Although the writing may be on the wall, don’t be too hasty with the break-up. Plan your exit strategy carefully, and stay on a path of being financially awesome.
Hopefully everyone is saving a little bit each month for an emergency fund, which should cover at least three to six months’ worth of living expenses.
Do you have a rebound?
Before quitting your job, give some thought to the next move. If another position isn’t lined up, do you have enough in savings to carry you through a period without a steady paycheck?
“Hopefully everyone is saving a little bit each month for an emergency fund, which should cover at least three to six months’ worth of living expenses. If you can set aside more while still saving for retirement and paying down debt, even better!” said Amy O’Dwyer, the branch manager of Washington Trust’s State Street Branch.
Even in a job market with low unemployment, it may take weeks or months to find the right situation. If your emergency fund isn’t flush, explore how your skills can translate into temporary or part-time work to maintain some cash flow. Consider signing up with a ride-hailing service if you have a reliable vehicle or rent out a spare room – such ventures work around your schedule.
Will you give up a reward leaving too soon?
Timing can be everything. Although you may be ready to move on, postponing a resignation may help your circumstances. If you’re managing a major project, will your reputation take a hit if you leave, or will seeing it through help secure a glowing reference?
Are there any financial perks coming up that you won’t want to miss, such as an annual bonus? Or, if you participate in a workplace retirement plan with a vesting schedule, will you be forfeiting any company contributions if you leave now? Understand what you may be giving up with a departure and determine whether it’s worth it.
Of course, if you made contributions to a 401(k) or other employer-sponsored plan, those assets – and their earnings – are yours. “Depending on how much money you’ve saved, you can leave the assets in your employer’s plan or roll them over into a new employer’s plan or into an IRA,” explained Kelly Watts, an investment officer at Washington Trust’s Meridian Branch. “You can also take the distribution, but know that you’ll owe taxes and likely a 10 percent penalty if you’re not at least 55 or fulfill other qualifications.”
Are you improving your total compensation?
Should your job change be driven by the need for a higher salary, weigh all the perks when comparing total compensation. Account for benefits like health coverage, retirement plans, stock options, bonuses, and assistance with child care or even student loans.
If flexibility is important – whether it is vacation or flex time to pursue other interests or the ability to work remotely to better manage the rest of what life throws at you – fully comprehend how a potential employer manages scheduling and what you would qualify for as a new employee.
Are you changing more than a job?
Will the amazing opportunity you’ve been eyeing require moving to a new city, state or country? Some factors to consider include the cost of moving – and whether an employer will foot the bill, how the cost of living compares to your current location and income, and what kind of commuting costs you can expect.
A slightly higher salary in a city with a much higher cost of living may end up setting you back financially, so be aware of the trade-offs and formulate a budget for a better grasp of the difference.