Although it may seem an impossible task, the steps to quit your corporate job aren't as daunting as you may think. If you have a corporate job, you probably already have a decent income, which makes saving up to quit so much easier.
Before you move on from corporate life, you'll need to gain financial freedom.
Start with the right mindset.
Financial Freedom Mindset
What does it mean to have a financial freedom mindset? Once you decide you want to quit your corporate job, your main focus needs to be stockpiling assets. Everything else is just a roadblock to achieving your goal.
That means no more car loans. Or frivolous purchases.
You are now the owner of your own financial freedom operation. Your job as owner is to make operational decisions that lead to profits. Profits = assets = increased net worth.
Stop worrying about what your co-workers are wearing, where they hang out after hours, what kind of cars they drive, or expensive watches they wear.
It doesn't matter what your neighbors or friends think of your new choices.
The millionaire next door probably looks like a blue collar worker, and chances are, she's a business owner. She typically drives a mid-priced used car and stockpiles her savings. She could afford a much nicer house, but chooses to live beneath her means.
That's you now. Get into the mindset to maximize your net worth.
The next thing you need is a strategy.
Strategy (to Quit Your Corporate Job)
A good strategy to gain financial freedom includes the following components:
- Understanding of your plans after you quit your job. What will you do with your freedom?
- Calculation of how much you need to fulfill those plans.
- Income strategy
- Savings strategy
- Investment strategy
What do you plan to do with your time after you quit your corporate job? What is your (attainable) dream life? A good place to start is writing your own personal manifesto, an exercise that helps you define your intentions. Download this free Word template to get you started:
Calculating the Cost
How much money do you need to quit your job?
It depends on two primary factors:
- burn rate
The biggest factor in how much savings you'll need is your burn rate after you quit your corporate job. Burn rate is your monthly cost of living, and it can vary greatly depending on your wants and needs.
The second major factor is how much income you'll have after you stop receiving a paycheck from your employer. If you start a side business that becomes your main focus after you quit your job, you may have a decent income to contribute to your cost of living. If not, you'll need to draw more from savings each month to cover those costs.
Read this post for details on how to calculate the amount of savings you need to quit your job.
Your income strategy starts with the income stream you already have – that dastardly corporate job. For as long as you have it, maximize promotion, bonus, and raise opportunities. And then shovel every penny of those extra dollars into your savings and investment accounts.
Building secondary income streams will make your path to quitting your corporate job quicker. It will also give you something worthwhile to do after you quit your job. Something you enjoy. So pick a business that's in line with your passions and post-corporate job plans.
Pretty much any interest can be monetized these days using the internet. Become an influencer on social media for your niche hobby, and you'll quickly be stacking Benjamins.
Okay, maybe not quickly. Building a social following is not fast. It takes time.
That's why you should start now. Like, today.
Twitter, Instagram, Facebook, and while you're at it, pick up a copy of Crushing It by Gary Vaynerchuk if you want more information about how all of this works, and hear stories of normal people who have already done it.
I recommend the audiobook. Its read by several people who made it after following in Gary's footsteps, and its mega inspirational.
If you're not interested in becoming an influencer, what are some other ways you can start a side hustle or build a side business? Start researching your options and focus on the things you enjoy doing.
Any good savings strategy starts with the b-word.
Yep, you need a budget.
Create a simple budget that's easy to follow, update, and revise as needed. I've been using the same budget for years. If you'd like to see how I budget for my bi-weekly paycheck, you can access my excel template here. You'll also get access to my other free worksheets and templates.
Bottom line – you need to plan how much you're going to save, track your actual expenditures, and improve your bottom line as you learn where your weaknesses are.
For some of my best tips on budgeting, read 5 Hacks to Create a Personal Budget that Works.
In addition to budgeting, you also need a cash flow plan. I personally use and recommend the Savings Waterfall system. Its essentially a digital envelope system that isolates your recurring expenses, and separately your non-recurring expenses for things that flux from month to month like groceries, supplies, travel, and entertainment.
The rest of your cash goes straight into a high-yield savings account or a brokerage account for investing.
Once you've determined how much you can save from your corporate job, and how much you can make on other income streams (in x number of years), start thinking about the timeline. Will you make enough money to quit your job by your target date?
If not, here are some extreme options:
- Sell your house if you have equity. Buy or rent a more affordable domicile.
- Stop maxing out your 401k. Only deposit the amount that gets you the company max offered by your employer.
- Become ultra frugal. Spend less, save more.
- Relocate to a lower cost of living area.
- Increase your income. Get creative.
- Go extreme with lower cost of living lifestyles post-corporate job. (RV, sailboat, tiny house, or expat lifestyles)
Unless you're approaching retirement age, stockpiling funds in your 401k won't allow you to retire early without taking penalties on your withdrawals. So you'll need to save an invest outside of an 401k or IRA.
There are a myriad of investment options that will deliver passive income to you and grow your wealth. Reinvest these funds continually to maximize your earnings on compound interest.
Here are a few options you can access from your home computer:
- High-yield savings account or Certificate of Deposit (CD)
- Full-Service Brokerage account (TD Ameritrade)
- Mutual Funds
- Index Funds
- Dividend Stocks
- Growth Stocks
- Options (learn how from OptionsTradingIQ)
- Peer-to-Peer Lending (Lending Club, Prosper)
- Real Estate Crowdfunding (Fundrise, Crowdstreet)
- Invest in Farmland (Acretrader) – This platform requires you to be an accredited investor.
- Silent partner in a business – A silent partner is an investor who contributes capital into a business in exchange for a share in the profits or losses of that business.
After you design your strategy to quit your corporate job, its time to execute. Earn, save, invest, and start building your side income streams.
Track your progress, and stay inspired by focusing on your dream life.
For motivation, listen to the Sixty Seconds Savings Coach micro podcast and Amazon flash briefing.
Do you have a plan to quit your corporate job? Share in the comments below!