No one can deny that your job is one of the most vital aspects of your life. The regular income you receive pays for your house rent, loans, bills, day to day expenses and part of it adds up to your savings. However, there may come a time when you’re contemplating about quitting your job, there can be many reasons for this decision. Maybe you’re not happy with the current job and you feel your career is stagnant. Or you just want to start your own business. Whatever the reason for your decision is, proper financial planning is absolutely essential if you want to make the transition without any hiccups.
Calculate how much money you will need
The priority is to determine how much money you will need in the bank to keep up with your current lifestyle. This will be your emergency fund and the amount you calculate has to allow you to take care of all your expenses for at least six months to a year. This should include all your fixed expenses like house rent or EMI, electricity bills, groceries, insurance payments etc.
To calculate your emergency fund, you have to first find out your monthly expenses. You can use any online financial calculator to do this. Multiply that by six and that’s the amount you should have in your account before you quit your job. This ensures that you can carry on with your basic requirements till you find another job or till your business starts earning profits.
Start cutting down on your expenses
Since you’ll be living off your emergency fund, make sure you cut down on unnecessary expenses, because money will not be coming in after you quit your job. Cancel OTT subscriptions that you can do without, start saving car fuel, do away with unnecessary restaurant dinners and make sure you exercise control over your expenditure.
Try to earn some money on the side
If you were earning a bit of money on the side apart from your job then it would be beneficial if you continue doing so. If you have the required skills you can do some freelancing on the side or simply provide some part time services to earn some money.
Quitting your job is a big decision and it is important that you think it through. Before you put in your resignation, draw out a picture of your future financial management using the above pointers and only then decide whether you want to go ahead with it.
Learn more about Mutual Funds for a good financial management.
* Terms & conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.