Planning to Resign? Consider These Financial Factors Before You Quit Your Job
Published: June 18, 2018 | Updated: June 14, 2021 | Posted by: Venus Zoleta | Personal Finance
Thinking twice about resigning from your job? Well, you should. Resignation—whatever your reason is—can have serious consequences on your finances.
Some employees get too blinded by their eagerness to leave that they overlook the possible effects of resigning from work. They end up struggling with money, feeling stressed, and regretting their decision.
You’ll be making a major career shift when you quit your job. Think it through to know whether you should stay with your employer or move on. Before you hand in your resignation letter, contemplate on these financial considerations to ensure a smooth transition.
Table of Contents
- Your Compensation and Benefits vs. Your Reason to Resign
- Whether You Have a New Source of Income Lined Up
- Having Adequate Savings
- The Timing of Your Resignation
- Any Upcoming Major Expense
- The Resignation’s Impact on Your Family
- Final Thoughts
Your Compensation and Benefits vs. Your Reason to Resign
Getting Better Compensation
Seven in 10 employees in the Philippines consider higher pay as the most important factor when deciding whether to resign or stay, found a Willis Towers Watson study.
Jobstreet.com’s 2017 Happiness Index Report had quite a similar finding, with 33% Filipinos saying that a raise make them happier at work.
As these recent studies show, money still matters in a career decision. Of course, you want to be where the grass is greener—it can be the company you’re working for, another employer with a better offer, your start-up business, or your budding freelancing career.
Is your current paycheck worth giving up? Think about it versus your reason for quitting. Talk to your manager and try to work together to resolve your issues at work. You might realize you have better reasons to stay. But if it doesn’t work out, then it’s time to call it quits.
Of course, one’s salary isn’t always the prime consideration. Certain situations in the workplace make resignation necessary and urgent, like sexual harassment and toxic work culture that can drain a person emotionally and cause health problems.
Letting Go of Company Benefits and Perks
Think also about the perks and benefits you’re enjoying from your employer that you might not get elsewhere: HMO, life insurance, the company-issued car or smartphone, numerous paid leaves, non-taxable allowances, travel opportunities, retirement package, etc.
Can you live without them? Which of these benefits are important to you and which ones are you willing to forego?
If you want to resign to become self-employed, do you already have a health card and life insurance that you or your family can use during a medical emergency?
Whether You Have a New Source of Income Lined Up
Are you sure you have a new stable job waiting for you as soon as you leave your employer? If your answer is no and your family is dependent on your income, it isn’t the best time to resign yet.
Most companies in the Philippines require their employees to give a 30-day notice for resignation. But one month isn’t enough time to find a job that’s a good fit for you. It could take three months or longer. While you’re still employed, it’s best to start looking for a new job three to six months before you resign. Being unemployed can hurt your chances of getting hired. Besides, the research found that job hunting is easier for employed people.
If you’re resigning to become a full-time entrepreneur, keep on growing your business and quit your full-time job only when you have steady revenue and solid customer base.
Planning to work from home? It’s too risky to start looking for clients only after you resign. Instead, do it while you still have a day job. Check out other tips on preparing yourself for a freelancer life.
Having Adequate Savings
You can choose not to work for sometime after leaving your job. You can take that well-deserved rest or even travel to unwind, especially if you’re burned out. But you can safely do these things only if you have enough savings to get you through until you’re earning again.
Yes, your employer will issue your back pay, but you’ll have to wait for at least one month. Not to mention that some companies hold their resigned employees’ last salary, which is usually included in the back pay upon clearance from HR. This means you might not receive your pay in your last month of employment when you resign.
An emergency fund will serve as your safety net or financial buffer during the weeks or months when you’re fresh from resignation and unemployed. While you still have a job, save up six to 12 months’ worth of your living expenses and deposit it in a savings account or checking account where you can easily access money when you need it.
Aside from savings, cutting down your expenses will ease your finances while you’re between jobs.
The Timing of Your Resignation
At work and in life, timing is everything. If you’re determined to resign, make sure you have a definite timeline for your exit and the timing is right. Consider how leaving your job at a certain time of the year will affect your income and spending.
For example, if you’re a parent or the sole provider in the family, resigning a few months before schools open can ruin your budget, unless you’ve prepared way ahead for your child’s tuition.
Also, consider postponing your resignation if your company will pay your bonus and unused leave credits in a few months. If you’re already entitled to receive a lump-sum early retirement package from your employer this year, you might want to wait a bit.
Any Upcoming Major Expense
Planning to buy a house or car this year? Do you have any major purchases coming up? Hold off your resignation until you’ve found a job or sustained a business that can cover your monthly housing loan or auto loan repayments.
Leaving your job can affect your ability to get approved for bank loans. The Pag-IBIG Fund, SSS, banks, and other lenders require payslips and income tax returns to prove that you can repay your loan.
Sticking with your present employer may be the only way to have a proof of stable income when you apply for a loan or a credit card. You may want to reconsider turning in your one months’ notice.
The Resignation’s Impact on Your Family
Your resignation may also affect your household budget and spending, especially if you’re the breadwinner. So when deciding whether to resign or not, consider not just your own finances. Can your family adjust their lifestyle with possible unemployment or decreased income?
Sit down with your spouse and children—they need to know your plans and be involved in any cost-cutting measures your family will take.
Being single doesn’t make resignation any easier. Will you live off your parents until you find a job? What if they aren’t well-off? Even if they’re financially secure, you don’t want to be a burden to them.
Having considered all these important factors, are you financially ready to resign? A work resignation shouldn’t be an impulsive decision. Carefully think about all the financial consequences.
(Photos from Freepik.com)
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Venus is the Head of Content at Moneymax, with 15+ years of experience in digital marketing, corporate communications, PR, and journalism. She invests in stocks, mutual funds, VUL, and Pag-IBIG MP2. Outside of work, she’s crazy about cats and Korean dramas. Follow Venus on LinkedIn.