We touched on finances a little here and there through the previous lessons. Let's get things all down in a checklist....
1. Determine your current financial position.
Get clear on your numbers. Understand your financial position in order to prepare yourself for the months following your resignation. This includes having a plan for debt management to planning ways to create positive cash flow.
2. Set up a protection plan.
What’s the worst case scenario? How are you going to protect yourself with your current resources, cash flow and insurance? For health care coverage in the US, look into Healthcare.gov and PolicyGenius.com.
3. Get clear on your short-term financial goals.
What are your short-term goals (5-10 years)? Specifically, what’s your planned timeline to re-enter the workforce? Do you plan to buy a home in which you would need more liquidity in assets for that down payment?
4. Have a rough idea of your long-term financial goals.
It’s hard to plan so far out in advance. Anything can happen in the next few months. But it’s still important to have a rough idea of your long-term financial goals in order to have a foundation for your future.
What are your long-term goals (10 plus years)? Do you see yourself staying in the same industry? Same city? Starting a family?
5. Build beyond an emergency fund.
Remember, it’s not just about having all kinds of (sometimes unnecessary) insurance in case the worse case scenario happens.
At the very least, have a 6-9 month emergency fund to cover basic living expenses.
Next, see if you can take it a step further. Can you establish an emergency fund in addition to your money saved for an extended time off? This brings us to the next item on the checklist...
6. Get creative with ideas in this gig economy.
The gig economy centers around the concept of creating an income from short-term tasks. This encompasses those who are full-time independent contractors to those who moonlight by driving for Uber or Lyft several hours a week.
Are there any part-time opportunities that you may consider taking on in order to explore a different industry? Any fun side hustles you’ve been thinking about trying? What are ways you can create passive income with your current resources and skill sets?
7. Track your expenses closely.
To provide a longer runway for your career break, take a closer look at your numbers to pinpoint any unnecessary expenses. What can be cut starting now?
8. Cash is king.
Do you have money in a brokerage account? Money in brokerage can be converted into cash before your quit to minimize risk of market volatility.
Need more personal finance tips for your upcoming career pivot?
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Get FIRE’d up about financial freedom.
There are endless ways to create side hustle income and reach FIRE. Investing in stocks, owning rental property, creating your own online biz, and so forth.
But it doesn’t mean you need to do it all. Just pick 1 or 2 that gets you excited.
Everyone's financial situation and personal interests is unique. It’s important to try out different side hustles to see what works best for you.
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