It is a dream for many to quit their 9-to-5 jobs.
Whether pursuing an entrepreneurial venture, supporting yourself as a freelancer, becoming a stay-at-home parent, or simply taking a break, it is important to take make sure you are financially prepared. Here is what to take into consideration before taking this exciting (but risky) step.
Quitting should never be a spur-of-the-moment decision. Before leaving your job, there are a number of preparations you’ll need to make weeks, or even months, in advance. For example, what are your plans for health insurance? How will you continue to save for retirement?
Do you plan to have an alternative source of income or will your spouse be supporting you? Are you simply taking a break or is this a more permanent change? Will you need to make new living arrangements or apply for new credit in the near future?
Regardless of your reason for leaving your job, it is likely you’ll need to make adjustments to your lifestyle and budget. Whether you are single or supported by your spouse’s income, the bottom line is you have less money coming in – even if just temporarily. Take some time to reevaluate your budget and where you can cut costs and consider whether you are really prepared to make such a drastic lifestyle adjustment.
You’ll want to ensure you have at least 6 months worth of savings (plus an emergency fund) to live on – probably more depending on your situation and whether you plan to have an alternative source of income. This is especially true for those pursuing an entrepreneurial venture, as even the best business plan cannot guarantee immediate success. Once you have reviewed your budget and figured out what you can live on, determine how much money you’ll need to have saved – and always allow for a little extra.
The last thing you want is to find yourself in over your head and scrambling to find another job if you run out of money.
If you have other friends, family members or former co-workers who have taken a similar leap, reach out to them for advice. They may be able to offer guidance and support based on their personal experience. This is especially true if seeking an entrepreneurial venture or setting out as a full-time freelancer.
Even if you hate your job, this is not the time to let your employer know that. You’ll want to ensure you always have your employer as a job reference for the future – and perhaps even have the option to go back if things don’t work out. Explain to your employer why you are leaving; chances are they’ll respect and support your decision, and maybe even offer some advice.
It’s important to follow you heart, but also to follow the numbers. It may not be permanent, but it will take some sacrifice. If you aren’t ready yet, don’t be discouraged. Be patient and take the necessary steps, and one day you’ll be able to comfortably take this next step in your life.