How to prepare your finances to quit your job

Whether you are leaving your job because you have found something better, are moving or are just plain fed up, being prepared is your first step. It can be overwhelming and stressful when you quit your job, therefore preparation is important. Below are some proper exit strategies and ways to prepare yourself financially to quit your job.

Give Your Employer Plenty of Notice

It does not matter what size the company is. By telling them you are leaving as early as possible, you allow more time for them to set up a suitable exit plan for you and help to make things run smooth. Leaving hastily is not a smart move and can burn bridges. Many times, people complain that the employer made the transition of leaving difficult, when in reality; the employee did not give enough time for the employer to get everything processed efficiently. This is especially true if you are leaving a smaller company that has fewer employees, since replacing you is more important and takes a little time.

Ensure You Can Afford to Quit

When you are ready, the best way to quit your job is to have some sort of fall back in place. This can be a full-time job at a bigger office or perhaps a part-time job in retail. Regardless of what the fall back plan is, ensure it is in place before you leave your current job. A quick solution would be to take on work with a relative or friend prior to quitting your job. Then, you will have something in place when you do leave your job and you can continue working part-time. It could even result in full-time employment.

Evaluate Your Financial Status

Saving money, creating a budget and living within your means are important to start doing right now as well as reevaluating your financial situation when you plan on giving up a source of income. In this financial evaluation, be sure to account for all assets and debts so you can properly manage your money.

Add an Emergency Fund to Your Budget

Go over your budget and trim it up in places you can afford to so you can redirect that cash into an emergency fund, which is now going to be your most important financial priority. It might seem like an emergency fund is a big goal since it takes a few months to build it up, but since you are unsure if or how long you will be unemployed, it is important to begin saving at once and save as much as you can in your emergency fund. If you have a second income in your household, you can try living on that income as much as possible.

Refinancing or Home Equity Loans

If you think it makes financial sense to do so, refinance your home. If you find that you can lower your mortgage payments significantly, begin the refinancing process as soon as possible, preferably before you quit your job so you can quality for it. You can add the refinance savings to your emergency fund in your budget.

Another option if you cannot refinance is taking out a home equity loan. As with refinancing your home, however, if you are looking to take out a HEL or HELOC, its best to do so before you quit your job. You can view your credit report to see where you stand as far as your credit rating. Remember, it can be risky using your home's equity as your emergency savings since you are essentially taking out debt and if you get over your head, you risk losing your home. Also, many lenders are making it more difficult these days to get a line of credit. Therefore it is important that you monitor your credit scores regularly to ensure you have a good chance of getting that loan.

Knowing how to quit your job tactfully is just a small part of the entire resigning process. You also need to be prepared for the worst. Also, if you quit your job before you have another one in place, you need to spend your time in between jobs wisely. Be proactive in your search for new employment instead of lounging around your home. Regardless, by following these tips you can feel confident that you are prepared.