Guest Blog: Top 4 Financial Do's and Don'ts Before You Quit



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In yesterday’s blog, I shared my high-level thoughts on how to prepare to quit. Today I welcome guest blogger Michelle Clark from Greater Calling Personal Finance, who outlines in greater detail what financial steps workers should take before resigning from a job.

Top 4 Financial Do’s and Don’ts Before You Quit

  1. DON’T quit too soon. As the Queen of Quit mentioned in an earlier blog, the Rage Quit might be our favorite fantasy. Still, it comes with dire professional and personal consequences, many of them financial. Whether you are leaving for a new career opportunity or retirement, spend considerable personal time designing what your next phase should be. Do a postmortem on your current situation. Is it is the boss, company, or industry you want to leave? Identifying your reason will go a long way towards satisfaction in your next role and will set the parameters for the financial preparedness you need for the transition. What does the future look like? Do you need to move, get more education, or take an entrepreneurial or ministerial leap? How will your expenses change when you leave your job? Some often forgotten things to consider:- 401k loans are due within 60 days of leaving the company’s plan.- You may need to replace employee-provided health insurance and life insurance.- If you have a vacation accrual balance, it will either get paid out if positive or withdrawn from the last check if negative.- Many employers who have paid for relocation or education will expect repayment if you leave before an agreed-to time frame.
  2. DO learn the skill of creating a written budget. Now that you have an idea of your expected expenses, you’ll prioritize them. Record your projected income (or available savings) at the top of the page and list your expenses down the page until the balance is allocated to a purpose. If you have never budgeted before, looking back over your bank transactions for the last several months will give you an idea of what to put into each category, but make adjustments for your new reality and leave room for unknowns and emergencies. For help with budgeting, check out some of the many online resources. My favorite budgeting tool is www.everydollar.com. If you are retiring, your monthly budget will come from a long-term plan to make your money last. Because this can be a complicated undertaking, I recommend getting professional help, preferably from a fiduciary firm specializing in retirement planning, not just financial advising.
  3. DO live by and track your spending to the budget. To maximize each available dollar, you have to: track your spending throughout the month, verify you will not overspend BEFORE you make a purchase, and make adjustments to the budget to keep it in balance as things change. Tracking your budget may sound tedious, but it does not have to take a lot of time or effort with online banking and interactive budgeting tools. Most people find that their money goes further than they thought just by being intentional with their spending. I recommend getting into these two budgeting habits about three months BEFORE you quit if you can. Be patient if you budget poorly at first! I suggest the three-month timeframe because no one is good at estimating what they spend, so it takes approximately three months for the numbers to be close to accurate. You want to have the kinks worked out before you quit.
  4. DO build a solid financial foundation. If you are changing jobs or just seriously considering it, I recommend paying minimum payments on loans and credit cards until your new career produces revenue. If you have extra money after paying essential expenses, put it aside to help with costs during the transition. Once your financial life is stable, you can take that extra money and apply it to debt or your emergency fund. Keep in mind that people who are out of debt and have three to six months of expenses set aside for emergencies have many options and less stress when the urge to quit becomes strong.

 

 

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