Quitting Your Job? Make These 5 Financial Moves First
They’re calling it “the Great Resignation,” because everybody’s quitting their jobs now. At least it feels like everyone’s quitting.
The COVID-19 pandemic has many of us reevaluating our lives and our careers. Some of us are burned out. Some of us aren’t ever going back to the office. Nearly 4 million Americans quit their jobs in June alone, according to the U.S. Bureau of Labor Statistics.
In fact, most American workers are currently thinking about bailing on their jobs, according to a number of recent surveys. A surprising number of them are even willing to go into debt to do so.
Are you in this boat? If you leave your current job without having another job lined up, you’re going to want to make these five financial moves before you give notice. Having a solid financial plan will give you the time, the room and the stability to pursue the kind of career you really want.
1. Have Savings in the Bank
Even though there are a lot of job openings these days, you might not get a new job right away. Before you quit, financial experts often recommend having enough savings to pay six months’ worth of living expenses — although that can be a pretty tall order.
In any case, you should have enough savings to support yourself for several months. Try funneling some of your current paycheck into a separate savings account, so you won’t be tempted to spend it.
With the Aspiration account, you can earn up to 20 times the average interest on your savings balance. (The FDIC reports that the average account earns just .05%.)
With this online account, your money is FDIC-insured and protected by military-grade encryption. You also earn up to 5% cash back on your debit card purchases. It takes all of five minutes to sign up.
2. Make Sure You’ll Have Health Insurance
Um, don’t forget that we’re still in a global pandemic. Yes, STILL.
You’ll want to have health insurance, even though you won’t have it as an employment benefit anymore.
COBRA allows you to continue coverage under your former employer’s plan for up to 18 months, but it’s expensive. You’re not eligible for government-paid COBRA premiums if you voluntarily left your job.
Instead, consider shopping on the federal health insurance marketplace, which offers a variety of plans at differing levels of coverage and cost. Depending on your income, you may qualify for a subsidy to help pay for your insurance.
3. Cut Your Monthly Expenses
With no steady income — at least temporarily — you’ll need to live on less. Examples: Cut cable, cancel some streaming services, don’t order out for dinner.
Don’t stop there, though. Take real steps to reduce your unavoidable monthly bills:
Car insurance: A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options. People have saved an average of $540 a year this way.
Groceries: A free app called Fetch Rewards will reward you with gift cards just for buying toilet paper and hundreds of other items at the grocery store. After you’ve downloaded the app, just take a picture of your receipt showing you purchased an item from one of the brands listed in Fetch.
Online purchases: Wouldn’t it be nice if you got an alert anytime you’re shopping on Amazon or Walmart.com and you’re about to get ripped off? That’s what this free service does. Just add it to your browser, and before you check out, it’ll check other websites to see if your item costs less somewhere else.
4. Roll Over Your 401(k)
If you’ve been in your current job for long enough that you want to quit it, then you probably have a 401(k) retirement account through your employer.
It might be tempting to cash it out and have access to all that money, but that’s not a good idea. It comes with penalties and taxes while reducing your retirement savings.
You should probably just leave your 401(k) account as it is until you get a new job. Then you can roll it over into your next employer’s 401(k) plan. Or, if you’re going to be self-employed, roll the money into an IRA, an individual retirement account.
5. Develop Other Income Sources
If you’re burned out on your job and you want a change, you’re far from alone. But if you quit your job without another one lined up, you may need some alternative income sources until you find your next permanent gig.
Maybe it’s time to look into getting a side gig for the time being. Here’s a list of seven side gigs that have gotten us through the past year and a half. They include delivery apps, elder assistance, contact tracing, freelancing and homeschool assistance.
We know other ways to pick up a little spending money here and there. For instance, research companies want to pay you to watch the news.
You could add up to $225 a month to your pocket by signing up for a free account with InboxDollars. They’ll present you with short news clips to choose from every day, then ask you a few questions about them. It only takes a minute to sign up, and start getting paid to watch the news.
The “Great Resignation” has a lot of us quitting our jobs — or at least thinking about quitting our jobs.
Nothing wrong with that. But if you’re doing this, having a financial plan in place will make all the difference.
Mike Brassfield is a senior writer for The Penny Hoarder.