) Plan for healthcare (the big swing item):

• COBRA: Typically 102% of the full employer premium (can be 105% in some cases). For context, KFF reported average employer premiums in 2023 were $8,435 for single coverage and $23,968 for family. That’s the sticker you’re roughly staring at when you go COBRA.
• ACA marketplace: The average benchmark silver premium rose about 4% in 2024 nationally (KFF). Compare net premiums after subsidies, but also look at deductibles and out-of-pocket maximums. For 2024, the ACA in-network OOP max capped at $9,450 individual / $18,900 family. If you pick a high-deductible plan, cash-flow for that worst case.
• Pick your poison: COBRA is usually simpler (keep doctors), ACA may be cheaper if subsidy-eligible. I’m still figuring this out myself every time a friend asks, networks matter a lot.

4) Taxes if you freelance/consult: If you pick up side income, set aside cash for taxes now. Self-employment tax is 15.3% (Social Security + Medicare), and you’ll owe income tax on top. A practical rule: bank 25-35% of profit for federal+state and make quarterly estimates (April, June, September, January). And yeah, it’s annoying, but cheaper than penalties.

5) One-time and “spiky” costs you’ll kick yourself for forgetting:

• Relocation or storing your stuff (storage units creep up rates occassionally, ask for written promos)
• Courses/certifications, language classes, portfolio gear (camera, laptop, software)
• Visas, residency permits, passport renewals, international driving permits
• Home setup on return (deposit, movers) and pet boarding or insurance quirks

Baseline formula: Monthly Fixed + Monthly Variable + Healthcare (premium + average meds) + Tax Set-Aside + One-Time Costs amortized monthly = your sabbatical burn.

Look, I get it, this feels tedious. But once you’ve got a number you trust, decisions get easy. If your burn is $3,800/month and you’ve banked nine months plus a buffer, you can actually relax. Anyway, perfect isn’t the goal; accurate-enough to avoid unpleasant surprises is. And if you’re unsure, round up. Future-you will send a thank-you note, eventually.

How much is enough? Use the 3-bucket formula

So, no hand-waving, just a simple structure that keeps you from guessing. You’ve already got your monthly sabbatical burn from above. Now we size the fund in three buckets, add a small contingency, and, speaking of which, treat any “maybe” income with suspicion.

1. Bucket 1: Core Sabbatical = monthly baseline × number of months off. If your burn is $3,800 and you’re off 9 months, that’s $34,200. Straightforward. This is the money that keeps the lights on while you’re off-grid or on the road.
2. Bucket 2: Re-Entry Runway = 2-4 months of the same baseline. Why? Hiring takes time and first paychecks lag. The median duration of unemployment in 2024 hovered around ~9 weeks per BLS data (call it a bit over two months), and even if you accept an offer quickly, onboarding plus payroll timing can mean you don’t recieve cash for 4-6 weeks. I like 3 months as a base case. With a $3,800 baseline, that’s another $11,400.
3. Bucket 3: True Emergency Buffer = 3-6 months of essential expenses, kept totally separate. This isn’t for flights to Bali or a surprise pottery class. It’s for real emergencies. Think mortgage/rent, utilities, food, insurance deductibles. Regulators and most planners have repeated 3-6 months for years, and for good reason. If your essentials are $2,600/month, then set aside $7,800-$15,600 in a different account you do not touch. Different bank if you have to. I know that sounds rigid. It works.

Here’s the thing, if income may occassionally arrive (stipends, subletting, rental, part-time contracting), give it a haircut. Jargon alert: a “haircut” just means discount it to account for risk. If you expect $1,200/month in rent but the tenant could churn or a week goes vacant, count $600-$800 tops. And only include it in Bucket 1; never shrink the emergency buffer with uncertain cash.

Add a contingency of 5-10% for inflation drift, medical surprises, or travel changes. Not to be dramatic, but healthcare co-pays and international medical consultations can jump when you least expect it. Inflation isn’t 2022-hot, but it’s still not zero, headline CPI ran higher than the Fed’s 2% goal for much of last year, and some services (looking at you, insurance) keep creeping. A small buffer saves you from nickel-and-diming the plan later.

Working example: Core Sabbatical ($34,200) + Re-Entry Runway ($11,400) + Emergency Buffer ($12,000 midpoint) = $57,600. Apply a 7% contingency → $61,600. If you have a shaky $700/month sublet, haircut to $400 × 9 months = $3,600. New target cash need ≈ $58,000.

