As more Americans continue to leave their jobs, the Great Resignation shows no signs of slowing down. But as appealing as the thought of leaving a job you don’t like might be, you’ll want to make sure you’re financially prepared for it. Here are some ways to adjust your budget before you quit your job.
Track Your Spending
If your budget has been on autopilot for a while, you’ll want to re-engage and start tracking your spending. Before you leave your job, keep track of every purchase and expense — large and small — because most of us spend more than we think each week. Tracking your expenses will give you a realistic view of your current financial situation and help you identify opportunities for change.
Cut Your Expenses
Once you have tracked your spending for at least two weeks, look for expenses you can reduce or eliminate. For example, maybe you’ve subscribed to a few too many streaming services, or gotten into the habit of ordering take-out several times a week. Start cutting back spending on wants and focus on putting money toward your needs only.
Check on Your Emergency Savings
Even if you already have a new job lined up or feel confident you’ll find a new one right away, having enough emergency savings to cover 3-6 months of living expenses will make the decision to quit your job less intimidating. Plus, if things don’t go as planned in your new role, you’ll still need something to fall back on.
Maximize Your Current Position
If you currently have health insurance through your job, get any necessary check-ups and preventive care done before you quit. Refill your regular prescriptions and order a pair of back-up glasses or contacts if you have vision coverage. Even if you’ll have benefits at a new job, coverage generally doesn’t start until after 30 days and the waiting period can be as long as 90 days in some cases.
Test Run Different Scenarios
As you’re working on your revised budget, test run a few different scenarios. Rework the budget to reflect your current situation, as well as a budget based on your anticipated salary. Also, be sure to work out a “bare bones†budget that strictly covers the essentials with little or no discretionary spending. That way, you’ll know the baseline for how much you’ll money you’ll need to bring home — or use savings to cover — if your new employment situation turns out to be different than you planned.