How to Make a Transition Plan for Quitting Your Job

Ben Steele  | 

Whether you’re seeking better pay, want to get out of poor work conditions, or simply want to pivot in a new direction in your career, it can be tempting to resign. If you find yourself considering whether you should quit your job, you’re not alone. Every year, workers are quitting their jobs at faster and faster rates. Indeed, 2019 saw the fastest rate on record, according to a report by CNBC

However, quitting your job without undergoing financial chaos is an involved process that requires careful planning and consideration. Do you have enough savings to survive without income for three to six months? Do you have a support system in place? If not, you might not be ready to call it quits quite yet.

Sometimes you just have to quit. But in the current job market, it may be a few weeks (or even months) before you can slip into a new job at a different company. If there is going to be dead time between jobs — especially if you don’t already have a job backup plan — good financial planning will make all the difference. This guide will help you decide when and how to quit your job while remaining financially stable.

Signs You Should Quit Your Job

Before taking steps to begin transitioning out of your job, it’s important to understand whether doing so is the right move. There are several signs that it’s time to quit your job:

  • No Opportunities for Career Advancement: Meeting major life milestones often requires consistent career growth. If you’ve been repeatedly denied promotions or raises, your current position may not be right for you. 
  • You Are Overqualified for the Job: Are your colleagues much less experienced or educated than you? If you look up your position title online, are the job requirements far below what you’ve accomplished? This is a sign that you may be overqualified. Spending some time looking for new work could lead to new avenues in your professional development.
  • Toxic Company Culture or Workplace Environment: An excessively negative or restrictive workplace may be incompatible with your needs. Toxicity can leave you feeling drained and demoralized. If you find yourself struggling to stay positive in the face of overwhelming negativity, consider finding new work.
  • Recruiters From Other Companies Are Reaching Out to You: If recruiters are proactively reaching out to employees from competitors, that’s a good sign that you are in an industry with plenty of job opportunities. This means that you should be highly scrupulous of your current employer — particularly if a competitor can offer higher pay or a better work environment.
  • You Don’t Like Your Job: Has your job turned you into a constant complainer? While it may feel like a petty reason to quit your job, the truth is that job satisfaction is a key consideration for long-term growth and happiness. If the day-to-day grind is too much to bear, it may be time to start drafting up a transition plan for leaving your job.

What Are the Parts of a Transition Plan for Leaving Your Job?

If you’re considering leaving your job, things might not be going well — and the satisfaction of abruptly quitting your job may be understandably tempting. However, quitting your job with no plan and no savings is a recipe for disaster. 

Going forward with this route requires a transition plan. You need to develop a savings strategy so you can live comfortably after leaving your current employer, a support system in case things don’t go as planned, and a time frame in which you will quit.

How Much Savings Do You Need Before Quitting Your Job?

You must have enough money in your savings to allow you to cover basic expenses until you are able to transition to a new job. Keep in mind, though, that even if you have a job offer, things could always fall through. The job may not work out, or the hiring process might get delayed. 

You’ll want to make sure you have enough in your savings for at least two months of rent and utilities, as well as any other necessities. Preferably, you should aim to save at least six months’ worth to mitigate any unexpected events.

Strive to make saving an emergency fund for job loss every month part of your routine. If you don’t have the savings to quit your job now, try to stick it out until you do. Relying on savings to carry you through unemployment will keep you in the black during times of financial uncertainty.

Creating a Support System

In order to stay financially stable (and avoid giving housemates an unpleasant surprise), you should let friends and family know about your intentions — assuming, of course, that this news will not make it back to your employer before you’re ready. Talk to them and explain your reasons for switching jobs. By talking earnestly about your decision and getting your loved ones on board with your decision, you can ensure that you have a support system in place.

If you need further help, there are also plenty of sources of financial aid available to people who need it. Here are some examples of such resources:

As noted above, things may not fall in place as you intend. A job offer may be rescinded, or you may have to quit your job before you have adequate savings due to factors out of your control. Your support system, in addition to supplemental financial resources, will help you persist through difficult times.

How to Determine When to Leave a Job

Once you have a savings plan and a support system in place, you should be able to estimate a good time to leave your job. By projecting how quickly you will be able to create a reasonable savings buffer and getting in touch with friends or family who may be able to help you during your transition period, you will be able to determine when you can quit your job in a responsible fashion. 