Where to keep it? Bucket 1 and 2 in high-yield savings or a money market fund, liquid and boring. As of Q3 2025, many top HYSAs are still >4% APY, though rates have drifted from last year’s peaks. Bucket 3? Same, but in a separate account you don’t even glance at on vacation. I might be oversimplifying, but separation prevents “I’ll pay it back next month” creep, ask me how I know.

Anyway, the formula keeps you honest: time off × monthly baseline; plus a runway that respects reality; plus a ring-fenced emergency stash. Round up if you’re torn. Money you don’t need is a nice problem to have; scrambling mid-sabbatical is not.

Where to park the cash in 2025 so it works (but stays liquid)

You’ve got a target (roughly $58k in the working example). Now make it earn something without turning it into a project. Rates aren’t at the 2023-2024 peaks anymore, but they’re still decent as we sit in Q3 2025. Actually, wait, let me clarify that: decent for cash. Not for bragging-rights.

High-yield savings accounts (HYSAs). Easiest button to push. As of Q3 2025, many top HYSAs still pay north of 4% APY, give or take, and you keep daily liquidity. They’re simple, they’re boring, and they’re covered by FDIC or NCUA insurance up to $250,000 per depositor, per insured bank/credit union, per ownership category. If your total stack creeps over limits, spread across institutions or use different ownership categories. Speaking of which, use nicknamed sub-accounts, e.g., “Core Sabbatical,” “Runway,” “Emergency Buffer.” It sounds silly, but labeling + separation reduces the “I’ll just move $1,000 and put it back” habit. I might be oversimplifying, but it works. It really works.

No-penalty CDs and short CD ladders. If you know parts of your timeline, say rent or insurance due on set months, park that slice in no-penalty CDs (common terms ~11 months; withdraw anytime after the first few days without penalty) or a short ladder. A simple 3-6-9-12 month ladder usually adds a small yield pickup over HYSAs (earlier this year that pickup was often ~0.10%-0.40% annualized), while staggering maturities so something is always coming due. If plans shift, you’re never far from cash.

U.S. Treasury bills via brokerage. For state-tax efficiency and predictable maturities, T-bills are the workhorse. You can buy new issues in 4-, 8-, 13-, 17-, 26-, and 52-week terms, and interest is exempt from state and local taxes (still taxable federally). Settlement is quick, and you can line up maturities with your monthly cash burn. I like setting auto-roll for the runway slice, then turning it off when the sabbatical clock starts. Predictable is good; predictable is very good.

Money market funds (MMFs). Solid home for Bucket 1 and 2 if you’re using a brokerage. Look for government or Treasury MMFs that hold T-bills, repos, and agency paper. As of this quarter, many high-quality funds sit around the mid-4%s, but they float with the rate path. Key detail: MMFs are not bank-insured. They aim for a stable $1 NAV, but it’s not a deposit. In practice, access is fast, typically trades settle in T+1 and you can move funds out in a day or two depending on your broker.

I Bonds (for the longer tail). If part of the cash is truly long tail, say the emergency buffer you hope to never touch, Series I Savings Bonds can help. The rate resets every six months based on inflation, interest is tax-deferred until redemption, and they’re state-tax exempt. The trade-offs: a 12-month lockup where you can’t redeem at all, and if you cash out before five years you forfeit the last three months’ interest. Also, purchase caps matter: $10,000 per person per calendar year electronically (TreasuryDirect), plus up to $5,000 via a federal tax refund. If you’ve got lead time before the sabbatical starts, you can stage purchases this year and, if needed, again next year to scale the position.

Quick tax and logistics notes (because those bite people): HYSA and CD interest is fully taxable at federal and state levels; T-bill interest is federally taxable but state/local tax-free; some Treasury-only MMFs pass through a high percentage of state-tax-exempt income; I Bond tax is deferred until redemption. Anyway, pick the mix that matches how often you’ll tap the money: daily spend in HYSA/MMF, known dates in no-penalty CDs or T-bills, and the “please-don’t-break-glass” slice in I Bonds if you have lead time.

Taxes, insurance, and benefits: the traps that blow up budgets

So, this is the un-fun section. It’s also the part that, if you skip, tends to wreck the plan. 2025 can be a great window if your income dips during a sabbatical, health subsidies, tax brackets, even capital gains can all work in your favor. But only if you set it up right and actually document it.

