If you’re planning to leave your current job, either to take a new job or to step out as an entrepreneur, you’ll want to assess your financial situation.
Consider taking the following steps to ensure you’re in a good financial place to make the move.
Create a budget
Some studies have shown that about two-thirds of us do not have a budget. This is an important first step to determine your income needs and to aid in salary negotiation with your next job. You’ll want to know how much money you need to make so you can pay your bills. In addition, creating a budget will help you determine anything you’re wasting your money on and ways you can decrease your spending so you can take the following step.
You’ll feel much more confident with your next step if you’ve built up a nest egg of savings. If you have enough in your savings to pay your expenses for at least six months you should be fine, depending on your next plans. If you don’t have much in savings right now be proactive and look at your expenses. What can you get rid of? Maybe you can go without cable service for a few months, or perhaps pack your lunch rather than eating out every day. You can likely find some creative ways to reduce your expenses.
Live simpler, cut back, and sell
To continue with the point above, make eBay or craigslist your friend. This is a great time to inventory the things in your home and determine what you can sell to bring in a few extra dollars. This might be some CDs or DVDs gathering dust, or perhaps that old laptop you no longer use. Take a look around and see what can be converted into some cash for your savings.
Evaluate 401k options
If you have a 401k with your current employer speak with a financial planner about the implications and options related to leaving your money with your old company’s plan or moving it to an IRA.
In addition to the steps above you might consider speaking to a financial adviser in order to develop a specific financial plan that fits your situation.