An estimated four million people left their job in April of this year, realizing the 9-to-5 office grind isn’t for them. It’s been coined the "Great Resignation."
"I think it's really the stress of the pandemic," says President and CEO Cathy DeWitt Dunn from DeWitt & Dunn Financial Services. "A lot of people have been experiencing burnout and a lack of growth opportunities."
But before you make this big life decision, it’s important to be financially secure. Cathy talked with KRLD's John Liddle about some money moves to make before you step away from your current job.
Q: How should we prepare our finances before resigning?
CDD: "You can reduce a lot of stress by knowing how much money you have coming in and how much is going out. The best way to do this is by writing down all your expenses, including your utility payments, cell phone bills, groceries and entertainment. Then compare those expenses against how much you make. If your expenses outweigh your income, you’re going to have to take a hard look at where you can cut. I have a spending plan worksheet on my website, dewittanddunn.com, to help you get started."
Q: Is it best to have a savings cushion when you walk away from a job?
CDD: "Absolutely...don’t walk away from your job unless you have an emergency fund that can cover at least six to 12 months of living expenses. The easiest way to consistently save for the unpredictable is by setting up automatic contributions from each paycheck to a retirement savings account or an emergency savings fund, so you know that money is going to be there."
Q: What about retirement plans, what should we consider when leaving a job, especially one that we've been at for quite a while?
CDD: "Depending on your job and how long you’ve been employed, you may be vested in a 401(k) plan. It’s important for your retirement savings to know how much of the match you would be eligible for if you left your job today.
If you have some time before you plan to leave, try to max it out. You can save up to $19,500 in your 401(k). If you’re over the age of 50, you have the opportunity to contribute an additional $6,500. This ensures your retirement savings won’t fall behind if you are out of work for a while, because you can't show up later down the road trying to fund your retirement."
Q: What's your thought on debt in relation to leaving your job?
CDD: "Use a debt worksheet to help you keep track of balances, due dates, minimum payments and interest rates. Then, have a plan to tackle your debt. There are two general trains of thought when considering how to pay off debt: Snowball - Organize your debt by the amount you owe and tackle your smallest balance first. Then tackle your next smallest balance. Like a snowball rolling down a hill, this method helps you build momentum until all debts are paid. Avalanche - Then there’s the debt avalanche. This method prioritizes paying off high-interest debt first. With either method, concentrate on paying off one debt at a time, while still making minimum payments on your other debts. The biggest thing is, don't take on more debt if you're thinking about walking away from career until you really have a plan in place and know what that's going to mean for you long term"
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