A couple of years ago, I got myself a full-time job after years of trying to make it as a freelancer. It offered me nearly double what I was making when self-employed — plus the usual benefits — and it was an exciting new career challenge. So you might be surprised to learn that on my very first day on the job, I began creating an exit strategy.
You’ve probably heard stories of people plotting their exit strategies from their full-time jobs. Generally, it seems that someone is motivated to create one because they hate their job, boss, commute, pay, hours, or even (sadly) all of the above.
But in my case, it’s about none of these things. Let me rewind — before I was a freelancer, I was a mildly content full-time employee.
Planning for a Switch
Although I didn’t love what I did at my job, there were too many other perks that made it worth my while. I had saved a little money, but I had no budget, and didn’t keep track of my finances at all.
There was absolutely no plan B if something were to happen to my job.
Instead, I focused on maximizing fun during my non-work hours, and that meant a lot of mindless spending. But then I was laid off. I was immediately thrown into the world of freelancing with zero preparation or skills on how to manage my business or myself.
It’s not an uncommon situation — if we’ve learned anything from the last few decades. Job loss can seemingly come out of nowhere, whether spurned by a market recession or an unexpected global pandemic.
And I’m not the only one guilty of poor planning: 45 percent of adults would be unable to pay an unexpected $400 expense, according to the Federal Reserve, showing there’s widespread unpreparedness for life after a layoff.
I blew through my savings quickly. Soon, I was living pretty much paycheck to paycheck the entire time I was a freelancer. You can imagine the stress. But I also learned a few things during those tough times, including how to live more frugally. I also tracked my money closely and followed a very strict budget.
As I began my new chapter as a full-time employee, I vowed to do things very differently.
This time, I’m preparing myself not only for that pink slip if it should come, but also building up my tools and savings in case one day, out of the blue, I decide that it’s time to move on.
And given that one long-term study shows that Americans born between 1957 and 1964 have held an average of 12.3 jobs between the ages of 18 and 52, it’s not an uncommon hypothetical to prepare for.
Here are a few of the steps I’ve taken to maintain some economic freedom.
Build an Emergency Fund
My first priority to developing an exit strategy is building up a huge financial cushion. This is not only for life’s unexpected expenses, but in case something happens to my job.
It can be difficult to resist spending in favor of building an emergency fund — but there is nothing worth buying that is better than financial peace of mind — especially when you consider the alternative stress you’d experience if you suddenly found yourself out of work.
“An emergency fund is your safety net, your rainy day fund for the unexpected events in life,” says certified financial educator Hilary Seiler. “It’s the pot of money you have set aside for when life decides to happen — and let’s face it, life happens a lot.”
That said, building an emergency fund is often easier said than done. Seller recommends individuals struggling to get started first take an assessment of their monthly expenses.
“Review your budget and determine how much your monthly expenses run you,” Seller recommends, using either a bank statement or a financial wellness app to obtain the numbers at a glance. “Once that’s done, take your monthly expense number and multiply it by three months, and start saving for emergencies with that number in mind.”
Make sure your nest egg has space for both short- and long-term expenses — and take steps to ensure that as your lifestyle or income changes that your fund stays current as well.
Don’t Inflate Your Lifestyle
It’s tempting to finally cut loose and spend more money since I’m making so much more — but if you’re already living frugally and building your emergency fund, why stop there?
For instance, I’m taking any “extra” money I’m earning and socking it away for my retirement. I’m also putting some of it into my investments.
In the end, however, many individuals succumb to a “lifestyle creep” that prevents them from setting aside more cash for a rainy day. One in three Americans admits they overspent on their budget in the past month, according to a study conducted by tax software service Intuit.
That said, setting a budget is still the best initial step you can take toward minimizing lifestyle creep — that and self control, of course.
“Setting a monthly budget can eliminate the urge to overspend on expenses, and identifying how much you may need to pay for needs, wants, and savings can help individuals stick to their budget,” explains financial coach Annette Harris.
“The 50/30/20 rule can assist in establishing a spending and savings regimen — spend 50 percent of your income on needs, 30 percent on wants, and designate 20 percent toward savings,” Harris continues. “Plus, setting up an automatic transfer of 20 percent of savings from checking to savings can help ensure that emergency money is set aside.”
Build Your Skills and Beef Up Your Résumé
Just because I got this job based on my current skills, that does not mean that I can or should rest on my laurels. I plan on learning as much as I can (the company offers tons of free training).
