(KRON) — A record 4.5 million people have quit their jobs just ahead of the holidays. That beat the previous record of 4.4 million, set the month prior, continuing a trend that’s been dubbed “The Big Quit”.
Many workers say they’re leaving their specific jobs or industries because they feel they’re underpaid and underappreciated. Others are citing burnout and a lack of growth opportunities.
While the “Great Resignation” sounds like employee subtraction, it most likely has more to do with low-wage workers switching jobs in industries that are raising wages. That makes some call it the Big Switch instead of the Big Quit.
Before you make that life-changing decision though — you’ll need to make sure your finances are in check. Sam Gaeta with Defined Financial Planning has some tips to help you prepare your finances before resigning.
Examine Your Monthly Cash Flow
- 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.
Increase Your Emergency Savings
- 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.
- An emergency fund is an account with money you can access at any time to cover unexpected expenses, like a medical bill, home repair or trip to the hospital.
- Even if you save as little as $100 a month, you’re off to a good start.
- 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.
Evaluate Your Retirement Vesting Schedule
- Depending on your job and how long you’ve been employed, you may be vested in a 401(k) plan.
- It’s important you 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 $20,500 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. Putting more money into the plan can also give you a sense of how well you can live with a smaller paycheck coming in.
- People spend their lives raising families, building careers and throwing money into a bucket, but they don’t always understand how it works. We educate our clients on how their nest egg can last through proper retirement planning.
Don’t Take on More Debt
- 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 – The first is the snowball method. 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.