ACA marketplace: low income can mean big subsidies. If your 2025 household income lands on the lower side, the ACA premium tax credit can slash premiums, and the enhanced subsidies from the Inflation Reduction Act run through the end of 2025. The old 400% of FPL cap is effectively gone this year; instead, you’re protected if the benchmark silver plan would cost over ~8.5% of income. For reference, the 2024 federal poverty guideline was $15,060 (single) and $31,200 (family of 4) in the continental U.S. (Alaska/Hawaii differ). Marketplace eligibility and cost-sharing reductions scale off those guidelines. Document your 2025 estimated income when you enroll, keep pay stubs/notes, and reconcile it on your 2025 tax return with Form 8962 and the 1095‑A. Anyway, plan the estimate carefully, massive changes midyear can create clawbacks in April.

COBRA vs marketplace: before you leave, compare the total cost and the network. COBRA usually lets you keep the same plan for up to 18 months, but you’ll typically pay the full employer cost plus up to 2% admin. Marketplace networks can be narrower, but cheaper with a low-income year. Look at: provider access (do your docs take the plan?), deductibles/OOP max, and Rx formularies. Small note: last year, benchmark marketplace premiums rose about 4% on average nationally (2024, per multiple state filings), but your state can look very different this year. Speaking of which, double-check your specific county rates before you quit, not after.

Use the low-income window for tax moves

• Roth conversions: Converting traditional IRA dollars in a low-income year can be smart. Watch your marginal bracket and don’t trip Medicare IRMAA if you’re nearing 65. For context, 2024 IRMAA started at MAGI of $103,000 (single) / $206,000 (MFJ). 2025 thresholds are updated, so check the current SSA table before pulling the trigger. Also, keep an eye on ACA subsidies, extra income from a conversion raises MAGI and can reduce credits.
• Harvest long-term capital gains: If your 2025 taxable income is low, you may be able to realize gains in the 0% long-term capital gains bracket. Last year (2024) that bracket topped out around $47,025 (single) and $94,050 (MFJ). 2025 numbers are slightly higher, but confirm the IRS table before you hit sell. And remember: harvesting gains increases MAGI, which feeds into ACA and possibly IRMAA two years later, fun, I know.

Keep your safety nets intact

• Disability insurance: If you have group LTD, ask about portability before your last day. Some policies allow a conversion or an individual policy without medical underwriting if you act within a tight window (often ~31 days). Miss the window and… you may not get coverage back on the same terms.
• Life insurance: Same idea. Group life often has conversion rights to an individual policy. It won’t be cheap, but it can bridge you until you price a proper term policy. Honestly, I’ve seen people forget this and then a new medical finding nukes their options.

Avoid 401(k) loans during a job change. Here’s the thing: if you leave, that loan can accelerate. Post‑2018 rules give you until your tax filing deadline (including extensions) to roll over a loan offset, but if you don’t, it becomes a taxable distribution, and if you’re under 59½, there’s usually a 10% penalty. I’ve watched good budgets blow up over a $12k plan loan that went sideways. Don’t be that case study.

One more tangent, document everything. Keep a little folder: marketplace income estimates, COBRA notices, insurer EOBs, and your tax planning sheet. When you’re tired in February and the 1095‑A shows up, you’ll thank past-you. Actually, let me rephrase that… you’ll at least not curse past-you. And that’s a win.

Debt, credit, and cash flow moves before you unplug

Look, the boring logistics matter. Lock this stuff down while paystubs still hit your account, so you’re not emailing a lender from a hostel Wi‑Fi begging for an exception. Underwriting loves steady W‑2 income, lenders routinely do a “verbal verification of employment” within about 10 days of closing. Quit first and you might watch approvals evaporate. If you’re thinking about a refinance, HELOC, or even a basic no‑fee card to expand available credit, do it before you resign. And keep your DTI low, jargon alert, debt‑to‑income is just your monthly debt payments divided by your gross monthly income. Lower is better when a human underwriter looks at your file.

On rates: mortgages are still higher than the 2020 freebies, 30‑year fixed sits around 7% give or take this month, so a refi only makes sense if you’re consolidating variable debt or tapping home equity you’ll actually use. I’ve seen people refi “just because,” then carry higher costs for years. Don’t do the vanity refi.

