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I recently quit my 9-to-5 to grow my side hustle: Here's how I got my finances ready

"Here are the five steps I took to prepare to leave my day job."

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Helen Lu is the founder of the Money Minimalist.
Courtesy Helen Lu

By the start of 2020, I was five years out of college and working at what I thought was my dream job as a tech project manager at a startup. But I began to realize that my most limited and valuable resource is time, not money or a fancy job title. 

And I'm not alone in my experience. A third of Americans have reported wanting to quit their jobs, in the wake of a tumultuous year and a half. In April, four million people quit their jobs in an effort to find better work. This shift has been called the Great Resignation

The pandemic has led many of us to rethink what we need and what we value in our work, and in our personal lives, myself included. 

So after several months of planning, I recently quit my 9-to-5 to pursue my passions and to grow my blog — the Money Minimalist, a personal finance education platform I created in July of 2020 to teach millennials how to invest for early retirement — into a thriving online business. 

I've already begun monetizing the blog through Instagram and through online workshops I teach based on my own experience paying off debt and growing my net worth to six figures over the course of four years. 

Here are the five steps I took to prepare to leave my day job

1. I leveled up my emergency fund 

Previously, as I had grown my net worth, in part through investing, my mantra had been "earn more, spend less, and invest the difference." But as I prepared to leave my 9-to-5, I shifted my financial plan to focus more on saving.

My goal was to save more than 50% of my annual salary. I saved at a higher rate for over six months, and put a higher percentage of my paychecks into a high-yield savings account. I was able to save up enough for a six-month emergency fund

Another way I was able to save was moving back in with my parents for a year, before recently moving into a new place. Now I am actively working on my side hustles to cover my day-to-day expenses like rent, utilities, and groceries. 

My goal is not to touch my savings, and to live off of my side hustles during this time. I'm giving myself a year and then I'm going to reassess. 

And all the while, I've tracked my fixed and variable expenses, as well as my investments, in Google spreadsheets to keep track of where my money is coming from and where it is going.

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2. I created additional streams of income  

In addition to my work on the Money Minimalist, before I left my job, I started laying the groundwork for other side hustles so I could dive right in when I was ready. 

I built a profile a few months back on Rover and I recently started a dog walking side hustle. I decided to do it because I love animals and I know people who have earned upwards of $500 a month on the app. That has already helped me bring in extra cash to pay the bills.

I also went to bartending school, and just earned my certification to start bartending for another stream of income.

3. I used all my company benefits 

I wanted to make sure that I was making the most of my company benefits while they were still available to me. So once I decided to leave, I took all of my remaining PTO, and made sure my 401(k) match contributions are vested.

And knowing that once I changed health plans I might experience more limited coverage or potentially have to switch providers to ones in-network, I scheduled all my outstanding health appointments.

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4. I got my own health insurance plan

Know what your health plan options are before you put in any notice. If you're under 26, see if you can get on your parent's plan. If you're married, check if you can be covered under your spouse's plan. If you're none of the above, like me, then you'll have to find your own health insurance plan. 

But don't be intimidated. I spent about two weeks researching plan options and I completed the application process in about two days. You'll want to shop your state's Healthcare Marketplace to enroll in medical and dental plans, and you can visit Healthcare.gov to get directed to your state's website. 

Based on your eligibility, you may even qualify for some tax credits to cover the premium costs or full Medicaid coverage. Most states require you to sign up before the 15th of the month to be eligible starting the following month. You'll need to time this accordingly to avoid any gaps in coverage.

5. I told my network about my plans 

Right now, I'm not entirely sure what the future holds. I want to take the next year to build my business, and take some time to travel if it is safe to do so. I can see myself potentially returning to a job like the kind I had. But if my work as an entrepreneur and my investments can cover my annual expenses, I would like to continue in that direction.  

Ultimately, as you are preparing to make any kind of career change, my best advice is to reach out to your network to tell them what is going on. You never know who might be able to help you accomplish your goals or connect you to a helpful person or an exciting new opportunity.  

And before you make the leap, take the time to ask for recommendation letters and update your resume while your accomplishments are still fresh in your mind.

It does take some time to build up a financial safety net to leave a steady paycheck behind. To avoid feeling burned out, I would also suggest doing what you can to make your current situation work for you, whether that is looking into a remote work option, a brief sabbatical, or negotiating for a raise or a promotion. 

Listen to yourself, and do what you can to give yourself the most breathing room to make the best decision for you. 

Helen Lu is the founder of the Money Minimalist.

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