Things To Keep In Mind Before You Quit Your Job
I am delighted to welcome back Bhavna Vaish with another guest blog. When people get into meditation, and a different way of approaching life, they often want to quit their job and work for themselves. Hey—it’s what I did! Bhavna runs through some important practical advice about how to make this transition in the best possible way. If you missed her previous post, then check it out, How to Fund an Alternative Lifestyle.
A few years ago I quit working a full-time day job.
The reasons are many. But to be completely honest about it – that day had been a long time coming.
Heck, I was ready to stop working even at the age of 25. I wanted to do ‘my own thing’. I dreamed of the freedom it afforded, of being accountable to myself. But it took me a whole bunch of years before I could actually quit.
Today my blog is my work and my job. Though it doesn’t quite yet, I am hoping that one day it will graduate from being my passion project to also being my main source of income.
Do you want to quit your job?
Are you getting ready to quit your workplace and start your own enterprise? If you are looking to replace a salary with income from your own venture then welcome to the tribe of people who have chosen to lead a life outside the cube.
Also, you need to read this.
Think you have saved enough to stop working. Think again.
Did you know that as your own boss you are likely to be paying more bills than when you were employed?
In other words, YOU need to plan for higher monthly expenses and hence more income to cover these expenses.
As your own boss, you are responsible for certain costs that earlier your company would incur. There was stuff that your company would provide for when you worked as an employee. In addition, workers like you also get plenty of non-monetary perks and benefits that help you to achieve the lifestyle you have today.
Just make sure you are cognisant of these and have built them in your calculations before you take that key next step – to quit your job. Budget for these expenses if you want to become a successful solopreneur, a blogger or a freelancer.
(p.s. Here are some financial habits of a successful woman.)
Medical and Health Insurance
Many companies provide health and medical insurance for their employees. Not just that, they also incentivise their employees to conduct medical check-ups especially if they are above a certain age. As your own boss, your insurance costs are going to come out of your paycheque.
Health and medical insurance can cost a bomb. But being without them is not an option, really. So unless you live in a country where the government sponsors or subsidises your healthcare costs, you need to budget in this cost.
P.S. – My company also provided life insurance coverage for all its employees. If yours did it too then another cost that you will need to bear on your own account.
Funding Your Future
One way to plan for your retirement is through employer-sponsored savings plans such as the 401(k) or the Roth 401(k). The advantages of such plans are that they provide an automatic way of saving for retirement, there are tax benefits associated with these investments, but most importantly employers offer matching contributions which essentially means free money for employees.
If you are self-employed, not only would you have to actively plan and save for your future you also miss out on the employer’s contribution which can be a lot of money that you have to work for yourself.
Continued Education, Training, and Conferences
All companies have a budget for the skill enhancement of their employees. But guess what, once you are on your own, you will need to pay for that training you want to go for.
As a solopreneur, you will need to know about the different aspects of running a business – marketing, accounting, taxes, the technological aspects about which you probably know little to nothing about.
Add in the networking conferences that you want to attend – all costs that you did not have to pay for as an employee.
Holidays and Time Off
Leave policies vary across companies but there is one thing common – employees are allowed paid leave each year. Not so when you are a freelancer or a solopreneur.
While you will have lots more flexibility in deciding your work hours and choosing your days-off, chances are that you will also feel compelled to not take any time off, at least initially. Yes, you could write a book, run ads on your blog and have a course set-up. But setting up passive income streams take time.
And if you are a freelancer, then you earn when you work.
Workplace at Home?
One of the many perks of being a blogger or a freelancer is getting to work from your own home. You can be with your children, oversee your home while you earn your living.
This does not come for free. You have to buy your own equipment – laptops, printers, cameras, pay for their running costs. Utility bills will inch up.
Does your job provide you with accommodation or a car? Does it reimburse your phone bills? How about your family – what are the benefits they enjoy as a result of your employment?
You need to think of how you will replace these in order to maintain your lifestyle and the cost of replacing them.
Working in an office environment along with other colleagues has its own charm. The social aspect is important for mental health. You learn from your colleagues and bosses which you will miss out on when you work as a freelancer or a solopreneur.
The Bottom Line
Nearly all young and middle-aged workers ask themselves if they are ready to quit their day job in order to do something on their own. It is an exciting prospect.
However, there are additional costs you have to incur when you work for your own self. The best way to ensure that life does not have any surprises hidden is to be prepared. Know the costs and advantages of what you are planning so you can make an informed decision.
Bhavna Vaish is a blogger who loves the world of finance. She writes about being wise with your money so you can live a life you love on a budget you can afford. Her blog Pennies For Cents has more useful articles for you. She has been a banker and a finance professional for many years before choosing early retirement.