How Your Financial Planning Should be When You Want to Leave Your Job
Although many like the job that they are doing, they cannot bring themselves to say that their job is flawless. Even the best job will have its downside that we have to accept. And when you stay in your regular job for a certain period of time, you might found what you really want to do and leave the job to do whatever you love. For example, resigned to become a freelancer because you want flexibility in work or resign to open your own business because you believe that you will be happy if you do what you love.
But, hold your horses. Do not be in a rush to decide your resignation if you do not have a clear plan, especially, a clear good financial plan. This is because, without good planning, your financial situation might experience turbulence. You might be short on funds or be in debt and is unable to pay back. Your plan has gone haywire and everything seems to be crumbling right in front of you. This article will then provide advice to prepare you before resigning from being an office worker as followed.
1.Plan on additional jobs
After working hours of the regular job and weekends is the suitable time to try doing an additional job that could turn into the future main job such as an open an online shop, invest in a condominium, do a traveling V-log or be a blogger who writes or reviews products. The additional job can lead to private business because if you tried and think that it is not what you like, you can always try again until you found the business that can bring you profit. You have to try until you are certain that the additional job will earn you enough. At least, the income must be equal to your monthly expenses.
2. Plan to build an investment portfolio to establish passive income or property income
During the time that you receive income from your regular job, you will need to have savings and use part of it to invest to gain income in form of dividends from the investment portfolio. In the initial phase of working, you might not know what kind of work you would like to do, but one thing that you can start immediately is financial planning and investment. If you gain income from both your additional job and investment portfolio with the minimum amount that is equal to your monthly expenses, you can feel secure when you have to resign from your main job.
3. Have reserve funds
You should have reserve funds that can last you for 12 months and have money reserved for starting a business. The amount would differ according to the types of business you plan to start. Therefore, if you have a choice, choose a business that requires lesser capital to avoid the risk of not having enough money.
4. Clear debt
Before resigning from a regular job, you should clear the debt as much as possible, especially, bad debt (debt with high interest and does not bring any income). If you cannot clear all of it, you are advised to ask for refinancing, so that the interest will go as low as possible and all debts should not exceed the value of all properties owned.
5. Plan to apply for more credit cards
When you resigned from your job, one thing that will be missing is your income statement, which acts as evidence that you receive regular income and you have good credit. The criteria of people who can apply for a credit cards are those who receive a stable income of at least 15 000 baht per month and have good payment records. After your credit card is approved, there is usually no more check on your income. Thus, before you quit your job, you should apply for more credit cards for useful benefits that meet your demands, suit your lifestyle and their yearly fees can be easily waived.
6. Plan for social security and health insurance
After you left your job, you have to register as unemployed at the Department of Employment within 30 days from the date that you are unemployed without needing to wait for the letter from the company. So, you will receive subsidies during your unemployment for not more than 90 days per year at a rate of 30% of average salary by calculating from minimum basic salary of 1 650 baht per month and the maximum basic salary not exceeding 15 000 baht. For example, the insurer receives a monthly salary at an average of 15 000 baht, they will receive 4 500 baht monthly subsidies and this will apply for another 6 months in 4 cases, namely; sickness, disability, birth-giving, and decease.
Apart from that, the money that you pay for social security every month, part of it will be saved as an annuity. You can check the amount on the website or application of social security and can ask for the savings when you are fully 55 years old. Whether you will get a pension or annuity, it all depends on the duration that you deposit money into social security. Within 6 months after you resigned, you should apply for social security membership as an insurer according to Section 39. This will allow you to receive medical coverage in case of sickness and emergency and protect your annuity.
If you think that medical benefits might not be sufficient, you might consider getting more health insurance. This is because once you quit your job, the medical benefits that the insurance company used to offer will also end.
7. Plan and manage the provident fund
When you leave your job, it also means you resign from being a member of the provident fund. If you withdraw the money from the provident fund without fulfilling the criteria of being 55 years of age, you will have to file for personal tax because you violate the conditions. If you want this amount of money to be exempted from tax, you can transfer your money from the provident fund (PVD) to Retirement Mutual Fund (RMF). This will allow you to have more options in investment and save money till your retirement without having to pay tax.
Nevertheless, to transfer money from a provident fund to RMF, you will have to mention this to your employer upon resigning. So, your company can settle this issue and transfer the money to RMF within 30 days from the date that all resignation document is received. As for RMF, to be able to receive the transferred amount from the provident fund, there must be a document mentioning that it is a fund from PVD or RMF for PVD and there must be a separation of RMF for PVD account from other RMF.
All in all, your financial accomplishment does not depend on whether you have a regular job, but who you want to be, what your future goal is, and how you start your day. This is because if you resign from your job without a good target and planning, you might find your life in ruins and stagger your way back to become an office worker as to how you used to be.
Nipapan Poonsathianrasap, CFP®, ACC
Independent Financial Advisor, Writer and Lecturer.