Great Resignation: Money Tips When Transitioning Your Job
With a record number of job openings all over the country, it’s a great time to look for a new job. But transitioning careers can leave you without income for several months or more, depending on how long you are out of work. If you are thinking of changing jobs, learn how to manage your finances during this period of transition.
What’s Driving the Great Resignation?
Millions of Americans have quit their jobs since the start of the pandemic in search of more meaningful and high-paying work. The health crisis closed millions of businesses, leaving many people without a job.
Many people switched to remote work to continue to earn a living. Businesses suffered losses and laid-off workers during this time as well, which led to high rates of job insecurity with many Americans wondering if they might be the next to go.
The pandemic gave many workers time to reflect on their lives. Some people left their jobs due to a lack of feedback or opportunities for advancement, while others wanted a better work-life balance. People also reported leaving over a lack of recognition and toxic workplace culture. Others quit in search of more pay as many businesses raised wages for incoming employees.
More than 40% of all employees were thinking about leaving their jobs at the beginning of 2021, according to a Microsoft survey of over 30,000 employees across 31 market sectors. The crisis and renewed attention on civil rights also motivated people to find more meaningful work that would benefit society at large.
Overall, employers have had trouble recruiting and retaining workers during the great resignation. Many companies have since increased wages, offered more benefits and improved working conditions to attract talent.
Money Tips When Changing Your Job
Regardless of why you’re thinking of changing jobs, you need to make sure you have a budgeting plan and money saved to hold you over until you get your first paycheck.
Use these financial tips to make your transition as smooth as possible:
Start by Reflecting on Your Needs
Changing jobs can be a major life event. Consider what’s motivating you to quit your job and what you’re looking for in a new one. Finding a better-paying position may be easier in this job market, especially if employers list the salary in the job description.
Finding a company that respects and values you can be challenging. Look for job openings at companies that share your beliefs and ideals. Use websites like Glassdoor in your job search to learn about the company’s culture to see if it would be a good fit based on your working style and personality.
Set a Budget and Check-in on Your Finances
Once you decide to leave your job and have an idea of what you’re looking for, you should take stock of your finances before sending in your resignation letter.
Think about how long it will take to get a new job. If you are moving for work or need to get licensed in another state, getting a new job can take months. The same is true if you are looking for work in a new industry and have little to no experience. You may need to take a pay cut or enroll in training courses until you have the necessary skills to get hired.
If your industry is booming, you have experience and there are plenty of job opportunities to choose from, you might be able to land a job in just a couple of weeks or less. Don’t forget to include the time it will take to receive your first paycheck. You might have to wait another two weeks or a month after getting hired to start earning income again.
You might be able to keep working full-time while you look for another job, but depending on your respective industry, job hunting can be extremely time-consuming. Take your time researching companies and comparing different offers to land a job that will keep you happy for years to come.
Once you have a time frame in mind, make sure you have enough money saved to hold you over until your first paycheck. It may be a good idea to research money savings tips to help add more to your emergency fund. You can cut back on expenses while you are looking for another job, but you still need to pay for necessities like food, rent, healthcare and transportation. Don’t forget to include any outstanding debts, including loan repayments and credit card bills.
You might need to buy new clothes for job interviews or spend more money on gas and train fares to meet with prospective employers in person. If you are trying to learn a new skill, you might need to spend money on software or a new device.
Check in on Benefits
Before you give your two weeks’ notice, check to see if you have any benefits that you are still owed, such as vacation time, paid time off, bonuses, pension and other perks that come with the job.
Check with human resources to see if you can still take advantage of these options. You might be able to look for work during your vacation time. Some positions give you access to stock options that can help you build up your savings before you leave.
You might need to switch insurance plans or use COBRA, which lets you stay on your employer’s health insurance plan for another 18 months after your exit. However, you will need to pick up your employer’s share of the premium, which can cut into your budget.
If you are enrolled in your company’s 401(k), check your balance and your vesting schedule to see how much of the employer match you’ll be entitled to once you resign.
If you have less than $5,000 in the account, they may require you to transfer the money, or the 401(k) provider may transfer the money to an Individual Retirement Account (IRA). If you have less than $1,000 your former employer may send you a check for the balance of your account.
If they send you a check, you have 60 days to deposit the check into your new employer’s 401(k) plan or an IRA, otherwise, it will count as an early distribution and you may have to pay the taxes and early-withdrawal penalty.
Once you have done your homework, it’s time to make your escape by handing in your two weeks notice. Make the most of your time off by looking for work and limiting your expenses so you don’t have to worry about money. You should have a new job before you know it.