Even if you’re eager to leave the 9-5 life, giving up a steady paycheck is difficult. Betting on yourself and your ability to get clients can be a little scary.
But you can really slow down your company’s growth if you hold onto your 9-5 too long. If you split your attention between your day job and your business, you won’t be able to give either the focus they need.
Leaving your full-time job can enable you to take your business to the next level. But you have to make sure you’re financially ready before you make the leap. Here are some questions to ask yourself to determine if it’s the right time to quit your job.
Do You Have a Big Enough Emergency Fund?
Most personal finance websites say you should have an emergency fund that will cover all of your expenses for three to six months.
For me, this didn’t feel like enough. I didn’t leave my part-time job until I had enough saved to pay all my bills for a year.
Having enough money in the bank to go twelve months without a single client gave me peace of mind. It also served me well during the pandemic when I lost a few of my long-standing clients around the same time.
But you don’t have to save up as much as I did to quit your job. It’s all about saving up the amount that will make you feel secure.
However, it’s not a good idea to leave your job if you have no savings. Without an emergency fund, you might have to take on clients that aren’t the right fit just to pay the bills, which will hinder your company’s growth.
Do You Have Repeat Clients?
It’s much harder to make a living as a business owner if you don’t have repeat customers. You’ll have to constantly pitch and sell yourself to new clients, which is time-consuming and stressful.
Before I left my part-time job, I focused on getting long-term blogging gigs rather than one-off assignments. Once I had five or six clients who wanted multiple blog posts per week, I felt like I had income I could count on. That gave me the confidence I needed to quit my job.
Are You Earning Enough to Live On?
Another important consideration is whether or not you’re earning enough to live on. Freelancers are taxed at a higher rate than regular employees. We also have to pay for our own health insurance, and we don’t get benefits like paid time off or 401K matching.
Before you quit your job, you need to make sure that you’re earning enough money to pay your bills and make up for the benefits you’re losing.
Ideally you should also be bringing in enough cash to be able to save for the future. Even if you love your business, you’ll probably want to retire at some point so you can enjoy your golden years.
Will You Make More Money if You Quit?
At some point, you may actually be leaving money on the table by sticking with your 9-5. My job at the call center didn’t pay very much – only about $12 an hour.
My hourly rate as a freelance writer was significantly higher. So when I left my job, my income actually increased even though I was paying for my own health insurance.
Run the numbers and see how much you earn per hour from your business and your day job. If you’ll make more money by running your business full-time, it can give you the courage you need to give up that stable paycheck.
If you said “yes” to all these questions and you’re constantly daydreaming about leaving your job, it may be the right time to make the leap.