Yahoo Finance Quitting Your Job in 2024? 5 Steps To Prepare Your Finances First
You’re finally doing it — after ping-ponging back and forth about whether to leave that job you’ve been at for the last five years, you’ve decided that this is the year you’re taking action.
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But not so fast. Experts say that if you are planning to quit your job, there are certain financial steps you need to take first.
“If you’re looking to leave your job, especially without having another one lined up, you’ll want to make sure you’ve done at least three things,” said Bri Conn, investment advisor representative of Childfree Wealth.
“First, pay off all your debts. You don’t want to be stuck figuring out how to pay those minimum payments with no job. Second, make sure you have a fully funded emergency fund. The last thing you should do is give yourself a savings buffer on top of your emergency fund.”
Below are more things to consider before ditching your current position.
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Make Sure You Have a Solid Savings Cushion
“Even if you are quitting to take on a new opportunity, I still advise having at least one paycheck worth of money saved up,” said Jake Hill, finance expert and CEO of DebtHammer.
“This ensures that any pay gap you experience between finishing your current position and starting the next does not negatively impact your expenses,” he said.
“If you are quitting without a new position in place, plan to save a minimum of three months’ worth of income. This will keep you afloat while you hunt for your dream job.”
Carter Seuthe, CEO of Credit Summit Consolidation, agrees.
“Regardless of whether or not you have another job lined up, I would make sure you have enough money in savings (or in other income) to cover your living expenses for a couple of months,” he said. “I’ve heard and seen lots of worst-case scenarios where someone has a new job lined up, but then that has fallen through at the last moment with no warning, resulting in them suddenly being unemployed.”
He said that having some money saved to fall back on can help cover your bases even in this absolute nightmare of a situation.
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Have Another Job Lined Up
According to Ann Martin, director of operations at CreditDonkey, the single best thing you can do for your finances if you’re thinking of quitting your job is to have another job lined up immediately.
“Avoiding the loss of income and the gaps on your resume is going to significantly improve your financial situation in the long term.”
She said that if you don’t have this taken care of, then you should at least make sure you’re ready to quickly hunt for jobs in earnest.
“This means having your resume in top shape, getting recommendations and references from any colleagues or supervisors at your current job, and updating your portfolio and LinkedIn profile.”
Put Away Enough Money To Cover Basic Living Costs
“It may take some time to get a new job unless it is in high demand,” said Joe Cronin, president of International Citizens Insurance.
“The average job seeker spent around five months doing this before the COVID-19 pandemic. A longer stay may be required as a consequence of the epidemic.”
He said you should have enough money saved up to cover your living expenses for no less than six months before you decide to vacate your job.
“You should also have enough money in your emergency fund to cover three to six months of your living expenses, but this is something else entirely.”
He said that to prevent getting into a jam when unanticipated bills pop up, you should use both accounts while you’re in between jobs.
Do Your Research Beforehand
“I believe it’s beneficial to speak to someone who has experienced the process of quitting a job, even if you’re not completely prepared,” said Te Wu, CEO of PMO Advisory.
“You can prepare for potential obstacles with advice from someone who has gone done it all before.”
He suggested finding someone you’ve met who could have a couple of suggestions, and he said to not be afraid to do some independent research as well.
“A good way to acquire unbiased insight on the challenges of leaving a job lacking a defined path to another is to ask around on social media platforms like LinkedIn.”
He said those connections might be really helpful when trying to formulate a strategy before taking the plunge.
Create a Budget and Plan For Expenses
Before leaving a job, Paige Robinson, real estate investor and owner of House Buyers, said it’s important to assess your financial situation and create a budget to manage your expenses.
“This will help you understand how much money you have and where it is going.”
She said it will also allow you to identify areas where you can cut back on expenses if needed.
“Planning for expenses can also help you determine how long you can survive without a steady income.”
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This article originally appeared on GOBankingRates.com: Quitting Your Job in 2024? 5 Steps To Prepare Your Finances First
