Quitting your job? Financially prepared?

Whether it is a new business idea that has taken hold of you or simple dissatisfaction with your current employer, there can be several reasons why you would want to quit your present job. Whatever your reason is, the one thing you should absolutely not do is make this decision when you are unprepared. Being financially ready is crucial to taking such a major decision. In fact, a lot of people keep slogging away at thankless jobs that they hate, simply because they don’t have their finances in order. In the absence of immediate income support, here are a few steps you can follow to be financially prepared before you leave your job: –

Take stock of your current circumstances

Before you can plan a financial strategy, you need to know where exactly you stand. You need to ask yourself a few questions – Do you have an alternate source of income that you can rely on? How long will you survive financially without a job? Do you have a new job waiting for you? Answering these questions should help you come up with a concrete plan of action before you quit.

Assess the expenses on hand

Do you have a contingency corpus that you can use? These savings will help you tide through the months after you quit. You need to make sure that you have saved enough to tide you over your monthly expenses, rent, bills, and EMIs (if any). Also, make sure that you have enough to clear any financial obligations that you might have towards your employer.

Check the legal Percurcessions

Before turning in your papers, go through the terms and conditions, as mentioned in your employment contract. Check the term associated with the notice period, restrictions (if applicable) on switching your job, data security clauses, etc. first. The last thing you want to do is to be found in violation of any clause that lands you with a hefty penalty to be paid. Not only this; but, a breach of contract can also make it quite hard for you to find a new job.

Do not get into too much debt

Maybe you have a foolproof plan to manage your debt, but if you plan on quitting your job, this really isn’t the time to have any debt. Try and clear off any debts you have, before you quit, especially if you don’t have an alternate source of income. Excessive debt can work against you and would reduce your capacity to negotiate with prospective employers, as repayment pressure might make you settle for another ‘not good enough’ job.

Be ready with a new plan

Whether you are quitting your job for a new one or for a business plan you have, make sure that your idea is viable. It will, of course, require a fair bit of research on your part, but find out about the market

conditions and how they favor your plan, before taking this decision. If the job market is not perfect right now, you can also look at the option to take up freelance work or a part-time job. Either way, you need to be sure about your next step before you come to a decision about quitting your job.

Think about the reason why you want to quit your job and consider if quitting is the only solution to it. At the same time, make sure you don’t forget to consider the effect this decision will have on your short term and long term financial goals; a thorough consideration of these two aspects will certainly keep you in good stead before you make the decision.