Q: I’m so sick of my job! Everything about it grinds me up. I can’t stand it, and I’ve decided to quit. What do I need to do before I resign?
A: We’ve all had jobs that just aren’t working out. Whether you’ve just been passed over for promotion or have been stuck cleaning up someone else’s mess for the millionth time, it’s frustrating to feel trapped in a job you hate. Quitting a bad job can be one of the best things you do for your career.
That said, your job is one of the most important features of your financial life. It’s likely to be your chief source of income. It’s where you get your health insurance. It’s the source of some of your retirement savings. There is no doubting the fact that quitting your job is a big move.
Those difficulties don’t mean quitting isn’t the right thing to do. It does mean that quite a bit of planning needs to happen before you make any public moves. Before you start the clock, make sure you do these things:
Cover your living expenses
The most significant change you’ll feel after quitting your job is the loss of a steady income. Your lifestyle is dependent on a cash flow to pay your rent, cover your credit card payments, pay your car loan and so on. It’s tempting to assume you can get by if you just skip meals out and avoid spending on lavish luxuries, but that’s not enough.
The most obvious way to keep yourself in the black is to have another job lined up before you quit. If you’re miserable where you are, though, there are other options. You might need to develop an emergency fund. How much money do you need saved up? The obvious answer, as much as you can, can be frustrating. Most professionals suggest three months of living expenses as a minimum, with more being preferable.
There are other options. Taking up freelancing, developing an online sales presence or some other secondary income can help make the transition between jobs easier to manage. These other streams don’t free you from the need for an emergency fund, but they can make it easier to stretch your savings in lean times.
Check your insurance
If you get insurance through your employer, it’d be a good idea to get a quick checkup in before you turn in your notice. Make sure there aren’t serious health problems that change your calculations. There may be a short period of time during which you don’t have insurance and you want to avoid paying medical bills out of pocket when you don’t have an income.
Thanks to the Affordable Care Act, getting insurance outside your employer is considerably cheaper and easier than it used to be. Changing jobs, or quitting your current one, is qualified as a “major life event” under the act, and means you get another chance to enroll in marketplace insurance. Your temporarily lower income may qualify you for reduced or subsidized premiums during your unemployment, though you’ll have to pay them back come tax time if your income goes back up.
Manage your retirement
If you have a 401(k) at your current job, it’ll sit there without significant growth or addition until it gets eaten up by fees. If you want to hold on to your hard-earned money, you have several options. For instance, you can roll it over into a new 401(k), or you can move it into an IRA.
If you’ve got a new job lined up, talk to your HR representative about the process of moving your existing 401(k) program to your new employer. It’s a relatively painless process, and you’ll have to do most of the work to set up your retirement plan at your new job anyway. With all your accounts in the same place, it’s easier to keep track of your financial future.
If your employment status is uncertain, you may be able to roll the fund into a SEP-IRA. SEP-IRAs are individual retirement accounts for self-employed persons. Many of the same rules govern 401(k) accounts and SEP-IRAs, but there are important differences in how they are taxed. You should speak to a financial planner about these accounts, particularly if you’re leaving your job to start a business.
Turn in your tech
If you’ve been using a company-provided smartphone, laptop or tablet at home, you’ll need to give those back once you leave. Be sure to clear these items of any personal information. If you’ve ever logged into Facebook or Twitter, be sure to log off and clear your browser history and cookies.
You’ll also want to back up any non-confidential data that you were using for your work. If you’re in design or writing, ask your employer if you could use some part of the projects you were working on for a portfolio. Make backup copies of anything you might need to show a future employer, but be sure not to keep anything that is proprietary or contains customer records or sensitive information. You don’t want the next data breach traced back to your laptop!
Don’t burn your bridges
Maybe you do plan to never set foot in your workplace again, but it will follow you. When it comes time to get a new job, you’ll have to trust your current employer to provide an honest account of your time with them. They may be unwilling to do so if you make a big stink on your way out the door.
Stay cool on social media and avoid mentioning your former employer if you don’t have anything positive to say. Wrap up any current projects as much as you can to avoid leaving a mess for your successor. Be as polite and hardworking during your last week as you were in your first.