2 Money Goals You Must Hit Before Quitting Your Job
Your gameplan to join The Great Resignation
Did someone forward you this newsletter? Click here to subscribe and receive it every Friday.
The Great Resignation is simultaneously one of the most talked-about and underrated stories of 2021.
You’ve probably heard that a lot of people are quitting their jobs. But do you know how many?
In September, a record number of Americans quit their job; 4.4 million of them, to be exact. 4.4 million in a single month. To put that in perspective, the previous record for employees quitting in a single month was 3 million back in 2005.
If I may take a moment to pat myself on the back, I predicted this back in January when I declared 2021 “the year of the part-time entrepreneur.” Two factors are driving The Great Resignation.
COVID was traumatic. That trauma has shaken people out of their apathy and given them the courage to follow their dreams. For others, it’s allowed them to step back and ask themselves if working for less than minimum wage serving people food during a pandemic is worth it. The results are in; “NO.”
It’s never been easier to start an online business. The creator economy is exploding, and anyone working from has an extra 15-20 hours per week they are not spending in their car that they can use to create a second income stream
Sometimes those income streams blow up into full-blown businesses. When that happens, you might be tempted to join the tens of millions of others who have quit their job and work for themselves.
Before you quit, here are two financial goals you have to hit.
#1— Assume bad things will happen and have enough cash to weather the storm
As I mentioned in a recent Twitter thread, it’s critical to realize that when you have two uncorrelated income streams that can each pay for your lifestyle, you have become financially bulletproof. If you lose your job, your side hustle can pick up the slack.
It’s also critical to understand that the second you give up your 9-5 job, you are no longer financially bulletproof as you have a single income stream again. I’m not saying don’t do it, but you have to understand the personal financial risk you’re taking on and find a way to manage that risk.
The risk of pursuing a side-huslte full time; the side huslte fails.
It’s a fact of life that most businesses fail. If you become a full-time entrepreneur and the business fails, you now have zero income streams, and your finances have gone from bulletproof to completely vulnerable.
Before you quit your 9–5, you need enough money in cash to pay for your lifestyle until you find a new job. This takes a lot of the financially devastating consequences of your side-hustle falling off the table.
Here’s a 3 step approach to determine the minimum amount of cash you need before dropping your 9–5.
Research your industry and come up with a conservative estimate of how many months it would take to land a good job in your field.
Multiply your average monthly expenses by the number of months to find a new job.
If you spend $5,000 per month and a conservative estimate for how long it would take to find a new job is 6 months, then you need at least $30,000 in cash before quitting your job to pursue your side hustle full-time.
FYI- If you’re looking for help tracking your expenses, I built this expense tracker from scratch. This YouTube video will show you how to use it.
#2—An income stream that you control and completely funds your lifestyle
If you want to work for yourself, you need to create an income stream that you control and covers all your living expenses.
That sounds obvious, but there are less obvious but essential nuances in that statement
What do I mean by an income stream you control?
An income stream you control is one that is predictable month to month based on an advertising/marketing strategy. If your business is reliant upon algorithms on social channels like YouTube or Facebook, you do not control your income; these platforms do.
If your business is one algorithm change away from oblivion, you don’t have an income stream you control.
Two channels that can free you from the whims of social media giants are;
Email (an email subscriber is much easier to reach than a “follower.”)
Advertising.
An email subscriber is infinitely more important for a digital business than a follower. If you have followers, platforms like Facebook own your audience. If you have an email list, you can pick up and leave a platform anytime you want and take your audience with you.
In January, I have a book coming out. I have spent the last few months learning the world of Amazon ads. If I can master ads, I can control and scale my income as a writer. In fact, if you can master digital advertising, you can have a successful online business even with no audience.
These channels take a lot longer to build than gaining social media followers, but that means your business has a stronger foundation.
What do I mean by an income stream that fully funds your lifestyle?
If you’re going to leave your 9-5 to work for yourself, the income stream you control needs to cover 100% of your current living expenses, including saving money every month for retirement.
It’s become fashionable these days to take the attitude that if you like what you do, you’ll work forever, so why bother saving for retirement? This might be one of the most dangerous pieces of advice you’ll ever hear.
Don’t let your young self write checks that your older self can’t cash.
You’re in love with your business today, but will you feel the same way at 65?
Even if you want to keep working at 65, it may not be up to you. Your health or the state of the future economy may not allow you to continue working into your golden years.
Be smart, bide your time and put yourself in a position to follow your dreams and never look back.
Don’t hit eject on the 9-5 paycheck until your side-hustle can generate enough income to allow you to build at least a bare-bones retirement plan.
Remember, saving too much money is always a better problem to have than saving too little.
Spread The Wealth
👉 If you have a friend that’s into personal finance, I would be grateful if you shared this post with them and encouraged them to join the community.
If this is your first time here and you enjoyed this post, click here to subscribe For free.
If you believe in our mission to build a new kind of financial media company, become a paying subscriber (personal finance tip: annual memberships are 58% cheaper)
Trending on MOAM
This article is for informational and entertainment purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.