What’s a Freedom Fund?
The best way to think of your job freedom fund is as a career emergency fund. Should you need to jump ship, you’ll want to have something saved up to help you make the transition – such as moving cross country or take a necessary course to get certified.
This is about investing for yourself. You don’t want to pass up on a once in a lifetime career or opportunity, because you didn’t have a safety net for yourself and/or your family.
How Much Money Do You Need?
There are a few factor you’ll need to consider to determine how much you need in your job freedom fund:
- How quickly can you expect to find another job in your industry? Some careers right now are stalling because it’s hard to switch over to better jobs. When answering this question, please be realistic with your estimates. It can help
- Do you have a job offer already? With many people a bit more cautious before jumping ship, many wait until they have a comepeting offer. That makes sense – you don’t need as much to money with the transition.
- Do you have to move to find another job? We had to move for a job opportunity ourselves a couple of years ago.
Everyone’s numbers will be different. You can’t be comparing yourself to others with the amount. It’s something you have to calculate for your situation.
How to Save Money Each Month
For us, automating deposits into savings has been a huge help for us. We try to keep our savings as a bill, meaning it is a part of our budget. We incorporate it as if it was non-negotiable. With that mindset, we have been able to achieve certain saving goals for our family. We start with a goal and then break it down to monthly deposits.
Don’t be discouraged if you can only allocate a certain amount each month, it’s better to start small and build from there than just wait for a raise to help you put down more money.
If you need ideas on day to day savings, MD has a great post on that exact topic. You may surprise yourself with how much you can save in one year.
Make sure whatever bank or credit union you choose that it has some important features to protect your savings:
- Covered by FDIC/NCUA
- No monthly maintenance fee
- $0 required minimum balance
- Earn a reasonable interest rate
While higher earning interest is a great goal, the main focus is to have the fund ready to use when you need it. That’s why I recommend not keeping it in a certificate of deposit (CD) or investing it in the stock market in hopes of getting a higher return.
Thoughts on Quitting a Job
How did you know it was time to quit your job? How did you prepare to make the transition? How successful were you? Are you deciding if it’s time to quit? Don’t forget to check out last week’s post on signs that you should quit your job.
Photo Credit: alancleaver_2000