How Much Do I Need to Save Before Quitting My Job?

Most experts say you should have at least 3-6 months worth of your monthly expenses saved in the bank. But that’s generally based on the fact that you still have a consistent paycheck coming in each month.

Are you confused when you think, “How much money should I save before quitting my job to branch pursue other opportunities?”

Don’t worry, here are 3 vital questions to ask before you quit your job.

Are you the breadwinner?

If you’re the one who brings home the bacon, you’ll have to save a large portion of your income to ensure you and your family will be well taken care of in the months to come. As a single-income family with you as the main provider, the burden of the finances falls on you.

If you quit your job, you have even more responsibility, so the more money you save in advance, the better off you’ll be. One thing to determine is how long it will take for you to bounce back from an unsuccessful business, or if you’re not able to find a new job quickly.

For example; if you estimate you need at least 3 months to allot for finding clients, job search time, interviewing, hiring, and payroll/invoicing processing, then make sure you have at least that much saved in an emergency fund before quitting.

Do you have a bare bones budget?

In other words, what’s the absolute minimum amount of money you need to make to pay all the bills and keep yourself afloat each month? I call this my bare-bones budget. In the event I have a low income month, or get sick and can’t work, I feel comfortable knowing that if I can at least make this certain amount, I’ll still be able to put food on the table and keep the lights on.

Here are the top things to factor into your bare bones budget (or baseline of expenses):

• Housing costs/rent
• Auto expenses, including loans
• Utilities, including lights, water, gas
• Cell phone, internet
• Groceries, food and household items
• Health insurance/medical
• Other misc. essentials

At the very least you should review your budget and find out what your lowest dollar amount is that you need to survive, then times that figure by at least 3 to give yourself enough time to recover from the circumstance.

Are you prepared to face reality?

In a perfect world, you want to give yourself a cushion of at least one year of expenses. But sometimes life happens and doesn’t always go as planned. When I was in the midst of planning my big leap to quit my job and start my own business, my plan was to save $10,000 in a business fund as a cushion (or 5 months of expenses).

But I was only able to save about half of that when a family member was diagnosed with cancer and my husband (who’s an only child) was called in to take care of her. We both quit our jobs and had to move to a new state within a month.

You can’t always plan for everything, and sometimes you need to make what you have work. It takes a lot of hustle, hard work and dedication, but even if you don’t quite reach your goal, be flexible and have faith that it will work out.

So how much money should you save before quitting your job?

Well, since finances aren’t a one-size-fits-all type of thing, it really depends on what you and your family need. But a good rule of thumb is anywhere from 3-8 months, to even a whole year of savings to cover your expenses during this time frame.

Three months is a relatively good amount of time to recover from any financial emergencies and personal issues. But if you feel that you’re better off with six, or eight or even 10 months of savings, then shoot for that. You’ll likely land on or near your goal!