Take These Financial Steps Before Quitting Your Job

Take These Financial Steps Before Quitting Your Job
Photo: fizkes, Shutterstock

As part of what’s been dubbed the Great Resignation, 95% of workers are thinking about quitting their jobs, with a third citing burnout as a primary factor, according to a recent survey. If this describes you, you’ll want to have a financial plan in place before you jump ship, especially if you aren’t leaving for another job. Here’s a look at a few must-dos if you’re going to quit without another gig waiting for you.

Look for alternatives to actually quitting your job

For the sake of financial security, you should ask yourself if you really need to quit in the first place. In most cases you likely won’t qualify for unemployment benefits if you quit voluntarily, unless it’s for a “good cause” like unsafe working conditions, or to take a firm job offer that later falls through. Plus, quitting gives you less flexibility in finding a more desirable job, as you’ll be racing against the clock to mitigate dwindling savings.

If you feel like you can’t tough it out under you current working conditions, talk to your boss about what can be done to shift or lessen your workload — the worst they can do is say no, and if they truly value you as an employee, they might be willing to do what it takes to keep you. And by staying employed, your job search can last as long as you need it to, allowing you to jump when the right job comes along.

Make sure your debt is manageable

Reconsider quitting your job until you’ve paid off any high-interest debt from credit card balances or other loans, especially if there’s any chance that you might miss a payment once they regular paychecks stop rolling in. Otherwise, you’ll want to take stock of your expenses and see how your debt payments can be maintained while you’re unemployed.

Have six months worth of living expenses in the bank (if you can)

It’s a tall order to be sure, but financial planners commonly recommend having at least six months worth of expenses (rent, car, insurance — all of it) lined up before quitting a job, if not more. Of course, the labour market is thirsty for employees right now, but you should plan for uncertainty, too. A lot of people leave their jobs with plans to get a new job right away, but that doesn’t always happen, even if you have relevant, in-demand experience.

Reduce your fixed expenses

Just because you have money saved up doesn’t mean you necessarily want to spend it, either. Try to stretch every dollar by revisiting your expenses and reducing how much you spend off the top every month. As an example, could you save on rent by living with your parents? Do you really need more than one streaming TV service? Since you won’t have any income coming in, you’ll want to keep spending to a minimum.

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