Many Americans are living paycheck to paycheck but dreaming of quitting their jobs (and perhaps freelancing full-time). In general, however, there can be little popular support for waving goodbye to a decent employer with steady benefits. And waiting until you inherit big or buy a winning lottery ticket is a pretty lousy exit plan. So for most people, it can be years—maybe even decades—between the minute they get the inclination to leave their day job and the day they actually do.
Strategists say there's no need to wait a lifetime. Instead, it's easier than ever to create a plan to plot your resignation, leave your current employer on good terms, and make a steady income on your own. Ahead, money and employment experts Delyanne Barros and Dana Sitar share five things to do before quitting your job and never looking back.
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Get All You Can From Your Current Job
Dana Sitar is a personal finance writer who founded Healthy Rich to publish stories that illuminate the diversity of our relationships with work and money. She says it's important to know what your current employee benefits are before walking away from them.
"Take advantage of resources in your day job before you leave," Sitar says. "Get access to training and assessments, as well as on-the-job opportunities that can help set up your next move. Even if your current job isn't everything you want, you can mine for the gold you can take with you when you leave."
In addition to using paid time off or leave without pay to your advantage, it is also important to understand your retirement savings or pension benefits. After resignation, you may be able to retain some, but others you may need to transfer or forgo.
Last, employer-based life and health insurance will need to be replaced. "This is a scary prospect for a lot of employees, especially if you support a family," Sitar notes. "Plan ahead to ease the stress."
If you're not going into another employment role that would cover these benefits, it's best to get quotes on HealthCare.gov to see whether you qualify for tax credits. Sitar says to "shop around for health insurance well before you need it, so you can see exactly the cost you'll have to factor into your budget to cover it."
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Use Your Day Job to Fund Your Start-up
Delyanne Barros is a money expert and former employment attorney who has left full-time corporate employment. She is now on track to retire in Portugal by the time she turns 45. When she coaches aspiring entrepreneurs on how to leave their day jobs, she suggests they start their business while still working.
"Think about it as using your day job to fund your own startup," Barros advises. "You'll be in a much better position to price yourself and negotiate offers if you're not stressing about paying your rent or mortgage that month. It'll give you the power to walk away from deals that may compromise your integrity or values."
Also, this gives you time to work through the kinks in your business: hiring an accountant, opening a business bank account, and making sure your idea is really viable.
"Keep all your business expenses separate from your personal expenses," says Barro. "This will keep you and your accountant from torturing each other during tax season."
This separation will also help you know when to time your departure. When the earnings from your business compete with those from your day job, it's time to prepare a grand exit.
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Set Up an Emergency Fund
In the movies, bank robbers always plan for a clean getaway, but inevitably something unexpected happens, and the whole plot falls apart. Well, you're no bank robber. The money you're trying to keep a grip on is yours to keep. So there's no rush. There's no need to feel anxiety or undue urgency. Plot your financial steps carefully, and take all the time you need to get there.
"Save a substantial emergency fund first in a high-yield savings account," advises Barros. "Cover at least six to nine months of expenses, including health insurance premiums. This will keep you from panicking."
Sitar agrees that it's important to "build a 'comfort fund.' This is a store of money that eases your financial stress. Set a number that makes you comfortable—even if it's arbitrary. Your comfort fund gives you the freedom to make life decisions without money weighing on you." Once any remaining financial stress is under control, your days at that job are numbered.
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Negotiate for Severance Pay
From her own experience, Barros says it is vital to "talk to an employment attorney before quitting and before starting a business. An employment attorney isn't just for suing an employer. Many will help you negotiate and even ghostwrite documents to help you exit your job in an amicable way," she says. For those who leave before full retirement age, a lawyer might be able to help secure severance pay.
And for those who plan to start a business or work for another office doing similar work, a lawyer can make sure that you know the rules about intellectual property rights or the fine print on non-compete clauses in your field.
This is especially important for folks leaving academia, tech product development, and start-ups. Last, a lawyer certainly can have your back if your employer is likely to hit you with any fees, fines, or penalties for resigning earlier than contractually planned.
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Leave the Door Open
The day has finally arrived, and the resignation letter is in your hand. Be sure to resign in compliance with any required rules and timeframes. Most employers require at least 30 days notice, but every field is different. It is common for some businesses to ask that you leave immediately, although the company will continue to pay your salary until your resignation date. Be prepared for this, and don't take offense.
Instead, be gracious. Have thank-you cards ready for the people who you care about most. Share your personal contact info with beloved office mates, and write down any emails or phone numbers you may need in your life after this role. Show gratitude for all the things you learned and were able to do during your time there, and—most of all—try to leave on good terms.
You may never want to work there again, but you never know who might. As a mentor or friend, you may still be able to refer others to their dream job. Or you may need a reference. Even entrepreneurs might find themselves in consulting or contracting positions in the same circles.
For lots of reasons, business networks and professional reputation still matter. So when you walk out that door, do it with your head high—but be careful not to slam it shut behind you.
