As a teenager, I had several part-time and summer jobs, most of which included low pay, long hours, and poor working conditions. Yet, every time I complained to my parents about quitting, my dad always cautioned me against making a decision I’d regret. He made sure that I understood why you should never leave your job before you have another one lined up. However, there are times when this isn’t an option. However, you need to consider your finances carefully before making any moves. If you find yourself with no other choice, here’s how you should budget to quit your job.
Making a Budget to Quit Your Job
1. Take stock of your financial situation.
Before I make any important decision, I take stock of my current situation. When it comes to quitting a job, these include questions such as:
- How much do I spend every month?
- What does my savings account look like?
- What are my recurring monthly payments?
- How much debt do I have?
- What expenses can I eliminate?
These answers can give you a realistic picture and an estimate of how much you will need to budget before you quit your job.
First, you must know how much you will need to cover your monthly bills and meet your basic needs. You can use a basic equation that tallies your current savings and income. Then, subtract your monthly expenses to determine if you are living within your means.
Doing the math can help you decide if you are in a position where you can quit. Even if you don’t have enough to sustain yourself right now, these are the first steps you will need to take to get there.
2. Check your emergency funds.
If you plan to quit without another source of income, you’ll need to use your emergency fund. This money is there to provide a safety net to help you through unstable times, like when you are between jobs.
Based on the recommendation of nearly all financial advisors, you should have enough to cover 6 months’ worth of living expenses. If you have this amount in your savings, it could be the right time to access these funds.
But, you must remember what an emergency fund is intended for. This money should be used for utilities, rent or mortgage payments, groceries, healthcare costs, and other necessary living expenses. However, if you use it like a discretionary fund, you’ll soon find yourself in a bad situation. Remember, this money won’t last forever. So, use it wisely.
3. Saving should be your top priority.
When you don’t have a steady income, saving money should be your top priority. Until you have a secure income stream, you need to preserve as much of your savings as possible to make it last longer.
This could be simple things, such as keeping your money in a high-yield savings account and continuing to contribute to your retirement funds. But, it also means that you will need to make fundamental changes in your spending habits. More specifically, this means looking for ways to reduce expenses and cut unnecessary spending. When you are living on a limited income, you have to adjust your lifestyle to fit your budget.
Finding Ways to Sustain Yourself
Although it isn’t the ideal situation, many people quit their jobs before securing another position. While it increases the financial strain if you are already struggling, you can find ways to sustain yourself through the transition.
There are endless tips for budgeting and saving that all claim to change your life. But the truth is simple: the only way to sustain yourself on a fixed income is to make a budget and strictly stick to it.