In addition, I try to keep track of my performance at my current job.
Around the office, I take notes on when and how much I’ve saved or earned money for the company, or did anything else noteworthy that I can use to my advantage in my next venture or in case of an unforeseen departure — a strategy that’s echoed by headhunting professionals.
“I recommend starting a spreadsheet or Word document where you keep a detailed summary of financial results you achieved, strategies you implemented, and any relevant key performance indicator improvements,” says recruiter and career coach Matt Glodz.
Glodz goes on to advise career professionals to set a recurring time to check their own progress, ensuring that achievements aren’t glanced over inadvertently.
“Set a calendar reminder to update this document at least once per quarter instead of waiting until you need to update your résumé,” Glodz recommends.
Keep Other Irons in the Fire
I dropped many of my side hustles due to lack of time. But there are still a few that I keep on the back burner, just to maintain my exit strategy.
It’s nice to know that if something happens to my job, I still have some ways to earn extra money while I’m searching for something else.
One in three Americans has a side hustle, according to a Harris Poll survey. If you’re looking to add some extra money to your annual income with a side gig, there’s no shortage of ways to increase your earnings.
“Side hustles can help you accomplish short-term financial goals, like paying off debt or taking a vacation — but over the long term, the biggest benefit to having a side hustle is that it increases a skill that can make you money,” explains R.J. Weiss, a certified financial planner.
Weiss stresses that side-hustling can enable greater financial independence by way of providing a separate, non–job dependent income stream.
“Side hustles are a low-cost, low-risk way to practice that skill of increasing your income,” Weiss adds. “These skills can help you in a day job or even help you start a business in the future.”
Many professionals fail to network effectively due to an inability to put their best foot forward. Here are some of executive coach Lori Rassas’ best tips on how to get the most out of your next professional get-together:
Adapt your style to the person you’re meeting: “If you know someone likes to discuss work over cocktails, arrange to meet for a drink. If they like to discuss business over golf, meet them on the course or at the driving range.”
Execute with confidence: “For example, when you reach your target connection on the telephone, act in a manner to make the other person comfortable with your request and willing to agree to it.”
Be specific in your request: “Once you have the person on the phone (or sitting across from you), be very specific as to what you want. Don’t ask for a job (the person will likely know this is the eventual goal). Ideally, explain what you have to offer in return. More often than not, people are willing to help, especially if they’ll receive a benefit in exchange.”
Be proactive: “Avoid vague promises that may or may not be carried through. Never leave the meeting with an agreement that the other person will ‘contact you if an opportunity arises,’ or ‘get back to you if they come up with other ideas.’ Suggest that you follow up with them in two weeks.”
Network Continuously
Being an introvert means that I generally loathe networking. However, I know it’s important to continue building relationships with people in order to have a decent exit strategy.
They could potentially be future clients, employers, or business partners. If I visit a new city, I like to find someone in my field, or in another field that I’m interested in, and take them out for coffee or a drink.
In fact, the average percentage of hires from referrals is 27 percent, according to a report by employee referral platform Drafted. Networking might be intimidating at first, but clearly a little bit of effort can go a long way.
Beyond networking with peers, maintaining a connection with a mentor figure can provide advice and key connections to help you develop an exit strategy and to get to the top of your industry.
“A mentor can be an incredibly important part of your career advancement because their interest in helping you is genuine. And if you happen to select a mentor with significantly more experience than you, you can learn from both their successes and mistakes,” says Lori Rassas, an HR consultant and executive coach.
“Sometimes these relationships develop in a formal manner, whereby you request that someone enter into this type of relationship with you,” Rassas continues. “Other times, they develop naturally because you continue to reach out to that person for advice.”
Whether it’s a senior employee at your current (or past) company, or someone you encountered along your career path, mentorship is but one facet of how networking can create new and exciting job opportunities — so don’t be bashful about connecting via LinkedIn (or in person).
The Bottom Line
I don’t know what the future holds, and if I’ve learned anything from the past, it’s that no one can anticipate the day we get our pink slip. That's why you always need a decent exit strategy.
But the exciting thing is that I’ll be in a much better position, both mentally and financially, for whenever that next chapter arrives.
With the help of some additional revenue streams, a consistently updated CV, a network of professional contacts, an emergency fund to fall back on, and a frugal mindset, I feel confident to address any situation that arises.
*Name has been changed.
The post Why I Started Creating an Exit Strategy on Day 1 of My New Job appeared first on CentSai.
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