Unless living in your parents' basement is your idea of a good financial backup plan, failing to figure out how you'll make ends meet after you quit your bad job could make you even more miserable than staying there. So before taking that leap, be sure to have a solid plan for paying your bills after you ride off into the sunset.
This holds especially true if your goal is to quit and travel, in which case flight and hotel costs can sink you into debt fast. Or perhaps you're gearing up to start your own business? Plan to bank even more money before you quit your day job, since new businesses often take a while to turn a profit, and may also require additional unexpected startup costs.
Whatever your reason for quitting, the golden rule is to save three to six months' worth of your fixed living expenses before leaving, according to Megan Lathrop, Capital One money coach and career workshops co-lead. "Having those reserves will give you financial comfort when leaving a job so that going forward you can pursue the notion of living your true values," Lathrop said in a phone interview.
Here's how to do the math fast: If you already have a monthly budget, multiply that by six. Not sure how much you spend each month? NerdWallet has a calculator to help you make a rough estimate; be sure to include stuff like your monthly debt payments and health insurance costs (since your employer won't be paying for you anymore). If your monthly costs add up to, say, $2,500 a month, you'll need to stash away about $15,000 to tide you over. Alas, if you have kids, you might need double that — or more.
We get it; life's too short to stagnate in a "meh" job. Quitting your job may sound scary, but you can do it with the right financial and personal resources lined up. Consider taking these four steps to play it safe.