‘Many people quit with the intention of taking a free holiday’: How to prepare financially

Social networks are full of posts from people who have embarked on the “Great Resignation,” or the mass of workers who resigned their jobs as the economy recovers. Nearly 4 million people quit their jobs in April, according to the Ministry of Labor, followed by another 3.6 million in May.

“A lot of people quit with the intention of taking a little free time,” says Cady North, CFP and founder North Financial Advisors in San Diego, California. “Maybe [they] characterize it more as a vacation, rest, take a break, maybe travel, or maybe even do job training so that [they] I can change jobs. “

Although taking free time can be a great way to impulsively recharge and think about your direction leaving work it could be quite expensive, especially in the gap between leaving one role and finding a new one.

Here are some ways in which giving up could be costly between jobs, and how to plan ahead to reduce costs.

‘COBRA is usually very expensive’

One of the main benefits of full-time employment is that many employers cover the cost of health insurance. Without that work-sponsored benefit, your medical costs could skyrocket.

“When you resign, you stay calm similar to COBRA, “says North. The program allows workers to continue to pay for health insurance they had with their previous employer. But you are responsible for the entire premium, including the portion your employer previously paid. As a result,” COBRA is usually very expensive , maybe two or three times more than what you paid on the payroll. “

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John Dooney, Human Resources Advisor at Human Resource Management Society, says COBRA costs could range from $ 800 to $ 2,000 a month, depending on the plan and whether you need coverage for your spouse and / or children.

Even before you leave work, North says, “I always encourage clients to compare the cost of COBRA health insurance with what is available on your state health exchange.” That way, you can “see how you can cover your health care in a way that won’t ruin your budget.”

You probably won’t qualify for unemployment

Another thing to consider: When you leave work on your own, you may not be entitled to it unemployment. “Every state is a little different in what they do with unemployment,” he says Carolyn McClanahan, a certified financial planner and director of financial planning at Life Planning Partners in Jacksonville, Florida.

The average weekly benefit in the regular unemployment program is $ 320, according to the Ministry of Labor. “I recommend people understand the rules [are] in your state, “McClanahan says.” If you quit just because you don’t like it anymore, I don’t think you’re going to qualify for unemployment. “

Prolonged job search could lead to ‘money disappearance’

Without income and access to unemployment benefits, you may have to dive into your own emergency savings account to cover basic living expenses including rent or mortgage, utilities and groceries.

And you can’t say how long it will take you to find the next gig that really excites you. “It’s going to depend on what the job market is like in your area,” McClanahan says. There may be national openings in your area, but they may not be near you.

The length of the gap between jobs can also depend on what exactly you want to do next. If you’re thinking about a turnaround, “it can take a lot longer to find a good role because you don’t want to put yourself in a situation where you just have to take another job because you’re running out of money,” North says. “You want a chance to think about what you want to do next.”

Any of this could end in exhaustion your emergency savings, so if you think it’s time to leave your current role, it’s important to plan ahead. This includes saving as much as you can before giving notice.

“When I train clients [leaving their job]”, says North,” we won’t do it if you only have a month’s worth of expenses [stowed away]. We will do this if you have covered probably a year to a year and a half, maybe even three years. “

Article “” Many people leave work with the intention of taking some free time “: Here’s how to prepare” originally published on Grows + Fat.

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