Are you ready to move on from your current job? Thinking of switching careers? Or are you simply burnt out and need a break?
Whatever your reasons, you're not alone. According to the Bureau of Labor Statistics, in 2021, 47.8 million American workers quit their jobs, in what has been touted as the "great resignation."
But to be able to make quitting work for you, you need to have a solid financial plan to do this stress-free. Especially in our current uncertain economy, with inflation on the rise and energy, gas and food prices skyrocketing.
We've put together some tips to help you navigate this period and get your finances in order.
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Assess your relationship with money
What's your money mindset? How do your emotions impact your spending? Do you find having conversations about money uncomfortable? Do you think budgeting means living a frugal life, devoid of fun?
Our relationship with money can often be complex because our safety, wellbeing and status are wrapped up in it. "An essential part of your exit strategy is to have your affairs in order. That will provide you with peace of mind and the focus you need to tackle the next step in your career path," says Renee Minchin, Founder & CFO of 2account.
So assessing your triggers and anxieties related to your financial situation, and preparing accordingly will help both your bank account and mental health.
How much money do you have in your saving account(s)? The general rule is to have a minimum of three months of expenses saved. Depending on how long you're planning to be unemployed, it's important to take into account other issues such as medical emergencies or unexpected house expenses.
Generally, financial experts advise saving around 20-40% of your income. How do you fare? Where can you cut your expenses to increase your saving power? By figuring out where you blow your money (it could be coffee), you'll increase your financial resilience – and peace of mind.
If you already have savings, how far can you stretch them? Don't blow your money and make sure that any excess goes into a savings account.
If you have debt, you should consider getting on top of it before quitting. While it seems to make no sense to pay more money when you're simultaneously trying to save more money – it does actually make sense.
When you're out of the working force, the last thing you want to worry about is debt. Quitting should empower you, not cripple you.
So the sooner you get rid of that debt, the better. Get a side hustle, sell some stuff you already own, and do whatever it takes to get rid of that debt.
Plus, getting a side hustle is a great way to have some extra income even after you quit (if that's your jam).
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Use your benefits before you quit
Before venturing into the unknown, it's best to make sure you get all the benefits from your current job.
If you're planning to start your own business, or you simply don't have another job lined up, it's essential that you prioritize healthcare.
Start booking all the checkups so you won't have to pay more later on. If you're taking any constant medication, another good idea is to talk to your doctor and give them the heads-up so that they can help you stockpile. That way, you won't have to compromise your health if you find yourself financially strained.
Conclusion
No matter where you're on the scale of financial literacy, the time to start saving money is now. These 4 tips will help you build a secure financial foundation before quitting.
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