should you quit your job?

Have you been dreaming about quitting your job? Thinking about stomping into the boss' office and saying c-ya?

We’ve been there. Recently, the temptation has been extra strong. In fact, as COVID vaccine rates pick up and restrictions relax, 95% of workers are considering changing jobs. (CNBC)

This movement is so great that it’s been coined the “Great Resignation”. (NBC)

But the real question is: should you join in?

quitting my job right now

📸: Popigloss

Maybe you have something lined up. Maybe you don’t. Nobody wants to come down from an “Yay! I quit!” high -- only to reach a financial low. Is it really worth the move?

To help you with this decision, we listed 5 different scenarios and a few things for you to consider before you make the leap.

And in true Penny fashion, we’ve also busted a few myths along the way. ;)

You’re quitting your company, and starting at a similar company

Let's say you're switching to another job with similar (or higher) pay and benefits.

Maybe you’re interviewing, or already have a job lined up.

We have NO concerns with that.

Go ahead, make a splash on that “Great Resignation” pool! We’ll bring our floaties and the margarita mix.

In this case, switching companies could actually BOOST your wallet, because you have more opportunities for growth, and negotiating a better salary.

Word on the street is you could get up to a 20% increase. And that’s good. Real good.

“While employees who stick at the same company can generally expect a 3% annual raise, changing jobs will generally get you a 10% to 20% increase” (MarketWatch)

“Younger workers tend to see the biggest jump in pay—around 11% for switching companies” (The Muse)

Of course you should consider your ability to get promoted, career growth, leaving a strong network, etc. but...

All in all, on the money side of things, this move is Penny approved.

In fact, we’ll even bust a few common company-quitting myths that might be stopping you from swimming into new waters:

MYTH: When you start a new job, you lose your stock options.

TRUTH: This is only partially true. Read “what are these stock options” for the full scoop.

MYTH: When you quit your job, you lose your vacation time.

TRUTH: You should get paid out on any days you earned! Cha-ching!

MYTH: When you quit your job, you lose your 401k.

TRUTH: Your 401k is YOURS 4EVER. Take it with you to your new gig.

PS. Remember! – in order to become eligible for a 401k match or other benefits (like vacation) you might have to put in at least 1 year at your new company. Please keep contributing to the 401k, even if you don’t get the match until later. It adds up!

So, go ahead! Jump into the “Great Resignation” waves and say goodbye to your old job.

You’re quitting a job that drives you bonkers, without something lined up, because you just can’t take it anymore!

We get it… Work stinks sometimes.

The never-ending Zooms. The boss that takes all the credit. The purpose-less role in a big a$$ company where you are just a number.

We don’t want you to feel miserable with a job that doesn’t fulfill you, but this “Great Resignation” move requires caution.

It takes about 5 months to land a new job, according to Indeed.

Do you have at least 5 months of living expenses in emergency savings???

You may wanna crunch the numbers for 12 months+ of living expenses (plus more costly insurance) so you don’t replace your terrible job -- with terrible anxiety.

Oh, and let’s not forget:

MYTH: COBRA healthcare allows you to keep your health insurance for 18 months.

TRUTH: Yes, but it’s going to cost MUCH more! You get a steep discount because your company subsidizes it, but not anymore. Expect to pay waaay more for health insurance, starting now.

Best to stick it out for a tad longer, and save up so you can quit with peace of mind.

PS. If you’re not sure how much you need, Penny’s got plenty of money calcs to do the math for you! Open up a new tab and start with our free money quiz.

You’re quitting your 9-5 to become an entrepreneur or consultant

Ohhh baby, be ready for the RIDE. OF. YOUR. LIFE!

Most women on the Penny team have been here, and let us tell ya… It’s amazing, and freeing, but also wildly different from a financial perspective.

Stability and recurring paychecks might be non-existent for a bit. Worth it? Perhaps.

Time to bust myth #1:

MYTH: If you can just replace your salary, you’ll be good, and have freedom!

TRUTH: Hmm… Not quite.

Here’s why:

Your 401k match is gone (about $2-10k a year),
You’re limited on how much you can add to a retirement account (from $19.5k to $6k), and
You lose access to sexy benefits like disability insurance, fertility treatment, etc. (could be upwards of $25k in coverage).

The solution?

Add 25% - 40% to your salary. Have THAT be your benchmark number in your head to bring in.

Also, just because you don’t have a 401k doesn’t mean you should stop contributing to retirement. PLEASE keep saving for future you with an IRA.

On the upside...

MYTH: If I quit my 9-5, I’ll have to pay more taxes.

TRUTH: Nope! One MAJOR benefit of being an entrepreneur or self-employed, is the tax savings.

With a big salary job, you get paid cash money. You have to pay about 30% of your income to the government, and that’s that.

When you’re running your own show, you can deduct eligible expenses against your income, so your effective tax rate will likely decrease.

Think of your usual expenses, like:

phone bill,
computer,
office space,
commuting,
dinners with clients, etc.

All of these can offset your income as a business owner, and you pay way less in taxes!

In sum: this won’t be an easy ride, but… If your heart (and your wallet) are ready, we’ll be cheering you on! The “Great Resignation” pool awaits. ;)

You’re going back to school

Ah, education. Learning. Opening your mind in new ways. Amazing.

Education is a wonderful investment. But at what cost?

The price tag on 2 year, full-time graduate programs can be over $100,000. (US News)

Plus...

MYTH: An extra degree will immediately translate into a higher salary.

TRUTH: BEWARE! Not every industry compensates for extra education!

That’s a lot of zeros to make up for… And since you’re studying full-time, you aren’t getting paid for at least 2 years.

You’ll probably need a job that pays at least $250k to break-even. Hmmm… We don’t wanna burst your bubble, but easier said than done!

If you’re confident going back to school is the right move for you, we won’t stop you.

Use Penny’s calculators to ensure you have enough money for grad school AND for life’s expenses, so you don’t get swamped with student loans and unnecessary debt.

You're quitting your job for ... Unemployment

NO. Uh-uh. Nope. Nada. Zilch.

We do NOT endorse this whatsoever, but we see so many people in the US doing this, so we gotta address it.

Think about this before you go:

MYTH: Because of COVID, anyone can get unemployment from the US government.

TRUTH: Nuh-uh. You have to apply for unemployment from your previous employer.

If your ex-employer gets a letter that says you filed for unemployment after you quit, they’re not gonna approve it! You didn’t get let go, and it wasn’t because of COVID. No cash for you!

MYTH: You can make more money on unemployment.

TRUTH: Also no! You get about 50% of your pay in non-COVID times. During COVID, the government added $600 per week to everyone’s weekly unemployment check. BUT… That has been reduced to $300 per week. And it’s supposed to end on Labor Day (Sept 6).

If this was your master plan, we strongly advise against it.

It may seem like “easy money” at first, but instead of swimming in financial freedom, you’re more likely to find landmines of money headaches everywhere.

So, which one are you? Will you be joining the “Great Resignation” wave? Or saving up, and waiting for the next best opportunity?

Share your thoughts with us at @startwithapenny

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