There are several crucial things you need to know before quitting your job without another job lined up or having a clear plan. These include: The fact that building anything new takes longer than you think, the importance of cash flow, being careful not to burn your ships and bridges, how you’re affecting people close to you, the importance of a transition and exit strategy, and risks you are taking.
In many cases, quitting your job can be the right decision for you.
You might be severely underpaid. Or your work environment is ultra-toxic, or there is an extreme misalignment between your and the company’s values.
Whatever it is, you have your reasons. And ignoring them is not a good idea.
Unhappiness and dissatisfaction will fester in the long term and will do no good for anyone.
But quitting without another job lined up or at least with some kind of workable plan is a very bad idea.
Except if you’re already a multimillionaire, and you have a foolproof business idea (and I highly doubt that there is such a thing).
I recently reflected upon my own experience of quitting my job cold, and how it affected me.
Here are 6 important things that are important for anyone who is thinking about quitting their job without another job or clear plan prepared:
1. Building anything new takes longer than you think
When I quit my job, all I wanted to do was to focus on acting. But as I needed to pay my bills, my plan was to build a business on the side.
I got several acting jobs and built my portfolio, but it took a long time. There was a lot of applying, casting, and waiting. To the point where I told myself I’m just gonna make my own film and give myself a job. Which worked out.
And ironically, it was not my side business that kept me afloat. Yes, I earned a few bucks from my 2 small businesses to pay my bills.
But it was an extremely successful house flip was what supported my acting and producing work. And even that took a long time. I oversaw the renovation of the house for almost half a year, and the house was on the market for longer than I expected.
The proceeds from that allowed me to focus on producing 2 feature films, 3 years after I quit my job. It was a long journey.
The problem was, that my plans hinged on things that were all new to me.
I already had some acting gigs while working in banking. But still, the industry was foreign to me.
And I believed that because I worked in business management in banking and on marketing campaigns, I would be able to easily build my own business. Little did I know that I was operating in 2 completely different environments and also industries.
The point is, that everything takes longer than you think. If you don’t have concrete, hands-on experience yet in a particular field, it will be very difficult to correctly estimate how long that will take.
Your plan might be to just quit first and then start applying for a new job. Or to quit and then start a business.
It might sound like a plan. But it is not an efficient plan. Getting a new job that is acceptable to you can take months. Starting a business, getting investors, making it profitable, can take years.
I’m not saying that you shouldn’t quit your job, but you need to build in a solid buffer into your plan.
A better idea, instead of quitting cold is this: Consider staying at your current job a bit longer. Spend time after work and on weekends to prepare your path ahead, whatever that may be.
Treat it as a warm-up phase.
The benefit of this approach is that a) if you’re looking for a new job it’s easier to get a job while you’re still in your old one and b) your confidence level is higher when you’re still in your job, and c) you still get your pay check while thinking of the next step.
2. Importance of cash flow
Planning and managing your cash flow is crucial. People often confuse cash flow with value and profit. These are very different things.
You might tell yourself that ‘My skills are very valuable, I have a unique skill set and it will be easy to get another job.’ Or ‘I don’t have to worry, I have assets in the form of property.’
But the thing is, neither your design skills nor your apartment can feed you.
Of course, you can turn your skills and your assets into cash flow. But it is not something that is given and immediate. There is a time lag between putting those to use and generating hard cash.
Without cash, it’s game over.
That’s why you can’t take it easy when it comes to your cash flow.
Having savings and an emergency fund when you quit your job is a crucial thing, and will give you peace of mind when you quit your job.
But your savings will run low and eventually dry out faster than you think.
That is why you need to plan your cash flow carefully. Take a conservative approach.
This means, don’t rely on income that is not generated yet.
If you start a business and think that you will earn a profit starting year 2, scale down that projection. Be prepared for setbacks and unexpected costs.
If you’re just starting to freelance and think you’ll earn $1,500/month after 6 months, tone down your projection also. It’s likely to take longer.
Also note that in most cases, everything will cost more than you think.
You thought that your living costs were $2,500 per month? If you consider everything, like going to the movies, additional health bills, gifts you give to family and friends, it’s likely to be more than you thought.
This is not to discourage you at all. If you have a realistic estimation, then you will be able to plan your finances more carefully.
Figure out how much you need to save up to ‘safely’ cover you during those months where you don’t have any income.
3. Be careful not to burn your ships and bridges
Don’t burn your ship and never burn your bridges.
I get that you hate your job and want to get out of it.
But it’s not war.
In many cases, it’s not about the company or the job. It is about a misfit between you and the job.
A job that is awful for you might be the dream job for someone else.
So don’t take it out on the job or the company. Whether you’re still in the company or you’ve already left it, don’t badmouth your former employer.
I’ve known of many instances where people left their job, only to return after 2 years.
Even though you’re not thinking about returning after you’ve left, there are good reasons to maintain a good relationship with the people of the company. Even after you leave the company, you might want to stay in touch with some people.
You never know in what capacity you’ll cross paths in the future.
So before you make your way out, while still at your job, try and strengthen your connections, instead of throwing everything out.
4. How you’re affecting people close to you
If you have people relying on you financially, then that’s a good reason to spend more time considering your next move.
Perhaps you would like to hand in your resignation right now and be free.
But think about the consequences and how that move will affect other people.
I get that your freedom and happiness is important. But do you have kids or parents relying on you?
When I was working in my high salary job in banking, I was able to support people in my family. After I left my job, I wasn’t able to support them as much anymore.
I know they needed my help, but I chose to follow my path instead of sticking to my high-income job. That was not an easy time.
It was a heavy load on my shoulders. Knowing that I couldn’t support them made me sad and filled me with guilt at times.
