For most employees, transitioning from one company to another is a natural process of advancing their careers. While a new job can offer an increased paycheck and more opportunity for career growth, it can also bring a cash shortage. Often, when employees transition between jobs, they face a temporary gap between when their prior job ended and their new one begins.
While this job gap may only last a week or two, the lack of pay during the transition is enough to rattle the budgets of cash-strapped workers. The following are four tips for avoiding a cash shortage during an upcoming transition to help you focus more fully on preparing for the new job.
Plan in Advance
Except for in extreme situations, a job change should never be completed on impulse. Rather, this change should be made after lengthy assessments of the pros and cons of transitioning from one company to another. By planning a career change in advance, you’ll have ample time to save up slowly for any pay gap you may experience.
Since some job transitions, such as layoffs, are unexpected, you can protect against sudden cash shortages by building an emergency fund. This is a savings account with funds to be used only in extreme emergencies, such as when you’ve lost one job and are still searching for another.
Consider the Timing
A job transition before the holidays isn’t exactly ideal timing. Rather, this timing would likely lead to additional unnecessary stress during the holidays as well as a cash shortage when you need more money rather than less of it. If possible, plan a job transition during a less hectic time of year. This will offer more control to save in advance of the career change and will also reduce your stress regarding the transition.
If you know a gap will occur between when your current job ends and the new one begins, plan in advance by reducing expenses. From cutting back on premium coffee purchases to cooking meals at home rather than dining out, several expenses can likely be temporarily cut from your budget.
By reducing expenses, you’ll create extra breathing room in your budget for any unexpected cash shortages during the job transition. This will also prevent you from turning to credit cards while keeping your savings intact.
Save Your PTO
From doctor appointments to family emergencies, workplace paid time off can be difficult to accumulate. However, since most companies pay the cash value of your accrued PTO when quitting your job, this may be the ideal option for preventing a cash shortage while enjoying a few weeks of freedom before starting your new job.
A job transition should involve excitement about advanced career opportunities, not worry regarding a pay gap. By planning in advance, reducing your expenses and taking other actions, you’ll have the funds needed to simplify your next job transition. Do you have additional suggestions for avoiding cash shortages during career changes?