The pandemic has changed work cultures everywhere, prompting millions of Americans to quit their jobs in what has since been nicknamed the Great Resignation.
The pandemic has proven that some work can be done remotely, giving many employees a new bargaining chip. For others, the changes may have inspired a complete career change.
Whatever the reason, leaving your job without getting a new one is a daunting task and will cost each person differently.
Here are some tips to help you figure out how much money you would need to quit your job.
Calculate your budget
Most financial advisors will tell you to have at least three months of emergency savings, but if you don’t know how much your necessities are costing you per month, you may not know how much you’ll need to get by. .
Think about your necessities because things can’t happen once you quit your job: housing, utilities, food, car expenses, childcare, gym membership, etc. An additional expense you’ll want to make sure you include is health care (unless you’re enrolled in a spouse’s or parent’s plan).
Once you know the fixed cost of your needs, you can see how many months your savings will spread out.
If that’s not to your liking, you may need to consider staying at your job longer to save more money. Or, there may be ways to cut your budget even further, like exercising at home or cutting your takeout budget.
Additional income can also be considered.
Assess any additional income
Do you have an upcoming bonus? Will your employer pay for your vacation or sick days? Do you own shares in the company? Doing some foresight into these variables could help you get a little more money into your savings.
Other additional income that could boost your budget could come from a stampede or from personal actions.
Withdrawing money from your 401(k) is also an option, but should only be considered in an emergency, as you will incur a hefty tax penalty.
Get help from the pros
A financial advisor can help you better prepare yourself and your budget, especially if you’re changing careers and won’t have a reliable income for several months or years.
A professional can also help you evaluate your stock options.
Don’t forget your 401(k)
And, speaking of that 401k, according to Capitalize, Americans have accumulated more than $1 trillion in “forgotten” or “left behind” 401(k) plan assets. Don’t be part of the statistics.
By rolling your old 401(k) into an IRA or rolling it over to your new employer’s plan, you can keep your financial situation in order while you’re in school or starting a new business.
This story was reported from Detroit.