4 Ways To Secure Your Finances Before Quitting Your Job

To paraphrase a classical quote, those who aren't willing to commit themselves to their personal dreams are doomed to be hired to build someone else's. In other words, if you have a million dollar idea and you're passionate about a certain field of work that doesn't quite match your current job description, then perhaps it's time to consider quitting and pursuing that career. There is also a plethora of other reasons why you might be inclined to leave your position, such as the stress that's taking a toll on your health, the desire to be a stay at home parent or occupational burnout.

Why isn't everyone quitting then?

The primary reason why most of us aren't going through with it is that losing the financial security of the monthly paychecks is out of our comfort zone. Yes, the prospective of a career change is exciting, there's no doubt about that.

However, it's also frightening, and that fright triggers a paralyzing indecision. How will you be able to afford rent and utilizes in the meanwhile? How do you know your business idea will actually turn out to be lucrative? How will you manage to make ends meet until your enterprise gets off the ground? These are all valid questions that we hope to answer in the following guide.

1. Start by consulting your financial advisor

It's always wise to request the opinion of an expert in the financial field before reaching a conclusion, because this decision is definitely a big one. Even if you don't intend to spend extensive time going through your fiscal options, a brief one on one session with your financial advisor could reveal problematic aspects that you overlooked, and that have the potential of derailing your plans.

These professionals know just where to look for cash leakage in your strategy. Upon reviewing your budgeting closely, they are able to pinpoint that you may no longer be able to afford certain commodities when you're no longer receiving the paychecks. In addition, they can help you devise a tactic to reduce your frivolous expenditures and start living a more frugal life, before your new career blooms.

In essence, you'll learn exactly what your household's bare-bones budget consists of and what you should prepare for.

2. Securing a fund for emergencies

Virtually every single financial advisor will recommend establishing a fund dedicated exclusively for crisis situations, and it's necessity is really a no-brainer. The problem is actually deciding just how large it has to be. This is where the consensus between financial consultants disappears. Many of them recommend that the emergency funding should be able to cover between 3 and 6 months worth of household expenses, while others stick to actual figures; more exactly, between $1,000 and $3,000.

The heart of the problem is that predetermined values may not always apply to real life situations, and you have no way of being absolutely certain that the funds will cover the emergency. That's why the best approach is to save as much as you can.

Let's assume your emergency fund is able to cover all your expenses for the upcoming year. This is an ideal situation, not only because you'll sleep more soundly at night, but it also confers you a margin of error for starting your business or finding a more rewarding job. You'll no longer feel like you have to rush into bad decision because your budget is running out.

3. Apply for private health insurance

Another reason why leaving your current position behind is frightening stems from losing the employer-funded health insurance policy. More often than not, the employer covers the full extent, or at least a large percentage of the health insurance premiums. When you leave, you lose that benefit and you'll need to handle this expense on your own.

Therefore, it's recommended to dedicate a couple of weeks beforehand for researching the available offers, evaluate the coverage, weigh the premiums and select a provider. The process tends to be slightly more difficult when you're suffering from a certain pre-existing condition, you smoke, are passed a certain age, etc. Under these circumstances, it may take longer to find an insurance provider, but it's not impossible.

4. Take care of bills and utilities in advance

It's relatively easy to become swamped by the burden of debt when the bills keep coming in and your income can't cover them. Consequentially, a key step to take in this sense would be paying them ahead of time, while you're still earning an income from your current job. This includes mortgage premiums, utility bills, internet, home/auto insurance policy, etc.

Otherwise, your only other option would be to keep loaning money, at higher and higher interest rates, until your credit score goes down the drain. You might find yourself so strapped for cash that you're unable to dedicate your time towards building a new career, which is the whole reason why you quit your job in the first place.