4 Financial Steps to Take Prior to Leaving Your Job

PUSH Money

4 Financial Steps to Take Prior to Leaving Your Job

Money and employment experts advise on four financial moves to consider before leaving your job for good.

Many Americans find themselves living paycheck to paycheck while dreaming of quitting their jobs, perhaps to pursue full-time freelancing. However, there’s often little support for leaving a stable job with benefits, and waiting for a windfall, like an inheritance or lottery win, isn’t a practical exit plan. For most people, the time between considering leaving their job and actually doing it can span years or even decades.

Experts suggest that you can immediately start. It’s now easier than ever to create a plan to resign from your current job, leave on good terms, and establish a steady income. Here are four things to do before quitting your job and moving on.

Maximize Your Current Job Benefits

Do you know the importance of and fully understand your current employee benefits?

Before leaving, take full advantage of the resources available in your current job. Utilize training, assessments, and on-the-job opportunities that can help set you up for your next move. Even if your current job isn’t everything you want, you can still find valuable resources to take with you when you leave.

Apart from using paid time off or even sick time, it is crucial to understand your retirement savings or pension benefits. After resigning, you may be able to retain some benefits, while others may need to be transferred or forfeited.

Being prepared to replace employer-based life and health insurance is also essential. This planning takes research and can be daunting for many employees, especially those supporting a family. Plan to reduce stress.

If you’re not transitioning to another job that offers these benefits, it’s wise to explore options on HealthCare.gov to see if you qualify for tax credits. Begin by researching health insurance options well before you need them so you can accurately factor the cost into your budget.

Use Your Job to Finance Your Startup

If possible (and within the parameters of your current employment), start your business while still employed. View it as using your day job to finance your startup.

Not being stressed over your mortgage or bills puts you in a better position to price yourself and negotiate offers. This financial stability will empower you to avoid deals that compromise your integrity or values. Starting your business while employed also gives you time to work out the potential curve balls thrown at you, such as hiring an accountant, opening a business bank account, hiring a bookkeeper, and ensuring your idea is viable.

Keep all your business expenses separate from your personal expenses. This separation will prevent headaches for you and your accountant during tax season. Maintaining this separation will also help you determine the right time to leave. When your business earnings rival or exceed those from your day job, it’s time to plan your exit.

Establish an Emergency Fund

Inevitably, some internal or external factor will appear to derail your plans. However, remember that the money you are managing is your own. There’s no need to rush. Take your time to carefully plan your financial steps without feeling anxious.

First, save a substantial emergency fund and place it in a high-yield savings account. You should have six to nine months of expenses, including health insurance. This savings will help you avoid stress in case of unforeseen circumstances.

It is essential to build an emergency fund to help reduce financial pressure. Once you have obtained your emergency fund target, you will have the freedom to make life decisions without financial worries, alleviating your angst about departing your current gig.

Be Open Minded

The day has arrived to submit your resignation letter. Make sure to resign following any required policies, procedures, and timeframes. Most employers prefer 30 days of notice, but the number varies by industry. Some organizations may ask you to leave immediately, so be ready for this and don’t take it personally.

Instead, create a plan to be gracious. Have thankyou cards prepared for those you care about most. Share your personal contact information with cherished colleagues and make a note of any emails or phone numbers you may need in your post-job life. Express gratitude for everything you learned, obtained, and accomplished while working for the organization, thus leaving professionally and hopefully on good terms.

You may never wish to work there again, but you may have family or friends who might. As a colleague, you may be able to refer others or need a reference. As an entrepreneur, you may, and likely will, find yourself in consulting roles within the same professional circle.

Business networks and professional reputations matter for numerous reasons. Therefore, when departing, do it with your head held high, but be mindful not to burn bridges.