In the summer and fall of 2021, tens of millions of laborers resigned from their jobs causing disruption in almost every sector of the U.S. economy. The media has dubbed this activity “The Great Resignation”. I too recently resigned from my position as an auditor to pursue better opportunities for my career. This was not a light decision. Leaving the comfort and certainty of a bi-weekly paycheck left me uneasy. Luckily, leaving my comfort zone has paid off for me. Before leaving, however, I put plans in place to ensure a seamless transition from having a steady income to having no income at all. The steps I have below is the advice I’d give anyone who wants to leave their job but does not know how to ensure their finances are adequate to support them. So, here are six smart things to do before you quit your job.
Have A Plan
One of the worst mistakes you can make for yourself or your dependents is to impulsively walk off the job. While most of us envision some kind of grand exit, the best strategy is to carefully plan your exit. Be strategic about when you leave. The best times are usually after bonuses are paid or during peak hiring season for your industry. For example, in accounting, the best time to quit your job is in the summer/fall. Once you know when you want to leave, think about what you’re going to do next. Are you going to take some time off to spend with family? Maybe focus full time on developing your business? Or even taking time off to go back to university? It’s best to have something planned when you quit your job to ensure your life keeps moving forward and you don’t fall into a rut. Or even worse, lose your motivation and purpose.
Have 3 Months Of Savings
If you’ve read my blog before you’ll know I’m a big advocate of having a well-funded emergency fund [How To Save Your First $10000]. If you want to smoothly transition into unemployment without having to worry about losing your paycheck, you’ll need to have savings. Ideally, 3 months’ worth of expenses should give you peace of mind. Remember, during this period all your bills still need to be paid on time and you want to maintain a similar standard of living as before. If you rely on your employer for medical insurance, remember that you’ll also be without that. Finally, if you have any type of car, student or mortgage loans you’ll have to ensure at least the minimum is paid each month. When you’re planning your exit keep these things in mind. Personally, I had half my yearly salary when I left my job.
Secure Another Position
Even though I was eager to turn in my resignation, I did not actually resign until I secured another position. For those who do not intend to start their own business or just rest, the smart thing to do before you quit your job is to secure a position elsewhere. Prior to your exit, search job sites for roles/employers that you’re interested in. Always keep in mind that employers generally do not like to see an unexplained gap in employment. Securing another job will work in your favor. The greatest advantage, however, is that you’ll not have to go through an uncertain amount of time without income. You can take a week or two to rest/reconnect with family or concentrate on your side hustle knowing that you’ve secured future income.
Document 401k Information
If you have an employer sponsored account, it is in your best interest to document and maintain all relevant account information. More than 16 million employer sponsored 401(k) accounts went unclaimed between 2004 and 2013. The aggregate of these accounts is ~$8.5 billion. Don’t become one of these people. Before you resign, the smart thing to do is sign into your account and document all relevant information that you’ll need when you are nearing retirement. This simple action will make your search for the account information when you’re preparing for retirement easier.
Visit The Doctor
If you rely on your employer for medical/dental/vision insurance, then once you resign you may lose this benefit. To save on potential medical expenses visit the doctor before you quit your job. Also, if you rely on monthly prescription medication, request a 3 month refill. This way you will not have to pay for your prescription out of pocket. When I knew the specific date I wanted to leave my job, I refilled my prescriptions and saw specialists as I knew my insurance premiums will likely increase. If being without insurance is risky, consider looking into COBRA and understanding your coverages before you send your resignation letter. At the moment your insurance premium is probably heavily subsidized by your employer. Once you resign, you’ll see your premium increase, at times as much as double what you were paying before. Ensure you are prepared to cover these costs.
Leave The Door Open
Ever heard the saying “Don’t burn your bridges”? Will that apply when you resign from your job. Do not get into the social media hype that promotes walking off the job and telling your boss what a bad manager they are. Believe it or not potential employers can reach out to your previous employer for details on how you performed your role. You want to ensure whatever your boss says is positive. Leave in a cordial and polite way. Remember to give a minimum of two weeks notice as it can affect your future job-hunting prospects.
If you’re considering resigning from your position keep in mind these six smart things to do before you quit your job. If you want to add something I missed that you think is important comment below and let the community know!