Ready or not, the coronavirus pandemic continues to rock the economy and uproot the way we live and work. So much, in fact, that many Americans are contemplating making big changes to their lives and careers.
New data from the Pew Research Center shows that 1 in 4 (25%) Americans say they or someone in their household has been laid off. And while rising unemployment signals red flags for all of us, the recession has impacted women, especially women of color, the worst.
In its newly released Women in the Workplace report, Lean In and McKinsey & Company found that 1 in 4 (25%) women are now contemplating downshifting their careers or leaving the workforce due to the impact of the coronavirus pandemic.
"Working mothers have always worked a 'double shift,'" the report states. And as schools, businesses and workplaces go virtual, the boundaries between work and home life are blurrier than ever.
Moreover, Lean In and McKinsey & Company's research shows that just 3% of C-suite positions are held by women of color. (White women hold 19% of C-suite roles, in comparison.) Yet without representative leadership to provide solutions for the problems women and women of color in the workplace face, trying to keep up can be a fast-track to burnout.
Even before the pandemic, Yai Vargas of The Latinista made similar observations. For 16 years, Vargas worked in multicultural marketing and strategy across multiple industries (automotive, sports and financial services). Her job was to help recruit, sustain and empower a diverse workforce within her corporation. If that sounds hard, it's because it was.
"You've probably read that there are so many women-owned businesses and entrepreneurs that are popping up. There are a number of reasons for this, but one of the major reasons is because women are sick and tired of the oppressive state of corporate America, and they just give up," Vargas tells CNBC Select.
Somewhere along the way, Vargas had a thought: What if she could make a greater impact on the workforce by striking out on her own than staying in a corporate setting?
And so, she began to trim her expenses and put aside money with a vague plan to make a big life change.
For years, Vargas kept her idea fairly quiet as she got her finances in order. She didn't have a target date as to exactly when she wanted to quit her job; she just knew she wanted to be ready if and when the time was right.
She started by eliminating debt and reducing her expenses. "I was hustling," Vargas says. Part of the reason why she stayed in her job was to pay off her student loans, because she wanted to be debt-free when she took the leap.
Apart from loans, Vargas didn't have any other debt. However, she did take a look at her spending to see what she could eliminate. She started with two of the biggest expenses Americans see in their budget: housing and transportation.
"I downsized my apartment," Vargas says. "I went from a 2 bed, 2 bath to a small 1 bedroom. I even leased out my car for a few months to a friend, and she took over the lease."
Cutting down those expenses helped Vargas find room in her budget for more savings, which she stockpiled into her rainy day fund. After seeing what her bare-bones budget could be, she decided on a goal of $60,000, knowing it was more than enough to cover at least one year of her expenses.
In addition to her emergency fund, Vargas had a 401(k) and other brokerage accounts. But she wanted to protect them. Building up a cash nest egg in an easily-accessible savings account helped Vargas ensure that her long-term investments wouldn't turn into a short-term safety net. She put her savings into an Ally Online Savings Account, which has a higher-than-average interest rate and charges no monthly fees.
Up to 6 free withdrawals or transfers per statement cycle *The 6/statement cycle withdrawal limit is waived during the coronavirus outbreak under Regulation D
$10 per transaction
Yes, if have an Ally checking account
To calculate your bare-bones budget, simply add up your essentials: housing, transportation, health insurance, food and utilities. Multiply it by the number of months you'd like to have in savings, and that's your emergency fund goal.
Vargas stayed true to her new budget while formulating the vision for what would eventually become The Latinista, her business. She confided in close friends and colleagues, took business meetings on her lunch breaks and started working in her off-hours to make a business plan.
Once Vargas reached her savings goal, she consulted with a financial trainer at The Financial Gym. When working with a financial planner it's good to share your big goals with them — like plans to quit your job — so they can help you spot anything you're missing in your financial plan.
And if you've recently been furloughed or laid off, it can be a good time to connect with a financial planner to help you determine next steps.
When Vargas finally quit her job in 2018, she took everything she learned in her 16 years of working in corporate diversity marketing with her. She launched The Latinista and now offers workshops, consultations, classes, career coaching and public speaking about diversity in the workplace as an independent business owner. Vargas was recently featured on Ellevest's list of Latinx women+ disrupting money and fighting for equity.
Quitting your job to pursue your passion is, for many, a dream come true. However, for some the decision is not their own.
Some people are getting severance offers from their companies if they agree to retire early. "But some people don't get an offer. There's just an announcement that there are going to be layoffs," says Eweka.
If you are concerned about job security, the number-one cost you should look at first is health care, Eweka argues. Medical insurance, doctors visits and procedures are not cheap. Even if you can find temporary work, you'll need to make sure you find coverage through COBRA or the health-care marketplace in your state.
Once you have an idea of how much health insurance is going to cost, then create a bare-bones budget by adding in your other expenses. Keep your budget lean — whether by choice or by circumstance, quitting your job is usually not the time to add extra expenses. Wait until things are more stable to add in budget items like dining out, vacations and extra shopping.
And if the amount you have in your emergency fund is less than ideal, know that you can still protect your credit while you're in limbo. Continue to make at least your minimum credit card payments so that your on-time payment history stays on-track. Call your creditors to ask whether they have one-time or ongoing assistance available that would allow you to skip a payment or two penalty-free.
Quitting your job can be scary, exciting, happy or sad. Most often, it's some combination of all four. If you're looking ahead towards a new venture or you've simply found yourself in a tough spot, never be afraid to ask for support.