4 Important Financial Moves I Made Before I Quit My Job

When I quit my job in July, I wrote a resignation email intended for HR and my direct supervisor. But I accidentally sent that email to all 800 people in my company. Oops.

So yeah, I could have planned my actual resignation a bit better. But luckily I did a lot of planning for how I'd handle my finances once I'd quit my job. Here are four important financial moves I made before giving my two weeks' notice.

1. Securing health insurance

When you lose your job-based health coverage, you can typically stay on your old employer's plan through COBRA insurance for 18 months (or 36 months in some cases) if the company has at least 20 employees. You can also qualify for a special open enrollment period on the Healthcare Marketplace within 60 days of losing coverage, which means you don't have to wait for the new year to buy health insurance.

I budgeted for COBRA insurance because I planned to become self-employed and didn't want to deal with switching health insurance. In retrospect, I'll admit that this was my big financial mistake of 2023. With COBRA, you'll usually pay your full premium plus a 2% surcharge. I'll save $259 a month when my Marketplace coverage takes effect in January.

But the more important point is: Going without health insurance, even briefly, could lead to financial catastrophe. If you're quitting a job with health insurance, it's essential to have a plan for coverage before you give two weeks' notice.

2. Opting for a 401(k) rollover

When you leave a job with a 401(k), you can typically leave the money in your old employer's plan, roll it over into an individual retirement account (IRA), or roll it over into a new employer's plan. (Keeping your money in your former company's 401(k) isn't always an option if your balance is less than $5,000, though the threshold increases to $7,000 in 2024 per Secure Act 2.0 rules.)

The best IRA accounts have low fees and account minimums, along with virtually unlimited investment options. Meanwhile, my 401(k) had fees and fairly limited investment options. Since I'd no longer be getting my 5% employer match, there was no reason to keep my money in the plan. I opted to open a rollover IRA at Wealthfront, where I've had my Roth IRA for years.

Note that you can't roll over your 401(k) until you've actually left your job. But if you're considering a job switch, it's never too early to start thinking about what to do with your 401(k).

3. Making sure my freelance income could cover my bills

The idea of not having a regular paycheck for the first time in my adult life terrified me. But I'd also spent the previous years building up steady work as a contract writer and editor. To make sure I was truly prepared for self-employment, I tried living on just my freelance income and saving my paycheck for two months. That basically meant working 70 or 80 hours a week, which was exhausting. But once I saw that I could easily cover my expenses with freelance earnings, I felt more confident about quitting.

4. Jetting off to Colombia for 3 weeks

Some states require employers to pay workers for unused vacation days if they leave their job. But alas, my home state of Florida isn't one of them. And my company's employee handbook stated that they wouldn't pay out for vacation days unless required by state law.

I had more than three weeks of unused vacation days and I sure as heck wasn't going to let my employer take those from me. So I convinced my boyfriend to take a somewhat last-minute trip to Colombia and spent three weeks hiking, island hopping, and sipping rum. Because Colombia is a cheap destination and we'd both accrued lots of points on our travel credit cards, we were able to avoid digging into our savings for the trip.

Before you resign, make sure you know your employer's policy on paying out for unused vacation. If they don't pay out, schedule time off before you give notice. Even if you can't travel somewhere, consider taking time off just to sleep in and binge on Netflix.

Is it time to quit your job?

I hemmed and hawed for months about whether to quit my job before giving my two weeks' notice in July. Had I taken much longer to mull over my options, the decision would have been made for me: Unfortunately, my entire department was laid off two weeks after my last day.

The big lesson here: Trust your gut if you feel like things aren't going well at work, whether it's because you think your company's finances are shaky or there's another issue.

That doesn't mean you should quit tomorrow. But take the time to spruce up your LinkedIn profile, take on some freelance work, or build your emergency fund so you can prepare your personal finances for a worst-case scenario.