Planning a career break

Many women step out of paid work at some point: for a baby, for a parent who needs care, for a partner's transfer, for their own health. The break itself is a legitimate choice. Walking into it without a plan is what costs. A two-year break can end up costing more than two years of salary, because the money you did not invest in those years never gets the decades of compoundingCompoundingEarning returns on past returns. It is why money invested early grows far more than the same amount invested later. it would have had. This chapter treats the break as a project with a budget, a start date and a protection checklist, the same way the household check-up treats your emergency fund: as something you size in advance, not during the emergency.

What a break really costs

Take Divya, 30, earning ₹9 lakh a year with a basic salary of ₹4.5 lakh and a ₹10,000 monthly SIP, planning a two-year break. The salary she will not receive is only the first line.

The lines that hurt are the ones nobody sees on a payslip: the EPF and the SIP that stopped. Every rupee not invested at 30 is worth eight to ten rupees at 58. That is why the plan below puts so much weight on keeping even a small investment running.

Fund it before you take it

• Build a break fundBreak fundMoney set aside before a career break to cover the household shortfall, premiums and minimum investments for the length of the break. that is separate from the emergency fund. Size it as months of break multiplied by the household's monthly shortfall without your salary, plus your premiums and the SIPs you intend to keep. The emergency fund stays untouched for real emergencies.
• Start twelve months ahead if you can. Redirect bonuses, raise your SIP into a liquid or short-term debt fund, and cut the big variable costs early rather than in the middle of the break.
• Use what the law gives you. Under the Maternity Benefit ActMaternity Benefit ActThe law that gives eligible women 26 weeks of paid maternity leave for the first two children, and 12 weeks thereafter., a woman who has worked at least 80 days in the past twelve months for an employer with ten or more staff is entitled to 26 weeks of paid leave for the first two children, and 12 weeks after that; adoptive and commissioning mothers get 12 weeks. Women covered by ESI receive maternity benefit through ESI instead.
• Ask your employer, in writing, about extended unpaid leave, sabbatical policies and whether your role is held. Keeping a job open is worth more than any fund.
• Keep an account in your own name active with net banking and UPI, so you are never asking for access to your own money.

Keep the protection and the investments alive

• Term insurance: if anyone depends on you or your name is on a loan, the premium is non-negotiable. Pay it from the break fund.
• Health insurance: your employer's cover ends with the salary. Hold a personal policy before the break begins, and if a baby is the reason, buy maternity cover early; its waiting period is often one to four years.
• SIPs: reduce rather than stop. Most funds allow a pause of a few months, but even ₹1,000 a month keeps the habit and the compounding alive.
• EPF: leave it where it is. The balance keeps earning interest at 8.25%, and a withdrawal before five years of continuous service is taxable. You can withdraw after two months without a job, but it is the last money to touch.
• PPF and NPS: keep both active with the minimum, ₹500 a year for PPF and ₹1,000 a year for NPS, so they do not freeze.
• Nominations: update them on every account and policy before the break, especially if the reason for the break is a new child.