How to Transition From Employment Without Compromising Your Standards

Most of my clients want to be coached through successful transitions; from being at home to back in the market; from one level of leadership to the next; from employment to self-employment, or retirement.

The 3 greatest concerns they have are:

  1. Financial stability (will I still be able to pay my bills?)

  2. Professional credibility (do I have the competence and connections to thrive?)

  3. Time freedom (will this force me to work 24/7?)

If these are also your concerns, let’s explore how to prepare to successfully transition from employment without compromising your financial stability, professional credibility, and time freedom to do what you value with the people you treasure.

In this article, we will start with the first:

1. Planning Your Financial Stability After Employment

The thought of not having a predictable and “stable” source of income is a deal-breaker for most people thinking of leaving employment. This is especially so when they are breadwinners. And understandably so, "their families have to eat!"

So how do you maintain financial stability and not compromise your standards when you leave employment?

  1. Do a budget

In this video, I asked people to be clear about what "more" is, when they say they want “more” money.

You won’t know what you need without first doing a monthly budget.

If you don’t regularly do a budget, here’s the simplest way to go about it:

i. Make the time to list every item you spend money on each month.

You may want to list like items under broad categories such as:

  1. Giving

  2. Savings

  3. Housing

  4. Utilities

  5. Transport

  6. Groceries

  7. Clothing

  8. Personal Care

  9. Entertainment

  10. Personal Development

  11. Miscellaneous (for line expenses you cannot fit into any of your major categories).

ii. Next to each item write the amount in your currency that it costs.

iii. Add up all the costs to see your total monthly expenses.

That figure tells you that each month of your transition, you will need to earn an amount that allows you to at least pay that figure.

2. Separate Needs From Wants

Your needs include shelter, food, utilities, clothing, and transport.

Wants are nice-to-haves that your life would not be significantly affected by if you were not to have them each month.

i. Look at the items you listed above and put an asterisk (*) next to needs, and a pound sign (#) next to wants.

ii. Calculate the sum of your wants and remove that figure from the total sum for your monthly expenses.

The new figure is the monthly amount you should aim to earn if you remove all the nice-to-haves but not necessary items from your budget.

3. Find Value for Less

If the income figure you calculated after removing your wants from your needs still makes you nervous about transitioning from employment, consider finding alternatives to the products and services you currently pay for.

i. Look at your new budget that consists only of needs and ask yourself,

"which line items in each category, can I find alternatives for that would give me more or less the same value at a lesser cost?"

ii. Next to each item with an alternative, write down the cost of the cheaper product or service (that does not drastically compromise your standards).

iii. Sum up the total of your new monthly budget.

How does your budget look? Is this something you can work towards securing each month?

Whether you stick to the original budget, or the one with your nice-to-have wants removed, or one where you consider value alternatives to your budget items, if you feel more comfortable entertaining the thought of transitioning from employment, we can now move to the next step:

Make sure you have the income to pay for all your expenses.

2. Save More

Since you know your monthly budget, you know the figure you need to save so that you can pay for your monthly expenses.

If, for instance, you want to start your own business or non-profit, and are not sure you will be able to secure finances that will pay you what you need in the first few months, you can save that amount whilst still in employment.

Experts recommend that we each save 3-6 months' worth of monthly expenses as an Emergency Fund for when life happens.

You can save 3-6 months’ worth of expenses for when you transition from employment.

Here’s how:

i. Look at your original budget again and ask yourself how much you can save each month from your current earnings towards the 3-6 months’ Emergency Fund.

ii. Deposit that amount into a fixed savings account. Preferable one you set automatic deposits to, and have little to no access to withdraw from until the set time when your funds have accumulated your desired amount.

Going the savings route will mean that it is the Emergency Fund amount, and the disposable income you can deposit towards it that will determine how soon you can transition from employment.

3. Earn More

Your budget just told you how much time you have to save 3-6 months’ income to have the financial peace you need in the first few months of your transition from employment before your new income streams kick in.

An alternative to saving for your period of transition is earning, especially if after doing your budget, you were left with little or no savings to put towards your future.

There are countless possibilities, here are 3 things you can do to earn the amount you need for your transition from employment, without compromising your standards:

i. Lease accommodation or transportation

If you have these assets, or can acquire them such that the investment gives you appreciable returns, rent a room, house, space, land, car, trailer, or anything else you can to earn passive income whilst you are still employed.

ii. Consult During Free Time

Mornings before work, lunch breaks, evenings, and weekends (please don’t forget your family) are perfect times to get in some consulting or other work to earn extra income.

Many boards, investors, businesses, leaders, projects seek expertise on favorable one-off, short to long-term arrangements. You can sign up to provide services and get paid handsomely for them.

iii. Start an eCommerce Business

Alone or in partnership, create, automate, and sell products online and start earning 24/7.

You can choose to use the earnings from your online shop to exclusively build your Emergency Fund.

The beauty of starting to explore developing other streams of income now is that you can continue with them even after employment, changing your financial goal from building your Emergency Fund to something else.

4. Secure 3rd Party Funding

You can save what you currently earn or earn what you need to save to enjoy financial stability after you transition from employment so that you don’t compromise your standards.

Or, you can get third-party funding.

Whether you choose to work or stay at home after employment, you and your family have to continue eating.

Where will the money come from?

Here are 3 sources for funding your budget after employment:

i. Family & Friends

If applicable and affordable, you can ask your spouse or another family member or friend, to finance your budget in the 3-6 months of your transition from employment.

This could be a gift, equity investment, or loan (I highly discourage borrowing without a foreseeable income source from which to repay).

ii. Grants

There are all kinds of grants available for all kinds of pursuits.

Whether taking a sabbatical to write, going back to school, starting a business to meet a social-economic need, you will find grants you can qualify for that will fund either your entire or part of your personal and organizational budget during your transition period.

iii. Severance Pay

Don’t spend it all at once! Maybe this is not exactly 3rd party funding but if your budget allows you to use your Severance Pay to fund your transition, do that.

iv. Loans

I am so averse to borrowing and owing that I would not advise you to borrow to finance your transition from employment just so that you don’t compromise your standards.

This is especially so when you don’t know when, if at all, what you are transitioning to will give you the financial stability to both meet your monthly budget and pay back the loan with interest.

Decades of consulting have taught me that until the money is in your account, you don’t have it. You can no longer take a handshake from someone you trust, or a signed contract to the bank. Many things can happen in between. Do not borrow when you don’t know how you will pay.

If, however, you have secured funding for your core budget and loan repayment amount, cautiously, conservatively, and with professional counsel, consider taking out a loan to finance your transition.

5. Withdraw From Your Social Security

If you have no intention to work and just want to relax and are certain that your social security disbursements can take care of you for the remaining years of your life, wonderful! Make a monthly budget and live la vida!

But I’m guessing you have read this far because you either do not want or cannot afford to live on social security alone.

If that is the case, explore and exhaust the 3 options above and seek professional financial planning advice before even thinking about using your retirement fund to finance your transition.

This is my opinion, please don’t use your social security fund to finance a new venture after employment.

As long as you are able to work and negotiate value for money, save, earn, or secure 3rd party funding for a new venture.

Yay or Nay?

After reading this article, how do you feel about transitioning from employment?

Need help?

I welcome you to book a Discovery Call to explore whether I can help plan, prepare for and successfully pursue your transition from employment without compromising your standards:


Recent Posts

See All