The Great Resignation: How to Plan Your Finances Before the Big Quit

Credello: According to data from the Bureau of Labor Statistics1, in September 2021, a record 3% of workers quit their job. That equates to roughly 4.4 million people. The mass workplace exodus of 2021 has been lovingly referred to as the Great Resignation. But the only way to make it a truly great experience is to ensure you’re financially prepared. So if you’re thinking about hopping on board the resignation train, here are four ways to plan your finances before saying, “I’m out!”.
Make Sure Your Emergency Fund Is Full
The purpose of an emergency fund is to offer financial protection and cushion during times of unanticipated need. Certainly, going without income after quitting a job is one of those times. That means before you quit, it’s essential to have a fully-funded emergency fund.
The general recommendation is that you set aside three to six months of living expenses. But if you have no plans for returning to work soon, you may need to beef up savings even more. Be sure to keep this cash on hand in a high-yield savings account. Doing so ensures funds are easily accessible when you need them.
Adjust Your Budget
It’s not practical to continue spending at a certain level once you no longer have a steady income. As you look to adjust your budget, decide which expenses are essential and which are non-essential.
Essentials include housing, transportation, and food. But things you may look at temporarily limiting include shopping for clothes, eating out at restaurants, or spending lavishly on entertainment. Once you have your list, consider temporarily going without some of those non-essential creature comforts until your financial situation stabilizes.
Get Your Insurance In Order
Many people have health insurance through an employer. And health insurance is a critical component of a stable financial plan. So before you quit your job, finding a new healthcare option is a must-do. That may mean switching to a spouse’s insurance plan or looking at getting an individual policy through an insurance company or medical sharing plan.
Assess Current Debt Burden
Credit card debt or similar high-interest loans could end up causing a strain during the days, weeks, or months you’re without income. So those with a lot of high-interest consumer debt may want to delay quitting for a few weeks or months to pay it off. Of course, you can use your emergency fund as needed to cover payments. But if you pay off any high-interest debt before quitting, you can free up that money for other needs.
The Bottom Line
Quitting your job might be top of mind. But it’s essential to be financially prepared before doing so. Simple steps like building out your emergency fund, adjusting your budget, planning for healthcare, and paying off high-interest debt can make quitting work a stress-free experience. And financial peace of mind means you can take the time you need to unwind, relax, and figure out your next steps.
1Bureau of Labor Statistics
Source: Credello