Editor’s note: This story originally appeared on The Penny Hoarder.
When you’re ready to say goodbye to your 9-to-5, you are not alone.
Millions of workers quit their jobs in the past year, which has led to the term “The Great Resignation”. Countless others are considering this step. According to the Society for Human Resources Management, more than 40% of US workers are actively seeking or planning to find new employment.
If you are burned out or frustrated at your current job, it can be tempting to quit hastily without doing any prep. But the better you plan your exit, the better prepared you will be for the consequences.
Plus, yelling “I’m quitting” or simply leaving work will burn bridges and potentially affect your pursuit of future employment.
This employee termination checklist contains important steps you must take before you quit your job.
1. Find out your next step
Unless you are financially independent and you don’t need a job to afford your lifestyle, you need a plan to make money after you quit your job. It is better to review your options before losing your current stream of income.
Consider applying for jobs before you quit. You can avoid a loss of income if you can start your new role as soon as you leave your old job.
If you have business dreams and don’t want to work for another boss, check out our ultimate guide to starting a business. This list of home business ideas can help you get started on a small budget.
You might decide that all you really want to do is take some time off before starting your next job. A career sabbatical can mean you won’t see a paycheck, but the free time can be stimulating and help you focus better on what you want to do next.
2. Save money for the transition
It is wise to build up some financial cushion before quitting your job. Even if you have another gig, it could be a few weeks before you get your first paycheck – or you may find that your new job isn’t exactly what you want.
It is ideal to save at least three to six months on living expenses in an emergency fund, but it is best to save that money for a real emergency, such as unexpected medical bills.
Instead, set up a sinking fund specifically to save for the cost of being out of work for some time.
3. Take care of upcoming major expenses
Big spending seems to hurt more when you’re unemployed and living on savings. Before you quit your job, think about the high expenses you can expect – such as new tires for your car – that you can pay for now while you are still employed.
It’s also important to note that losing your job can affect your ability to qualify for finance or credit. For example, if you are in the middle of the home buying process, losing your job could affect your chances of getting a home loan, even if you plan to use your spouse’s income to cover payments. You may want to reconsider your plans, or schedule things so that your loan will be completed before you quit your job.
4. Use your PTO or other advantages
Before filing your resignation, you should make the most of your employer’s services.
Some companies pay out accrued vacation and sick days upon departure, but others do not. If your company isn’t paying out accrued paid time off (PTO), make sure to use your vacation days while you can.
Please note that your employer may no longer be able to grant your request to use an auxiliary severance service after giving two weeks’ notice.
It is also best to take advantage of any other employee benefits that you lose. For example, if your child is getting braces, you may want to do so while you still have dental insurance with your employer.
5. Gather the information you need to get your 401 (k) rolled over
Once you quit your job, you will lose the opportunity to contribute to your employer-sponsored 401 (k) plan. Of course, you can still save with your next employer with an Individual Retirement Account (IRA) or a 401 (k) retirement plan – but you may want to transfer the money from your old 401 (k) so you don’t have to do several Manage accounts.
If you typically log into your retirement account from your work computer, make sure you have your login information and account number so you can access your account from the comfort of your home.
6. Find out how to get health insurance
For most people, losing their job means losing access to health insurance, although there are still options to continue or get new insurance.
One of the easiest options could be to get your spouse or domestic partner’s health insurance if they are insured through their job. Loss of health insurance (even if it happens through a voluntary job loss) is considered a qualifying life event, which means your spouse or partner can add you to their insurance without waiting for the open registration deadline.
Alternatively, you can extend your current health insurance coverage via COBRA (the consolidated omnibus budget reconciliation law) by 18 months. With COBRA coverage, however, you have to pay your employer’s contribution share plus an administration fee.
Since continuous coverage with COBRA can be expensive, another option is to find a cheaper health insurance plan through the health insurance market. The Coronavirus Pandemic Stimulation Act made it cheaper to get health insurance under the Affordable Care Act.
7. Find out how to get your final paycheck
Your last paycheck may not come on the schedule you’re used to with direct deposit. Contact your company’s human resources department or employee handbook for information on how they issue the final paychecks.
Some companies will send you a paper check even if you have been signed up for direct deposit in the past. Make sure your address and other contact information in your employee files is up-to-date.
You should also write down the contact information of your manager or your HR representative in case you have any problems or inconsistencies with the payment of the final payment.
8. Create a professional letter of resignation
While it’s best to get the news to your boss in person, it’s best to file an official resignation letter.
Your resignation letter should include the date of your last work day and other important details, such as projects that you would like to finish. You may want to provide the reason for leaving the company, but it’s better to keep things vague than badass your employer and possibly burn down a bridge.
Check out this article for clever tips on how to write the perfect letter of resignation.
9. Tie loose ends together
It may never be the perfect time to quit a job – after all, work never ends – but your termination will be accepted more cheaply unless you quit during a busy season or in the middle of a big project.
If possible, try to schedule your retirement so that you can tie up the loose ends of the work you are currently doing. You are more likely to get a positive recommendation from your employer if you spend time training a new hire or providing a knowledge transfer so that your co-workers can take over your role when you are away.
It is also helpful to use this time to gather contact information to keep in touch with your co-workers. Don’t forget to ask your manager about using it as a reference.
If you are in an area where you need to put together evidence of your previous work experience in a portfolio, put everything you need together before you quit. Your employer can choose to end the relationship with you immediately instead of waiting for your chosen end date. You don’t want to lose access to files that you may need for your portfolio.
10. Prepare for an exit interview
Before you leave, your employer may want to sit down with you to discuss your reasons for leaving. While exit talks can also be used to help companies get information about what they could do better, remember to treat things professionally so that you go on good terms.
Prepare to tactfully discuss why you are leaving the company, what you think about your time at the company, and what constructive criticism you could offer your future employer.
When you’ve gone through all of the things on this list, you will be well prepared to quit your job with no regrets.
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