Unless work conditions are extremely poor or there are other extenuating circumstances, you will want to give your employer two weeks’ notice prior to this date. This is a courtesy that should maintain your employer’s perception of your work. This is vital if you ever intend to use your current employer as a professional reference down the road.

Budgeting After Quitting Your Job

The first thing you’ll want to do is create a personal budget with a specific focus on tracking your expenses. Remember to factor in all your outgoing finances, don’t forget automatic bill payments, and any loan payments. Of course, don’t forget to maintain your savings buffer, if you’re able.

Next, look for things to cut. Cut your spending as ruthlessly as possible. You may want to experiment for a few weeks to make sure you can maintain a scaled back lifestyle while you look for the next work opportunity. Don’t strangle your budget to a point where you can’t live and eat, but meals out, entertainment subscriptions, monthly shipments, and anything non-essential may have to go. You may need to downgrade phone and internet service.

Remember that those monthly subscriptions can be the death of a thousand cuts. Five dollars for a website subscription here, $15 for a streaming service there, an extra $20 for unlimited data — it can all quickly add up. Try and get those automated payments either off your back completely or reduced.

Managing Credit Card Debt While Unemployed

Credit cards can and will be useful to you when you’re unemployed. But you need to be picky about when you use them. If you just start charging everything to credit in order to keep money in your savings account, you’ll find interest and debt eating up those precious resources later on.

When you’re deciding whether to use a credit card while unemployed, take into account the importance of the expense. Neglecting a loan payment for a car, house, or anything else can negatively impact your credit, but if you use a credit card and can’t pay it off in time, it’ll have the same effect — plus very likely a higher interest payment.

If you absolutely need to, consider opening a new credit card with a promotional 0% APR period on balance transfers. Just remember that the reason credit card providers do that is to make money off of you when the interest-free period ends — so don’t undertake a balance transfer lightly.

How to Get Health Insurance Without a Job

If you’re going to be out of work for more than a month, you’re going to want to look into alternative health insurance options. While individuals will no longer be hit with a tax penalty for being uninsured — as was the case under the Affordable Care Act — the medical bills associated with getting injured or sick without insurance are too debilitating to risk. Even with the future of U.S. healthcare in flux, health insurance probably isn’t one of those budget areas you want to cut.

If you’ve just lost your job-based health insurance, explore your options on the Health Insurance Marketplace. While there is an enrollment period, you will generally be eligible to enroll with a new insurance provider within 60 days of losing your existing coverage.

Tips for Transitioning to a New Job

The ideal transition is to have an offer on the table before you leave your current job. But that isn’t always feasible. You will want to create a detailed plan to get you out of unemployment and into the right job as quickly as possible.

Shoot for the stars, of course. Create a plan around your ideal job, but think about other ways your skills can be applied, as well as other industries that may be able to provide you with what you need. Spread your job-hunting net wide, but do so with intention. Ideally, you’ll have an idea of which positions and companies to target before you start. Check job ads carefully to make sure you’re applying for the right job and making the best use of your time. 

Make a list of local networking events, check for companies hosting open houses, and hit the streets in addition to your online search. You’d be surprised by the difference a resume dropped off in person makes. Give yourself a productivity quota; treat looking for jobs like a job. Put in a full work week at it once you’re unemployed.

Here’s what a job plan might look like:

  • A list of keywords related to your current job title, and job titles of ideal careers. You can use these to aid in your search and identify relevant postings rather than searching all jobs in an area;
  • A pre-fabricated resume template, customized for each industry and niche that you’re targeting. For example, you can find a template for marketing professionals here;
  • Drafts (not templates) of cover letters that highlight different skills and experiences;
  • A day planner with reminders, your weekly application quota, networking event dates, and follow-up information.

Incidentally, beware of anyone who invites you to lunch to talk about how they can help you start your own business, especially if they say the words “multi-level-marketing.” They’re probably trying to pull you into a pyramid scheme. These predators often come in the guise of friends and business acquaintances, and they will smell blood in the water when you tell them that you’re between jobs. Falling for one of these is a guaranteed way to not survive unemployment.


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Ben Steele is a writer, theatre(re) professional, and nonprofit administrator. He was born in England, spent his teen and early 20s in Canada, and now lives in America. Please excuse his occasionally confused voice and the odd recalcitrant u after an o.