Is it (Finally) Time to Quit Your Job?
Back in 2018, I wrote the first version of this article. Today, it’s even more relevant. Workers are resigning from their jobs in record numbers due to a LOT of different factors. Some are pandemic related, some aren’t. Regardless of why you’re considering it, I’ve got some great resources to share with you along with my original post. At the end is my Job Change Financial Checklist of all the things to consider before, during, and after your transition.
It’s Friday. Which means a lot of you are probably starting to look forward to the weekend. That alone might not be a sign you should quit your job, but read on for 4 signs that are – and the impacts they can have on your finances.
You’re not getting paid enough. Either because you’ve been at your company a long time, you’ve got skills they aren’t paying you for, or you failed to negotiate up front, not getting paid enough is number one. It’s the unfortunate truth that you are more likely to get more money switching jobs, than you are from your current employer. Waiting around for your company to recognize your worth and reward you for it, is futile. Be your own best advocate, check out a salary calculator (Salary.com or Payscale.com) to see how much you should be making, and don’t take less than you deserve.
More income is the best way to improve your ability to become financially secure. It impacts how much you will earn via future raises, how much you can save for the future, and how easily you can weather a financial emergency. It drives your ability to meet your financial goals much more than trying to spend less.t
You’re getting paid too much. Wait, didn’t I just tell you to make more money? Yes, but I also find that those of you who get paid too much have a lot of trouble as well. Your jobs are more likely to cause you stress that can lead to divorce, health problems, and high levels of anxiety. You’re likely suffering from lifestyle creep that eats into all those benefits that making more money was supposed to bring.
I often work with clients who are wondering how they can live on less. They want more time with their families, more time to travel, or just more time to relax. They want to downsize from the rat race. The numbers on your paycheck aren’t the only ones that matter. Figuring out what you NEED to make to reach other goals in your life can free you to consider a job change.
Your benefits are awful. Employee benefits can be a powerful tool to help you reach your financial goals. I love employers who offer great 401k plans, a high company match, Health Savings Account contributions and good insurance plans, student loan payoff, education assistance, legal plans, disability insurance, transit benefits, generous leave policies, and subsidized childcare. When you’ve got job offers, make sure to factor in all of these extra perks – put a dollar figure next to each one to help you compare when salaries might be unequal.
Make a list of all of the benefits you currently use and check to see if your employer offers ones you haven’t taken advantage of. Then make a list of all the potential benefits that you would find valuable in a new job. Perhaps your current employer is open to adding benefits? You won’t know unless you ask. Benefits that make your financial life easier to deal with can make a job decision, stay or go, become a no-brainer. For more ideas about benefits you can ask for if you transition to a new job, check out my post on the Cultivating Wealth blog!
You’ve been thinking about it for a long time. Whether it’s because your boss is awful, you don’t like your work, team morale is low, or you just can’t get excited to get out of bed, thinking about leaving might be a sign you need to move on. It’s hard to quantify how this affects your finances, but if you’re miserable in your job, you’re less likely to be inspired to work on your future financial goals. Necessary tasks such as paying the bills and budgeting become even more miserable.
Are you afraid of change or the unknown? A lot of people I work with think about doing something for a long time before doing it. In the meantime, their finances get put on hold “until the timing is right”. Guess what, there’s not going to be perfect time to make a job transition. If you’re wondering how to survive on one income for a short time – check out this blog post!
Before you go – Understand your current benefits and financial situation
Retirement – does your employer offer a retirement plan with matching contributions? What is the vesting schedule, i.e. would waiting a few months make a significant difference to your balance? Do you have any retirement plan loans that become due in full at separation of service?
Health insurance – understand your current plan. Does it make sense to take care of any health issues now or wait? Might be a good time to visit the dentist or the eye doctor. Will you need to replace coverage for your entire family or move to a spouse’s plan?
Life insurance/Disability Coverage – are you enrolled in this coverage? Can you take it with you or will you need to replace it?
Current compensation package – do you have any deferred compensation coming in the near future, bonus payouts, or stock option vesting? Think about waiting for these events to occur.
Get finances in order – do you have emergency savings? Will changing jobs impact your expenses? Do you need to move your home as well?
During the Transition – Old Job
Current Benefits – When do current benefits end? Some companies cover you until the end of the month, while others stop on your last day with them. Will there be a gap you need to cover with COBRA, are you joining your spouse’s plan, or will you need to purchase insurance on the open market?
Compensation – When is your last paycheck? If you are taking time off between jobs, know when your new checks will start and plan for that. Save paystub information and update employer on your new address if moving.
Extra Income – Will you be paid for unused vacation, sick, or personal days? Consider using this money to increase your emergency savings if you don’t need it to cover your transition.
Moving – If you are moving homes, check with the IRS to see if expenses are tax-deductible.
During the Transition – New Job
Negotiate – Know your worth and negotiate your salary, sign-on bonus, and/or ask for more vacation. This is the best time to ask and a higher salary now will pay multiples into the future! If you are giving up deferred compensation benefits your previous position offered, ask your new employer if they will compensate you.
Benefits – Evaluate all benefits to understand if there is a gap between what you had before, and what you will have going forward.
Relocation – If your new employer is offering relocation, understand the tax implications, and payback triggers.
After You Start
Income – If you are making more money, set up your direct deposit so that some goes directly into a savings account.
Benefits – Enroll in new benefits such as health, disability, life insurance, and retirement plan. Also consider enrolling if your new employer offers additional benefits such as pet insurance, pre-tax commuter accounts, or a legal plan.
Simplify – Decide what to do with old 401k or retirement plans.
Expenses – Review expenses to see if you need to adjust your budget – commuting, dry cleaning, travel, etc.
Taxes – Review tax withholding to avoid surprises at tax time.