My situation wasn’t as dire. However, I can imagine that there are a lot of people out there who have family members fully relying on them for their livelihoods.
If they just quit their jobs, without allowing time for a proper transition, then the consequences can be very bad.
So if this applies to you, reconsider your timing of resignation.
Also, take time to communicate your plans to people affected. Lastly, figure out a transition plan together with these people so they will be able to cope with the upcoming new situation.
5. Importance of a transition & exit strategy
There are many solutions that lie in between having it all figured out and having no clue about what’s next.
It pays off to spend time to work on a transition plan.
And this touches on two aspects.
A transition plan for your career development
With a transition plan in place, you’ll minimize wasted time. And what I mean by that is not time spent on learning things from the ground up or developing a new career.
What I mean is time wasted spending weeks and months confused and aimless.
Many people quit their job in a rush and find themselves in no man’s land.
After quitting they feel something like ‘Yeahh, now I’m finally free, and I can do whatever I want. But I’m freaking scared and don’t know what I’m going to do next, concretely’. And then spend their next months soul searching during the day and binging netflix at night.
Of course, there is some allowance to do this after quitting your job. But you don’t want this to go on for too long.
When quitting your job, you might not have figured out yet how you’ll best move from being a sales manager to becoming an interior designer.
You might still be deciding whether you’ll go back to school or do a course, or work as an apprentice for someone else.
Changing careers or getting your dream job will take time.
Don’t get stuck in analysis-paralysis. While you’re figuring out everything and getting to where you want, try to make the time in between as productive as possible.
This may participating in a course or online learning. As long as the investment is not too large in terms of cost and effort, you can jump into a short-term cost without overanalyzing.
The reason why this is important is, you’ll discover new things about yourself or useful things for your plan ahead, by experiencing things hands on.
A transition plan for your finances
While figuring out your next move, it’s a good idea to keep money flowing in. There was a time when I had to live off of my savings. And everytime that I used money from my savings, it gave me a sinking feeling. It was a concrete reminder that I wasn’t generating income, but rather spending my hard-earned money.
It’s a good idea to take up a part-time job or freelancing in your area of expertise. Oftentimes, you’ll be able to get work from your former colleagues or acquaintances. It may not be a lot, but it will at least pay some of your bills.
There are many other ways that you can secure yourself an income during your transition phase. If you happen to be a property owner, renting out a room or your house can help you generate a positive income stream.
Of course, it might be an inconvenience, but the benefit of having a steady monthly income will likely outweigh that.
In case for whatever reason you want to fully focus on your new endeavor and not having to work on the side, then you need to have a robust financial plan.
Hold off quitting your job, just for a while. Calculate how much money you will need exactly. Build in a solid buffer into your emergency fund. Whatever that number is, double, triple it.
That means that you might need to stay in your job a bit longer. But by having more savings, you will avoid a situation where you need to go back to your old job.
Many people also underestimate the various benefits they get when they were working. Health insurance, stock options, bonuses. For each of these items, you’ll have to consider the consequences. How will you replace your health insurance? When is the best time to leave the company so that you get your well-deserved bonus paid out?
That’s where the exit strategy comes in. Don’t let your emotions steer your decisions. Think about when the best time is to quit your job. In may be 2 months, 6 months, or 1 year from now.
I get that you want to leave right now, especially if you feel very frustrated with your job or situation. But planning the right time to leave will give you an end in sight, something to look forward too.
Oftentimes for people it’s the uncertainty about how long they’ll have stay in their job that drives them crazy. Decide when you’re last day will be, and enjoy the countdown toward that.
6. Risks you are taking
There are rarely things in life that are risk-free. And most things worth pursuing in life comes with a big dose of risk.
Leaving your job comes with some risk. What comes after may be better, or may be worse, depending on a lot of factors.
But so does staying in a job in which you are completely unhappy and unfulfilled. A job that doesn’t support your personal goals in any way.
Jordan Peterson talks about the risk of staying in a dead-end job: “..A lot what’s good about you is going to be gone, and a lot more of what’s terrible is going to be amplified’.
This is to say that a job not only affects your financials and your career, but also other aspects of your life. Including your enthusiasm about life, the way you see the world and deal with it.
So now what? Which choice should I make then if both staying and leaving has it’s own risk?
The important thing here is to be conscious about the risk that you are taking.
In all scenarios that you are considering, e.g. staying in your job, staying 12 months longer, or quitting right now to pursue other things, try to outline the risks.
Although it’s difficult to do this with high precision, it’s better to be aware of some of the risks than none at all. For example, let’s say that your plan is to leave your job now and start your own business. What is the worse thing that can happen?
Perhaps, it’s losing $10k dollars you’re planning to invest in it. The likelihood that you’ll not be able to match your previous income by working freelance. The possibility that you’ll ’embarass yourself’. Time lost working on something that didn’t work out, that you can never get back.
This is not to discourage you. On the contrary. If you’re aware of the risk, then you’ll be able to make an informed decision.
Despite these risks, am I still going to go ahead with my plan?
Or are there things that I can do to manage these risks, although I cannot totally eliminate them?
Taking a course of action, while knowing the risks involved, will also minimize any regrets in future. Regardless of whether something that you planned worked out in the end, or not, you can tell yourself that back at the time when you were faced with a decision, you made the best decision possible.
On the flipside, after weighing off the risks, you might also decide to stay in your job for a longer, e.g. 5 years. You might think that in those 2 years you’ll be able to save up and accumulate savings and investments that will sustain you for a longer time.
There is no standard solutions. But by taking into account these 5 things, spending some time going through these, you will definitely arrive at a well-informed decision.