• Student loans: Confirm your 2025 repayment plan, autopay, and the income recert date. Federal autopay usually knocks 0.25% off your rate. On SAVE, unpaid interest doesn’t accrue beyond the monthly payment, which helps keep balances from ballooning. Recertification is annual, set calendar reminders 60 and 30 days ahead. If your sabbatical income will drop, that could lower your payment at recert, but timing matters.
• Autopay everything from a dedicated sabbatical checking account: Funnel a set monthly amount into that account and have all bills hit it: rent, utilities, student loans, insurance, phone, the works. This reduces missed payments, payment history is 35% of your FICO score. I’m still figuring this out myself, but separating “core bills” from “fun money” stops the oops‑I‑forgot fees.
• Protect your credit score: Keep utilization under 30% (under 10% is even cleaner), don’t close old cards if they’re free, and set alerts for statement cuts and due dates. “Amounts owed” is about 30% of FICO, so high balances, even if you pay in full, can ding you if they report mid‑cycle.
• Be careful with balance transfers and travel cards: Transfer fees are typically 3%-5%, and 0% promos can backfire if you slip past the promo window. Travel cards look sexy, but high APRs (often north of 20%) and quirky redemption rules can eat the value. If you can’t redeem at 1.25¢-1.5¢ per point or you’re forced into bad routing, the math breaks.
• Build a cash glidepath: Stage money by month so you don’t front‑load spending. Example: if your 6‑month sabbatical budget is $24k, move $4k into the sabbatical checking on the 1st of each month. It’s the behavioral guardrail you need when you’re relaxed and, you know, ordering another overnight train. For sizing, many planners aim for at least 6-12 months of core expenses for a sabbatical (more if health costs are unpredictable), funded before day one.

Two quick credit line notes from the trenches: 1) If you open new cards for flexibility, do it a few months before you leave so the new‑account ding has time to mellow. 2) Keep utilization low by paying mid‑cycle; that way the balance reported to bureaus is smaller. Small thing, real impact.

Final housekeeping: freeze your credit if you’re traveling long term (free to thaw when needed), keep at least one backup payment method in a separate bag, and store your bank’s international fraud number. Actually, let me rephrase that, store two numbers. I once had a card flagged in Lisbon and it took hours to get a human. You don’t want that while hunting for a charger. Anyway, get this plumbing set now and future‑you will not have to triage finance stuff from a cafe server that keeps dropping.

Okay, what’s your number? A quick worksheet and a challenge

So, here’s the thing: rehearsal beats bravado. Before you submit that out‑of‑office for a few months, do the math and test‑drive it. The framework is simple, and yeah, we’re going to be a little pedantic for about five minutes because it saves headaches later.

Compute it (on paper, a napkin, Notes app, whatever gets used):

1. Baseline monthly spend (rent/mortgage, food, insurance, transit, phone, minimum debt payments, basic fun).
2. Times your sabbatical months (3? 6? 9?).
3. Plus 2-4 runway months for re-entry. That’s the job search buffer after you return.
4. Plus a 3-6 month emergency buffer that you do not touch unless it’s a true emergency. This sits on top, not instead of, the sabbatical cash.

Formula: Baseline Monthly × Sabbatical Months + Runway (2-4 months) + Emergency Buffer (3-6 months).

Why that big a buffer? Because surprises don’t send calendar invites. Bankrate’s 2024 survey reported only 44% of Americans could cover a $1,000 emergency from savings, which means 56% would need debt or to sell something. Don’t be in that 56% while you’re off recharging.

Segregate the cash into three separate buckets so you don’t raid the buffer during a late‑night “I deserve it” moment:

• Bucket A: Sabbatical Spend (the months you’re off). This is the allowance you actually draw down monthly.
• Bucket B: Runway (2-4 months). For the re‑entry period, interviews, travel to meet teams, laptop battery dies the week before an onsite… you get it.
• Bucket C: Emergency Buffer (3-6 months). Hands off. Different bank is ideal. Name it “Do Not Touch, Future Me’s Job.” Yes, I’m serious.

Speaking of which, rates still matter. Even with central bank cuts on the table and yields drifting from last year’s highs, many high‑yield savings accounts were still paying around 4% APY earlier this year. That’s not a guarantee about next month, but parking Buckets B and C in a plain, FDIC‑insured account that pays something is, you know, free money for patience.

Automate it: set weekly transfers into A, B, and C to hit your target by your departure date. Weekly is boring, in a good way. Micro‑funding smooths cash flow and makes the progress visible. If you need $18,000 in 9 months, that’s $500/week. If I start sounding jargony when I say “dollar‑cost average your savings,” what I mean is: move small, regular chunks on autopilot so you don’t rely on willpower Friday night.

