Lately, there’s a lot of news coverage about the Great Resignation, which is the name the media has given to the movement of people leaving their jobs. If you’re considering leaving your job or getting forced out, you’ll need to take control of your finances quickly. Here are the things you should do now to stay out of the workforce for as long as you want.
Get out of debt
If you’re about to have a reduced income, then you know every cent counts. Before you make the leap to becoming unemployed, make every effort possible to become debt-free. There are even ways to learn how to pay off debt with low income if your current job isn’t paying enough of a living wage. Don’t skip getting out of debt before quitting because when you do, you’ll need that money for other bills.
Cut your expenses
You’ll need to change how you spend money no matter how long you plan to stay unemployed. The good news is that if you’ve had expenses related to commuting to work, they will be cut out automatically. Consider the other things you typically spend money on that are work-related: clothing, lunches, cell phone plans, etc. Can you get rid of these to free up money every month? What about other expenses that you can do without, even temporarily? The more you can reduce your expenses, the longer the career break you can take.
Add to your emergency fund
If you haven’t yet begun an emergency fund, you’ll need to start one as soon as possible. Your emergency fund should have enough to cover your bills for however long you expect to be on a career break. If you’ve already saved enough to take off as much time as you want, consider padding your emergency fund a little bit more to account for the unexpected. You may not use that extra money, but the amount of compound interest it accrues could be well worth the effort.
Create a budget
Budgets aren’t just about restricting the things you love to spend money on, but they’re valuable tools to see how feasible your work break will be. Get together your regular bills plus any additional income you’ll receive (side gigs, interest, royalties, alimony, etc.) and crunch the numbers. If you come up short every month, it’s going to make your sabbatical much shorter than expected, so don’t skip this part.
Stay away from your credit cards
Credit cards can be tempting tools to have when you’re on a limited income, but keep them out of your wallet. Too often, people will see credit as “extra” money or an extension of their income instead of a loan that will need to be paid off in a month. If you’re unable to pay off your balances, you’ll accrue interest, which raises the cost of your purchases and reduces the amount of income you’ve expected to have.
The bottom line
Whether you’re taking a break from employment by your own choice or someone else’s, it’s essential to consider how your finances will be affected. Use these steps to ensure that you’re able to thrive while out of the workforce and wait for the right opportunity before you go back.