Financial experts recommend that you should be able to survive for three to five months without an income before you quit your job. However, it’s not always this simple.
Many people quit their jobs to work from home because they have a business idea ready to explode and need to be at home to work on it.
If you are ready to start building an online income, here are the steps you need to take to maintain financial stability.
Pay Off your Debts
Once you quit your job, you’ll almost certainly be spending more than you earn, at least initially. This will eventually lead to debts and can get quite expensive at the one time when you can’t afford it.
In the months leading up to your resignation, funnel income towards debt repayments. You will then leave the workforce with a strong financial record and you can focus only on paying for the essentials such as food and rent.
You should be spending no more than 30% on rent, leaving you with enough additional income to fund a new business venture.
Start Earning From Home Before You Quit
If you’re entering a new sector of wealth creation, then you can never be sure if you can make it work. Give yourself confidence by starting to earn an income before you’ve left your 9-5.
This will give you a little bit of a buffer zone, covering at least some of your costs while you figure out how to increase your profit margins. Often the hardest part of starting in a new industry is getting the ball rolling.
It’s much harder to go from making nothing a month to making $1000 than it is to go from making $1000 a month to making $2000.
It’s that initial experience that matters the most, so acquire that first. It is rare that a customer will be interested in a business with no track record to show for themselves, so don’t risk quitting your job before you have any sales to your name.
It will mean putting in the extra hours but will help set to you up for a more flexible and profitable working situation in the future.
Taking the plunge into freelancing is always going to take a leap of faith, but that doesn’t mean that you don’t bear some responsibility.
Get your finances in order first, paying off debts and building up a savings fund to live off. Ensure you already have work before you quit, so that you can transition more smoothly into your new life of freedom.