September 28, 2018

Planning to quit your job? How to put your finances in order

There are many reasons why you’d want to quit your job. It could be that your personal situation has changed recently or that you want to actively pursue new dreams. It could also be that you have simply fallen out of love with your current position. Regardless of your reasons, it is important for you to ensure that you are adequately prepared financially before taking the leap.  Here’s how to do so.

Analyse your financial exposure

Unless you’ve got immediate income support, you will most likely feel the strain on your finances when you quit your job. Do you have any dependents? How will you take care of the expenses arising from all your responsibilities?  How long can you survive without an income whilst dealing with these expenses? If you can’t quickly answer these questions, then you may be better served putting back your exit from the job.

Check your emergency fund

Your emergency fund is your fall back for times like this where you either lose your job or in this case, voluntarily walk out.  Ideally, you should have a minimum of your three months expenses saved up before you can genuinely say you have an emergency fund. However, it may not be enough in some cases. Review this option carefully, with the mind-set that you could be without any income for the next three months. If you don’t think your reserves can last that long, you have to consider pushing back your exit.

Clear your debt or reduce it to the barest minimum

You need to clear your debt before you quit your job.  If you can’t completely cross into the green on your debt, pay off all the major ones first. You can then consolidate smaller debts where you have the option. For instance, your credit card debt can be lower if you apply for a favourable balance transfer. This way, you could have far less interest to pay when you are out of a job.

Rule out any legal implications

You don’t want to quit your job and then run into legal difficulties that could throw off your finances majorly. Review your employment contract to ensure you stick to all the terms and conditions. If you get embroiled in a legal tussle, it could take a while for you to get employed.

Sort out your insurance and retirement pension

If your insurance and retirement plans are tied to your current roles, you need to explore your options. In many cases, you can simply take your insurance or retirement along to your new place of work. You also need to work out how you will keep up with premiums.

Go over your plans once last time

Think about why you want to leave again. What is it about the job that you can no longer stand? Have you gone over your plan for that new business you are looking to start? What does your partner think? Only go ahead with your plan after you are satisfied that all grey areas have been covered.

Leave on great terms-it could be your bail out!

When you have made the decision, exit on good terms with your current employer. Make sure you place emphasis on the fact that you are leaving to pursue new opportunities. If your plans don’t work out, you can always explore the option of getting your old job back.