Stress‑test it, live on the sabbatical budget for 60 days. Seriously, two months of rehearsal beats guesswork:

• Cap discretionary spend at the sabbatical level. If it hurts, good, you found a leak.
• Track with one tool for 60 days (card app, YNAB, spreadsheet). Don’t switch mid‑test.
• Fix what breaks: renegotiate insurance, pause subscriptions, cook 2 extra nights, pick the cheaper phone plan. Small wins stack.

Rule: If you can’t comfortably live on the sabbatical budget for 60 days now, you won’t like month three when a delayed deposit or flight change hits.

Your challenge this week (takes a coffee and a playlist):

1. Pull the last 90 days of spending from your bank/credit cards. Export CSV if you can. Tag the big rocks: housing, food, transit, insurance, debt, medical, childcare, “fun.”
2. Build the baseline: average those 3 months, then adjust for sabbatical reality (commuting down, travel up, health premiums maybe up if COBRA). Write that final baseline number in bold somewhere you’ll see it daily.
3. Set calendar dates to fund each bucket. Example: “Bucket A fully funded by Feb 1, Bucket B by Mar 15, Bucket C by May 31.” Add the weekly transfer amounts right in the calendar invites.

Look, the job market is fine in some pockets and choppy in others right now, and hiring always gets weird late in the year. That’s why the 2-4 month runway is there, to absorb the “we’ll circle back after the holidays” emails. I’ve been on the wrong side of those delays, twice, and cash made it a speed bump instead of a crater.

I’m honestly excited for you, there’s a confidence you get when the spreadsheet and the bank balance tell the same story. Anyway, do the 60‑day rehearsal, fix what squeaks, and automate the rest. Then when you go, you actually get to, you know, go.

Frequently Asked Questions

Q: How do I calculate my Sabbatical Number without lowballing it?

A: Build it bottom-up, not from a guess. As the article says, it’s three buckets: (1) sabbatical living costs, (2) re-entry runway, and (3) a separate, do-not-touch emergency fund. For living costs, list line items: rent/mortgage, health insurance (COBRA or ACA), travel you’ll actually do, child care changes, courses/certs, visas, gear, and taxes on any side gigs. For the re-entry runway, plan 3-6 months of essential expenses to cover job search time and moving costs if needed. Emergency fund is separate, 3-6 months of essential expenses (more like 6-12 if you’ve got dependents or a single income). Then add a 5-10% buffer because, you know, stuff happens and 2025 prices aren’t 2019 prices.

Q: What’s the difference between a sabbatical fund and an emergency fund?

A: Simple: the sabbatical fund is money you intend to spend; the emergency fund is money you hope to never touch. Sabbatical fund = your planned burn plus the re-entry runway. It can sit in a HYSA or short T-bills you’ll intentionally draw down. Emergency fund = separate account, high-liquidity HYSA, sized at 3-6 months of essential expenses (go 9-12 if your income is volatile). Don’t commingle. If you mix them, you’ll either overspend or panic early, seen it a dozen times.

Q: Is it better to keep my sabbatical cash in a HYSA or T-bills?

A: Use both. The article points out that online HYSAs are around 4-5% APY in 2025, and short T-bills earlier this year were roughly 4.5-5.0%. Practical setup: keep 3-4 months of near-term spending in a HYSA for easy withdrawals. Ladder the next 6-12 months in 4-26 week T-bills so maturities line up with your monthly cash needs. Keep the emergency fund entirely in a HYSA. Reinvest maturities if your plans shift. And set this up before day one so you don’t scramble.

Q: Should I worry about my retirement accounts and credit while I’m on sabbatical?

A: Yes, future you will thank present you. Retirement: you need earned income to contribute to IRAs in the same year, so if you won’t have W-2/1099 income, pause contributions. If your income is low this year, consider partial Roth conversions to fill lower tax brackets, just earmark cash to pay the tax. Keep your 401(k)/403(b) at the old employer or roll to an IRA if fees are high; avoid early withdrawals (10% penalty if under 59½, plus taxes). Credit: keep autopay minimums on every card, maintain a few small recurring charges to keep accounts active, don’t close your oldest cards, and keep utilization under 30% (under 10% is better). Also, notify banks you may be traveling so payments don’t get blocked, you don’t want a missed payment to nuke your score because you didn’t recieve an alert.

@article{sabbatical-emergency-fund-the-3-bucket-plan-2025,
    title   = {Sabbatical Emergency Fund: The 3-Bucket Plan (2025)},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/emergency-fund-for-sabbatical/}
}