They call it «the great resignation» because now everyone is quitting their jobs. At least it feels like everyone stops.
The COVID-19 pandemic is causing many of us to re-evaluate our lives and careers. Some of us are burned out. Some of us never go back to the office. According to the US Bureau of Labor Statistics, nearly 4 million Americans quit their jobs in June alone.
According to a series of recent polls, most American workers are even considering quitting their jobs. A surprising number of them are even willing to go into debt for it.
are you in this boat If you’re leaving your current job with no prospects for another job, here are five financial steps you should take before you quit. A solid financial plan gives you the time, space, and stability to pursue the kind of career you really want.
1. Have savings in the bank
Even though there are many job openings these days, you might not get a new job right away. Before you quit, financial experts often recommend having enough savings to cover six months’ living expenses — although that can be quite a challenge.
In any case, you should have enough savings to support yourself for several months. Try putting a portion of your current paycheck into a separate savings account so you’re not tempted to spend it.
The Aspiration Account allows you to earn up to 20x the average interest on your savings. (The FDIC reports that the average account earns just 0.05%.)
With this online account, your money is FDIC-insured and protected by military-grade encryption. You’ll also get up to 5% cashback on your debit card purchases. Registration takes five minutes.
2. Make sure you have health insurance
Don’t forget that we are still in a global pandemic. Yes still.
You want health insurance even if you no longer receive it as unemployment benefits.
COBRA allows you to continue your previous employer’s coverage for up to 18 months, but it’s expensive. You are not eligible for federally paid COBRA awards if you have left your job voluntarily.
Instead, consider shopping at the federal health insurance marketplace, which offers a variety of plans with different levels of coverage and costs. Depending on your income, you can get a subsidy towards your insurance.
3. Lower your monthly expenses
Without a regular income – at least temporarily – you have to live on less. Examples: cutting cables, canceling some streaming services, not ordering anything for dinner.
But don’t stop there. Take real steps to reduce your unavoidable monthly bills:
car insurance: A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your zip code and age and it will show you your options. People have saved an average of $540 a year this way.
Food: A free app called Fetch Rewards rewards you with gift cards just for buying toilet paper and hundreds of other items at the grocery store. After downloading the app, simply snap a photo of your receipt showing you’ve purchased an item from any of the brands listed in Fetch.
Online Purchases: Wouldn’t it be nice if every time you shop at Amazon or Walmart.com you get a notification and you’re about to get ripped off? That’s what this free service does. Just add it to your browser, and before you checkout, it checks other websites to see if your item costs less elsewhere.
4. Submit your 401(k)
If you’ve been at your current job long enough that you want to quit, you likely have a 401(k) retirement account through your employer.
It might be tempting to cash it out and have access to all that money, but it’s not a good idea. It comes with penalties and taxes while reducing your retirement savings.
You should probably just leave your 401(k) account as it is until you get a new job. Then you can roll it over to your next employer’s 401(k) plan. Or, if you want to become self-employed, roll the money into an IRA, an individual retirement account.
5. Develop other sources of income
If you’re burned out at your job and want a change, you’re far from alone. But if you quit your job with no other line up, you may need some alternative sources of income until you find your next steady job.
Maybe it’s time to look for a part-time job for now. Here’s a list of seven side gigs that got us through the last year and a half. These include delivery apps, help for the elderly, contact tracing, freelance work and homeschooling support.
We know other ways to get a little pocket money here and there. For example, research companies want to pay you to watch the news.
You can add up to $225 a month to your pocket by signing up for a free account with InboxDollars. Each day they present you with short news clips to choose from and then ask you a few questions about them. It only takes a minute to sign up and get paid for watching the news.
The “big resignation” has caused many of us to quit our jobs—or at least consider quitting our jobs.
Nothing wrong with that. But if you do, having a financial plan in place will make all the difference.
Mike Brassfield is a senior writer for The Penny Hoarder.