The economic landscape has seen some significant disruption over the past couple of years. This isn’t just the direct result of unstable infrastructure caused by the pandemic. Many people have become aware of how their employers’ actions and priorities concerning workers are not consistent with high ethical standards. For some employees, low wage rates and absent benefits have been the tipping point, while others are burned out by toxic working conditions.
The result of this has been an event dubbed the Great Resignation. Talented professionals are recognizing their worth and walking away from employers failing to treat the workforce fairly. However, if you’re among the members of the working population considering joining this movement, it’s important to recognize there may be some financial risk involved.
So, let’s take a look at how you can best steady your finances before quitting your current position.
1. Review Your Finances
Before you quit your position, it is wise to take an honest look at your financial situation. You may be experiencing a certain amount of burnout and mental strain as a result of your treatment at work. However, quitting immediately and stepping into uncertainty is unlikely to make your position any less stressful.
Start by reviewing the status of your liquid assets. This may include your checking account and any savings you can immediately gain access to if needed. Be realistic about how long you are likely to be able to cover your living expenses without any additional regular income. It can be concerning to look at your finances in the cold light of day. But you should also consider it to be empowering. After all, it helps you make more informed decisions moving forward.
Alongside your assets, you should look at your current debts. There may be student loans or credit card payments making up a chunk of your outgoings each month. If you find you need to quit without having a new job lined up, explore the potential for taking repayment holidays or a student loan deferment. These are usually tools you’ll need to apply for in advance, so it’s important to start to process as soon as possible. If you simply stop paying your loans without warning, there can be severe consequences.
2. Confirm Income Streams
One of the most important considerations before quitting is to confirm your onward income stream. This can take a variety of forms. Indeed, simply diving into any other job that comes along is unlikely to be a positive move. While the problems leading to your resignation are likely to be more than simply financial, establishing potential sources of your income can certainly take some of the stress off.
If you’re looking for another full-time position, it’s wise to be intentional about this. Transitioning jobs during the Great Resignation certainly benefits from a little planning. You need to make sure the new positions you’re targeting bring the finances you require while servicing your ethical and social needs. Set standards based on what you know your talents are worth. Look for organizations known for treating workers fairly and have a transparent policy of leveling up salaries in line with workers’ career progression.
Traditional full-time employment isn’t your only option here, though. Remote working is increasingly popular and practical, with many companies providing salaries comparable to in-office positions. This can be a good way to secure a good income in your industry without having to worry about relocating to a new city or acclimating to another office environment. In many cases, you’ll be able to start immediately, which reduces the income gap you might otherwise experience.
3. Investigate Your Accrued Benefits
Depending on your job, you may be entitled to benefits with significant financial value. One of the mistakes too many people make is to simply quit their position and leave without reviewing their benefits. They think all they’ll be owed by the company is their final paycheck. You need to investigate what other perks you can liquidate in ways that can help you be more financially stable when you quit.
It may be the case your role allowed you to accrue a certain amount of paid time off (PTO) each year. Many workers in the U.S. are hesitant about taking their full owed vacation time. This may particularly be the case if you’ve been working in the common toxic atmosphere in which going on vacation is considered a sign of less commitment. However, you need to remember the laws surrounding your rights to cash out your PTO vary from state to state.
Some states, such as California and Colorado, require employers to make payment for accrued PTO in the final paycheck. Your consideration here should, therefore, be directed toward making certain this amount is accurate. Make your own calculation on what amount of PTO you’re owed and then speak to your company’s human resources (HR) department to confirm this before you broach the subject of quitting with them. In states that allow “use-it-or-lose-it” policies, you may be able to arrange to take your paid time off in lieu of working your full notice. This gives you more breathing room to apply for jobs while still getting paid.
4. Budget for Income Gaps
It’s difficult to accept, but quitting your job can see you experiencing an income gap for some time. There may not immediately be a suitable job available to you and by voluntarily resigning you’re generally not eligible for unemployment benefits. As such, it’s important to plan your household budget to handle any potential loss of income.
Firstly, you need to establish what your drop in pay is likely to be. It may be the case that your partner is still bringing in a certain amount of money from their job and is happy to provide support in the interim. Alternatively, you could be using a part-time job as a stop-gap. Either way, knowing the potential deficit from your usual income gives you a goal by which to reduce your usual expenses.
Some budgeting techniques you can use when trying to save money can apply to bridging your income gap. The envelope system can be particularly relevant. It involves you physically placing money for each regular expense in envelopes, which gives you a good visual impression of your outgoings.
The key in this circumstance is to find ways to minimize the number of envelopes and how much you need to put into them. This may involve cutting down on subscription services, utilizing coupons for your grocery shopping, or even downsizing your rented home. This is likely to only be a temporary measure. But sticking strictly to a budget can mean you don’t suffer on your way to a better job.
The Great Resignation is a clear indication that workers are unwilling to be taken advantage of by employers. You certainly deserve to be treated ethically and fairly for any business you provide your talents to. However, before you quit, it’s important to gain an honest understanding of your current finances and make a plan for new income streams. Don’t neglect to research the benefits you can cash in before you leave. Remember that strict budgeting now can reduce your stress as you find the right new position.