While we all know that jobs don’t define who you are, leaving one can impact your finances, either temporarily or long-term. You might be leaving for a new role, starting a business, or taking time off. Sometimes it isn’t your decision to leave a job.
Regardless, it’s always a good idea to have a buttoned-up picture of your finances to figure out how to move onto the next chapter. Here are things to consider.
When You Leave for a New Role
If your job isn’t passing the vibe check, you’re not alone: the average American millennial has held an average of 8 jobs between ages 18 and 34. Whatever your reason for seeking new employment, it’s a good idea to have a financial plan in place to bridge the gap. You may need to do some housekeeping before you jump ship:
- Keep track of your retirement accounts. It’s important to know where these retirement accounts are held, and how much is in them. Some people like consolidating their savings and retirement plans after each job by rolling them over into a single account (like a rollover IRA) to make things easier to track.
- Find out which benefits roll over. Chances are, many of them will not roll over, especially if you are going to be a full-time employee at your new company. You’ll want to check health, dental, and disability benefits to confirm, as well as your life insurance. Typically, group life insurance coverage ends when your employment at that company ends.
- Reevaluate your supplemental life insurance. Changing jobs is an important time to examine your life insurance coverage. Most life insurance offered through employers is not enough to keep your family financially afloat if something catastrophic was to happen. Consider getting covered through a term life insurance policy like Ladder offers, especially if you are changing jobs where your new salary and benefits could be tied up in life moments like having a baby or buying a home.
When You’re Taking Extended Time Off
Perhaps you’re taking a self-imposed sabbatical, exploring being your own boss, or staying home with your kids. You should take a look at your financial picture before doing so, especially your savings. You’ll want to bridge any gaps in income, health insurance, disability insurance, or life insurance, and have a smart plan in place to keep the cash flow where it needs to be.
When You’ve Been Let Go
No matter the reason, being let go is a huge bummer, and can be an emotional roller coaster. One way you can take care of yourself during this time is to have your finances in order. You can do this by:
- Filing for unemployment benefits. Requirements for unemployment vary by state but you can contact your state’s unemployment office to determine eligibility and find out what records you need to provide to apply for benefits.
- Reviewing your health insurance options. The HR department of your former company should have information on coverage grace periods, COBRA, and potentially state health care options like Medicaid or coverage available on the Affordable Care Act marketplace. If you have a spouse who is employed full-time, you can also check to see if there is a special enrollment period where you can be added as an insured. Being without health insurance is a huge financial and health risk, especially if you have dependents.
- Revisiting your budget or outlining your expenses. If you haven’t already created a budget, outline your expenses for three to six months. See if you have enough savings to cover them. From there, cut what you need, or think about alternate gig income streams to tide you over while searching for a new job, such as a part-time job or contracting as a freelancer in your industry.
- Transition the benefits that will continue. Know where your retirement accounts are so you can roll them over, and any other savings accounts like a Health Savings Account or Flexible Spending Account.
Transitioning from a job can be a pivotal time emotionally and financially. By keeping a checklist of things you need to do, you’ll help to ensure that nothing falls through the cracks.
