Sometimes, you need to take a big leap of faith and a whole lot of risk if you want to improve your life. This includes going back to school, starting a business, quitting your job, changing career, and so much more. It’s all about how you handle your money.
There are two things which make a big difference at times like these: your ongoing expenses, and how much emergency cash you have got. It helps to reduce your debt and to pay them off as much as you can, while at the same time creating a stash of money for the time you’ll be taking that leap of faith. These steps surprisingly make your life easier later on.
Typically, experts recommend that you have an emergency fund which can help you through 3 months of expenses. If you are a single earner, you should have 6 months cash. If you are making a change that includes pay cuts or zero pay for some time, you should save for a longer period of time.
So here is what you can do: find out for how long the pay cut shall last. Will it be for a year or for two? Save according to that.
When you project and plan for future income and expenses, it shall help you to make the leap easily when the time comes. For instance, if you want to go back to school again to complete your education, determine what kind of new job you want after the course is done, what are its prospects and how much more or less you’ll earn than what you are making now. In the end, be realistic. If the education is not for furthering your career, you still need to figure out how to keep paying your bills and expenses in the meantime.
Use your benefits before you quit
It may not be smooth sailing all the way. Things may come up for which you had not planned. You need to foresee these things, or at least plan for them. Think about how changes can affect your life, your savings, retirement, etc.
Experts suggest that you need to take all the benefits and advantages you can get before taking the leap. For instance, you may decide to take new glasses, new dental work, and the like. Get bare bones health coverage at least. If you want to quit your job and retire, stay at it for a while longer. This also applies if you want to invest in stock options, retirement savings, or for some other form of benefit.
At the end of the day, it is all about what you want in life and on your savings.