How to Quit Your Job and Not Run Out of Money

With all the buzz surrounding a Microsoft study finding over 40% of workers expected to quit their jobs this year, a movement now dubbed The Great Resignation, it raises the question: If you don't have savings, how does one actually afford to quit? 

Remaining at your job until you have a new post lined up is standard advice, but with pressure building from pandemic-induced stress and overwhelm, some may need to give notice as soon as possible -- whether they have a new opportunity lined up or not. Their health depends on it. 

And while it is true that the personal savings rate in this country has increased over the past year, making the decision to quit easier for some, many continue to live paycheck to paycheck. A recent survey by the American Payroll Association found that nearly 7 in 10 workers would have a hard time making ends meet if their paychecks were delayed by just one week. 

If you find yourself trapped in a job you can no longer handle -- for any reason -- but don't think you can afford to leave, here are some strategies and steps recently discussed on my podcast So Money that might help set you on a better path.

Try to fix your job before you quit it 

It can be helpful to express our dissatisfaction at work with a manager before we reach the breaking point. And there are plenty of angles to explore to improve your situation: 

• Can the company allow adjustments to your hours or scope of work? 
• Could you take an extended leave, while still maintaining your pay and benefits?
• Would an opportunity to take classes or train for a new role within the company excite you? 
• Would more money change the equation for you? 

Now is a particularly good time to ask for what you want. In a job market where so many are considering quitting, retaining a valued employee is worth every penny. An oft-referenced Society for Human Resource Management report estimates that it costs, on average, six to nine months of an employee's salary to replace them, accounting for the time, money and training that's invested in securing a new hire.

"Employees have an opportunity to negotiate some more favorable working conditions like better pay or more schedule flexibility. Maybe even both," says Sharlyn Lauby, president of ITM Group, a consulting firm that focuses on developing training that engages and helps to retain workplace talent. 

Before you call a meeting with your manager, have a specific proposal in mind, Lauby advises. Research the company's benefits, think through your needs and be prepared to articulate your rationale. And consider carefully whether a granted request will actually make the difference for you. Quitting your job -- after your manager has gone to bat for you -- may burn a bridge. 

"The one thing that employees should do before asking for anything is ask themselves the question, 'If I get everything I want, will I be happy?' I've seen employees ask for more pay, and get it, only to quit a few months later because they weren't happy," says Lauby. "This is very confusing to organizations and managers."

Aggressively reprioritize spending 

If you're still set on quitting -- but not sure how to make ends meet before landing a new opportunity -- calculate how much you'll truly need to keep your head above water. It may be less than you think.

As of July, the average duration of unemployment in the US was roughly 30 weeks. With that in mind, figure out a bare-bones budget that includes only the necessities, including housing, food and your utilities, as well as insurance. 

The good news is that there is currently a record high of 10.1 million job openings in the US, according to the Department of Labor, increasing your chances of finding a new job quickly. "The job market favors candidates right now … Many organizations are hiring. It's possible that an individual might be able to land a new job quickly while they are still employed," says Lauby.

In the meantime, aggressively reprioritizing your finances is vital to setting up a savings cushion. Start with big-ticket monthly expenses, where even a small percentage reduction could translate into large savings. For example, temporarily slowing down your debt repayment -- just paying minimums -- and pausing your monthly 401(k) contributions could yield hundreds of dollars a month. 

If you're in a seriously bad place at work, with your mental health at stake, it's more than OK -- it's crucial -- to give yourself permission to depart from traditional financial rules of thumb.

Other avenues to explore: Ask your landlord for a reduction in rent. Get a little stricter with your grocery and food budget. And negotiate for a better price on every single monthly bill, including cable, internet, home and car insurance, as well as your phone.

Once you decide you need to leave your job, you may see some monthly expenses in a new light, says Tim Herrera, a former editor at The New York Times who recently quit his job after experiencing severe burnout. Herrera explained on my show that he began plotting his exit earlier this year and saved with the intention of quitting and taking a break. "Once I realized I needed this time off, I worked backwards on how to operationally make this happen," he said.

Secure an 'interim' job

Finally, if your job search is proving unfruitful, consider shifting your focus. If you can't land your "dream job," consider taking one that will set you free from your current employer -- and buy you time and provide income and benefits to ease your transition. It may not be the job that fully aligns with your passion and skills. It may pay less. But it could provide a means to an end.

"This might require detaching your sense of self worth from a particular job title,'' says Jessica Carney, a recent guest on So Money and host of her own podcast And Then I Quit. "Maybe you can move away from that nonprofit that you love working at, but it's absolutely destroying your life with the stress and number of hours. Can you go take another job for a while and figure things out?"