Financially Prepare To Quit Your Job
Last week, we told you the signs that it’s time to look for a new job. But quitting, while it can feel exciting and relieving, is also scary. After your last day, you’ll have new problems to encounter. How are you going to pay your bills? How will you find a new source of income? Who will support your household?
Change hits hard. But a little bit of planning can help soften the blow. Below, we’ve listed a few steps to financially prepare to quit your job, so that you can more easily and more comfortably transition to your new vocation, whether that’s new employment or entrepreneurship:
Get health insurance. Your benefits end on your last day on the job. Start making room in your budget for health insurance, and shop around for one you can afford so you’re covered even when you’re no longer employed. You don’t want to be saddled with a P50,000 medical bill when you’re in between jobs. Also, even when you do get new employment, there might be a waiting period until you can get health insurance, so it’s best to make arrangements for yourself.
Have an emergency fund. Once you decide to quit, you should prepare financially for the time during which you won’t be getting any income. An emergency fund of at least three months (but preferably, more) can help you get by while you’re in between jobs, or while you’re waiting for your self-started business to take off. If you don’t have an emergency fund yet, start building one right now with our guide.
Revisit your budget. Make your emergency fund last longer by redoing your budget. Cut down and eliminate non-essential expenses. You can start the transition to living on less in the weeks leading up to the end of your current job, so that it’s not such a shock to the system when you have to live off of your emergency fund.
Find a way to make some money while you’re in between jobs. You can start this while at your current job. Brainstorm ways you can add to your emergency fund, like earning money as a freelancer, or starting a work-from-home business. Any extra money you can bring in is helpful.
Have a new job lined up. Before leaving your current job, it’s best (professionally and financially) if you already have a new one waiting in the wings, or if your business can be up and running shortly after you quit. Otherwise, prepare for the job search by brushing up your résumé, improving your work-related skills, using your networks to find new positions, and practicing job interviews to make yourself attractive to potential employers.
A change in employment affects your life greatly. It’s best to be prepared financially, so you know that whatever happens, or whatever you decide, you’re ready for the next stage in your career.