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But those financial tips are easy to read through when you are trying to figure out how to use money that you have. But what if you are looking at a major financial decision that has the tendency to lower down your income? If you are trying to look at quitting your job, the financial ramifications will be severe in case you cannot replace that income in your budget.
Statisticbrain.com shares that in 2014, unemployment rate was at 6.1% leaving about 18 million Americans jobless. And if you are quitting your job, you then become part of the statistic of people trying to make do with little to no income. There are about 10 million consumers collecting unemployment benefits and you do not want to be one of them .
Of course, if you are quitting your job, it sounds like it was a personal decision. No one wants to be jobless in this consumer driven economy - unless you have something lined up like another job waiting for you. It can also be because you are looking to start up your own business and need to put in all your effort in realizing your entrepreneurial venture.
It is definitely a different ballgame when you are looking for ways to make ends meet. When you are having to live by a shoestring budget, everything becomes a lot harder. And quitting your job which is the main source of income can leave you in financial distraught.
Tips in handling your finances
When you quit your job it is a major financial decision that you need to plan for. The income that sustains your whole budget will now be almost non-existent. Here are some things you can consider when preparing your finances when in light of quitting your job.
- Consider talking to a financial advisor. Investopedia.com defines a financial advisor as a qualified person who can dispense financial pieces of advice or guidance. This is the holy grail of financial tips for almost all aspects of your financial need. When you want to quit your job, you are putting in danger your household budget. But a financial advisor might be able to point out other areas of your financial life that will be affected your decision to quit your job. They can also give you more tips on how to prepare your finances before letting go of your job.
- Strengthen your emergency fund. Your emergency fund is meant to be your safety net when you encounter financial challenges in life. On top of the list is usually losing your job and quitting one definitely fits the bill. Your reserve fund should be able to cover your expenses for as low as six months to a year. There are several rules about how much of an emergency fund you need to have. The bottom line is that your emergency fund can be as big as you want it to be. In truth, the bigger, the better. When you are quitting your job, you need to have a plan on what you want to do next. This timeline should be your target in building up your emergency fund.
- Do not forget your 401(k). When you are in a hurry, you tend to forget a few things just like when you are rushed in packing so you can catch a flight. You later realize that you forgot to pack shirts in your bag because you were pressed for time. The same can happen when you are quick to decide in quitting your job but you might lose more than just a shirt. Think of your 401(k) that you have been contributing in your past job. But before you decide to just take out your 401(k) to pay for debt, you need to know that you can rollover your contributions to benefit your retirement. You can choose to do two things with our 401(k) - you can either put it in an Individual Retirement Account (IRA) or you can even put it in your new employer’s 401(k) if you have another job waiting.
- Settle bills with advance payments. This is one of those financial tips that can benefit your cash flow greatly in case you plans to say goodbye to your job. If you already know ahead of time that you are resigning from your post, try to make payments on your bills in advance before the date of your resignation. With all the chaos and confusion that can happen on the month that you leave work, you might overlook some of your payments which can hurt your budget even more not to mention your credit score.
Handling your finances after you quit your job
Your financial planning will be different when you are just about to quit your job and when you have actually taken the plunge and left the company. You can look into all the financial tips that you can find prior to leaving your job but all those planning can go down the drain if you blow your after-resignation finances. Here are some tips to consider when managing an income-less budget.
- Take a frugal lifestyle. Living below your means can do wonders for your budget. And it does not even mean dumpster diving or living off noodles for months on end. There are actually fun ways to a frugal lifestyle that you can consider even if you already have kids of your own. It actually becomes more important to consider a frugal lifestyle when you are managing a budget for a big family. The more you can save, the more it can benefit your budget in the long run.
- Do not blow your emergency fund. You might have been able to build up a solid amount for your emergency fund in preparation for leaving your job but you need to make sure that you use it for its intended purpose. Define the instances wherein you can dip your finger in your reserve fund. Is it only for expenses that spell the difference between life and death? That sale in the mall does not constitute as an emergency and must not be satisfied by pinching on your fund.
- Monitor your household budget. This is actually something that you need to do, regardless of your financial situation. It is not a sexy chore but you need to monitor your budget more than ever when you quit your job. You need to make sure that all the expenses are on track and you are not overspending at a time when your income is essentially non-existent.
- Look for an alternative source of income. If you know that it will take you a while to regain a steady source of income, one great financial tip you can use is to look for alternative sources of income while you do not have a job. One idea is to use your hobby and transform it into a money making venture. If you love baking, you can take orders and deliveries starting with friends and relatives. If you have a talent in taking pictures, you can look market yourself as a photographer and book events.
There are a lot of financial tips that you will come across when you are planning to quit your job. You just have to remember that whatever you set your sights on financially, you keep at it and continue to learn and evolve.