Today’s article is by contributor Romeo Jeremiah, a philosophical independent thinker, and author of The Wealth Number, a book that provides a financial solution to pursuing the job you’d love.
I’ve taken quite a few “rest and relaxation” vacations over the past year, four of which have been outside the United States.
For me, the most enjoyable experiences during my vacations are when I learn about other people, many of whom are also vacationing from the United States. It’s amazing, because most people really enjoy talking openly about themselves.
If you’ve been to a “tourist area” outside of your country recently, and had a conversation with other vacationers, you’ll know that at some point the question of, “when are you leaving” is broached.
I try to avoid asking others this question altogether but, out of reciprocity, I inevitably ask. And that’s when it starts.
“Yeah, I leave tomorrow. I’ve been enjoying the sun since last week but, it’s back to reality now. It’ll be back to putting up with my boss, responding to an absorbent amount of emails, and spending ten hours of my day at my crappy job, not including the commute.”
In an attempt to stay positive, I usually respond by saying, “Well, yeah, but at least you get to take a vacation from it all, right?”
Unfortunately, my attempts to comfort my new “friends” usually fail. They’ll just continue telling me how crappy their jobs are and how they wish they could quit to do something differently. It is at this point when I respectfully interject by asking, “Since you feel this way, have you ever considered getting another job?”
Of course, the answer is usually, “Yes. But…”
Why Don’t People Quit Jobs They Hate?
The biggest concern people have shared with me after attempting to answer my posed question is the fact that they’re not financially prepared to quit their jobs but, if they had the money or, rather, knew how to get the money, they’d quit in a heartbeat.
Being how this answer is given while they’re on vacation, it always seems quite ironic to me. It’s ironic because the “no money” excuse comes from a person who has spent at least $4,000 for his or her family to vacation.
If his or her monthly spending was only $2,000, that $4,000 equates to two months of financial freedom and power under the wealth number concept.
Because I’ve heard the, “I don’t have the money excuse” so many times, from strangers, family, and friends alike, I decided to offer a solution to their problem, which I explain methodically in my newest personal finance book, The Wealth Number: The Financial Solution to Quitting the Job You Hate.
The wealth number is not a solution to early retirement and it is most definitely not a quick application solution. It is a pre-meditated, carefully crafted solution to transitioning from a crappy job into one that you’ll finally enjoy.
The Plan To Save Up Enough Money To Quit
In short, the best way to begin your career transition is to grow your wealth number. The wealth number is measured in months and expresses the length of time that you can maintain your same comfortable standard of living in the event that you lose your income after quitting a job you hate.
Imagine having enough money set aside right now so you can comfortably leave your job and manage your expenses until you can transition into one that you love. How empowering would it be? While you may think you need a huge sum, the reality is you don’t.
All you need is enough money saved to cover your monthly expenses for a transitional period, with just a little more months remaining to purchase the few things that you want or need.
If your expenses are only $2,000 monthly, you’d only need to save $24,000 to free yourself from your job for a year. At that point, your wealth number would be twelve, representing twelve months’ worth of living expenses.
If you saved $48,000 you would be free for two years, with a wealth number of 24. And if you saved $72,000, you’d be free from your dreaded job for three years with a wealth number of thirty-six. Imagine the freedom!
Ultimately, your wealth number is what you’d use to determine how financially free and empowered you are. Each month of living expenses you save represents a purchase of your freedom.
If your wealth number is relatively high, the time gap of your career transition can be significant. If you “buy” a long career transition, you will have a better chance of coming across a career opportunity that allows you to determine your own success and eventually maximize your happiness.
How Much Do You Need To Quit Your Job?
The key to maximizing your wealth number is to:
- Determine your target wealth number.
- Separate your accounts, rearrange your billing cycles, and automate your finances in such a way that reduces your finance stress. The ultimate objective is to have accounts that automatically transfers your money for bills, discretionary spending, and your wealth number.
- Adjust your spending habits with the understanding that your freedom is worth more than material things. The fewer things your purchase during your plan to transition, the more money you’ll have to save towards your wealth number.
- Reduce your existing expenses to the lowest that you can get them. For example, you may be able to reduce a cell phone bill by $50 a month just by switching providers. Or, a simple call to negotiate lowering the prices of your existing bills may save you even more money.
- Strive to increase your savings until you’re saving an amount of money that equals your primary wealth number, monthly. In the end, when you’re saving at least a month of your expenses per month, every working month of your life should buy you one month of freedom that will allow you to transition and walk away from the job you hate.
Each of these steps are discussed in detail in The Wealth Number, including the quickest way to reduce debts without feeling broke so you can maximize your wealth number. When you master these concepts, you’ll feel empowered knowing that you are saving a nest egg that is linked to your ability to quit your job.
The Wealth Number is the “before” you leave your job preparation. If my vacationing friend had a wealth number of twelve, equating to $24,000 of liquid assets, he could have been well on his way to set up the next step required to successfully leave his job—engineering his lay off. As Sam has already written extensively about, a lay off that is engineered can be worth more than a year’s salary.
With the concepts taught in The Wealth Number and How to Engineer Your Layoff, you will be extensively prepared to leave the job you hate while you transition into one you love.
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Updated for 2016 and beyond
Thanks for the comment, Bryce. Yeah, the “wealth number” is very close in concept to an emergency fund. However, I explain in the book that they are different in that your “wealth number” is for an eventual job transition. If you only use your emergency fund you’d find yourself very carefully stopping at 6-12 months of savings. I’m saying keep up the same savings until you are ready to transition form the job you hate into the one you’d love.
Bryce @ Save and Conquer says
I got lucky and got a career job out of college that I have liked for the past 28 years. It’s interesting to me that what you are calling a wealth number, which you equate to number of months-worth of expenses saved, is what I would call my emergency fund. My wife and I have at least 12 months worth of living expenses saved in cash (actually in CDs paying 2% interest). Basically, if we both lost our jobs, we could fall back on this cash for up to a year. I suppose one way to lose your job is to quit. We are planning to do just that when we retire in 9 years.
Financial Samurai says
One of my favorite topics Romeo. Thanks for sharing. It’s interesting how some folks spend like crazy and then turn around and then wonder how are they ever going to get out of the rat race.
Absolutely. Thanks! I think every day should be a grind to escape the rate race.