How to Financially Prepare for a Job Resignation

Posted on Monday 20 August 2018

How to quit your job the smart way

There are countless reasons you may be considering leaving your current job, from relocating, to a career pivot, to simply wanting to take a break! Whatever the reason is, it is both an exciting and daunting prospect to soon be without the financial security that comes with a regular paycheque.

Job resignations are a part of building a career across multiple companies. However, they require considerable financial preparation and a lot of planning. You’ve probably dreamed of telling your boss “I QUIT!”, but before you utter that statement, here are some steps to consider:
Build up your savings

Unless you are jumping straight into a new job (and paycheque!), it is unwise to just up-and-quit your current job. If you are looking at a period of job-searching, time off or freelancing, it is smart to have enough savings in the bank. Savings help a lot when you need to get a car or something else. In fact, you should start researching what CPP is so you can get a better idea of whether you need it or not. Fast payday loans are great, but not when you don't have income coming in. So focus on savings at this stage.

Realistically, six months’ worth of living expenses is a solid minimum savings goal. This will give you a bit of financial cushioning if the job search takes a bit longer than expected, or while your own business gets up and running. It may seem like a big figure, but having enough money saved will give you freedom from jumping straight back into any old job, just because you need some cash.

Other times, you might be leaving your job simply because the work is demanding. Perhaps the job is no longer as fun as it used to be or you've outgrown it. In such an instance, a change is imminent. You might choose to remain at the job perhaps because it's well-paying. But sometimes, you might want more than just the money.

Therefore, if you work somewhere and you can no longer feel the growth that comes with the job, then perhaps it's time to take your leave. In fact, this might be your leap into something better. Often, we tend to think we control things. However, in certain circumstances, you have to let go and watch things unfold. When you become more open to other opportunities, you'll start finding money from sources you never even considered.

Clear all debts

With a proper plan, credit cards or other debts don’t have to be a cause of stress. Without a stable income, however, debts can soon become overwhelming and negatively impact your credit score and financial situation for a long time to come. For this reason, Mint advises that people completely pay off any and all debts which they may have incurred before going forth and exiting from their current jobs.

Cut down your spending

Even with a big chunk of savings in the bank, now is not the time to splash the cash. While in-between jobs, spending should be limited to necessities. Think of it this way: six months’ worth of savings is a lot less if you cook at home rather than at a restaurant for every meal! Besides, you can treat yourself when you do get that new job and it will be so worth it! Furthermore, cutting down on expenses allows you to put money into other important things such as building a college fund for your child.

Make the most of work perks

There are probably a lot of perks at your current job that you won’t be taking with you. Whether it is healthcare, a gym membership, or retirement fund contributions, you should make the most of these while you can.

While you’re doing that, you should consider how these will be covered once you resign. Will you be paying for your own gym membership? Can you afford the healthcare cover you require? These all need a lot of research, but for now, you may as well use any and all work perks while you can!

Aim to leave on good terms

Not everyone exits their jobs on amicable terms. In many cases, conflict with management, undesirable professional circumstances, and other related factors are determining motivators behind a person's decision to quit their job.

Even under the aforementioned circumstances, The Balance still advises individuals against badmouthing their soon-to-be former employers or otherwise burning professional bridges. In many cases, new employers consult the former bosses of potential hires. For this reason, blasting a manager can easily backfire and even halt potential, forthcoming employment.