Want to Resign From Your Job? 4 Financial Considerations to Prepare For

Quitting your job takes careful planning. Consider these financial decisions before you take a leap.

Are you dreaming about resigning from your job? Maybe, you've got a new gig or you're quitting without a backup plan because you feel burned out. You want to make sure that you're financially prepared before you take the life-altering step.

Here are some things you might want to do before you make the leap and the tools to help you.

1. Calculate Your Emergency Fund

If you're planning to take some time off between gigs or are finally ready to pursue your true passion, how much should you have in your emergency fund before quitting? Financial experts typically recommend people have enough money saved to pay their bills for three to six months. That includes fixed expenses like your rent, mortgage, utilities, credit card payments, and variable expenses like food, entertainment, and discretionary expenses.

However, you might want to save more if you suspect it will take longer to find another gig or if you plan on taking a longer break from paid work.

Here's an Emergency Fund Calculator from NerdWallet you might want to check to help you find that magic number.

2. Make a Plan for Your Retirement Accounts

If you have retirement accounts with your employer, you'll have to find out what you can do with them and how to proceed.

If you live in the US, you'll want to look into 401k rollover options. In some cases, you can leave your account where it is. But you may need or want to roll over your plan to a future employer's plan or an individual retirement account (IRA). Not sure what's the best bet for you? Here's a 401k Rollover Calculator by Guided Choice to help you through your options.

If you live in Canada, you might have an RRSP via your employer's group plan. In that case, you can transfer the money to another RRSP in your name.

3. Navigate Your Health Coverage

Whether you live in the US, where your employer pays for your health insurance, or have a benefits plan that covers things like prescriptions and therapy appointments, you'll have to make some hard choices when leaving your benefits behind.

You're eligible to keep your current health plan via COBRA in the US. The downside is that you have to pay the entire cost of the coverage, including the portion of the premium your employer previously paid. This makes sense for people who like their current plan, but it is often more expensive than buying temporary coverage.

Related: Ways to Love Your Job All Over Again

You'll have to reach out to your HR department to get a quote on the cost of your coverage. However, you can get an estimate of how much buying health insurance via the Health Insurance Marketplace will cost with this Health Insurance Marketplace Calculator by KFF.

If you live in Canada, you might want to pay for supplementary health coverage to pay for your prescriptions and paramedical appointments. There are several companies that offer this kind of coverage, including sometimes through professional or freelance associations, where you can often get a discount on your coverage.

4. Review All Your Benefits

When leaving a job, there can be some other financial considerations. Therefore, you should sit down and sort through your benefits package to consider what other financial implications are involved in resigning.

For example, if you have any vacation days saved, they will likely be paid out to you when you leave. But, conversely, if you took vacation days this year before you earned them, they might be deducted from your last paycheck.

If your employer had a life insurance policy in your name, you might want to get a personal life insurance policy to protect you and your family while you're unemployed or between jobs. You can calculate how much you need with this Life Insurance Calculator by Forbes.Life Insurance Calculator by Forbes.

Pull the Trigger and Begin Anew

Once you know that quitting won't mean you won't be able to pay your rent and you have a plan to navigate all the financial and administrative hurdles involved in resigning, it's time to do it. Often quitting is the best thing you can do.

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