Before you leave your job, there are eight important financial steps to take to help make this transition.
Thinking about your finances before making this big career decision will allow you to save for an emergency fund and help you understand what you need to do with your 401(k).
Leaving a job may financially affect you in many good and bad ways, so make sure to follow these steps.
If you are thinking of leaving your job for another or taking time off before looking for a job, it's important to have a savings plan in place.
This is a huge financial decision with possible financial implications.
Before you quit your job, you want to have at least three months of your expenses saved. However, if you want more security, save up to six months. Some factors that can impact how much you save are:
Look at your unique situation to see how much to save.
There are eight key financial steps to help you financially prepare for a job change. Some of these may be obvious, but there are some important things you may forget about in the process of changing jobs.
Whenever making a large financial change in your life, having an emergency fund is important.
You may not think you need this, but when you change jobs, there can be a lot of hidden expenses. For example, you may need to buy a desk if you are taking a remote job. Also, if you are moving states, there are costs associated with moving.
If you have a workplace retirement account, like a 401(k), make sure you know the next steps after you put in your notice.
Find out how much of your workplace's contributions are vested. You will also need to make a plan about where you roll over this account.
Before leaving a job, take advantage of any type of insurance you have not used.
At the same time, you'll most likely have insurance with a new job, so it's best not to leave your current insurance unused. If you get a credit towards contacts or classes, use it. Also, look into your FSA or HSA accounts if you have one.
If you are looking for a new job, do not do anything that can impact your credit.
Try not to make major life decisions at least six months before you plan to make a change. Taking on new debts can lower your score, and your credit will be run if you are looking for a job.
You don't want to have an employer not offer you a job because of your credit when it's an easy thing to avoid happening.
You will want to readjust your budget as you transition into a new job and leave your current job.
Starting this before you have a new job will help you know if you need to negotiate for a higher salary. It's easy to set a budget and not touch it again, so major life events like this are an appropriate time to update your budget.
While this doesn't always happen, you may owe your current company money when you leave. This can be from:
Check with your HR or any paperwork that you have signed to know what you may have to pay back. Every company is different, but if you do owe money, it will be due shortly after you put in your notice. Save up for these expenses on top of your emergency fund.
Always check your time off balance and keep a record when you put in your notice and on your last day.
Usually, companies will pay you for any unused accrued PTO time, which is a nice bonus! You want to understand how much you should anticipate getting back, and if it is incorrect, you can talk to HR.
If you are looking for a new job, you may be open to relocating to a new area.
While some companies pay for relocation, some offer less money or no money.
The cost of moving can be expensive from:
You may get the money for your move right away, but some companies only reimburse you.
So even though you'll be getting money back, you may have to use your credit card for payments instead of cash.
Choosing to leave your job is a big decision.
There may be many reasons for seeking a new job, from a better work-life balance to a better opportunity. But, no matter your reason, always ensure you are financially prepared for this.
Follow these eight ways to prepare for a better transition into your new role without worrying about its cost.
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