Things to consider before resigning
Thinking of resigning? There are a few things you should consider before handing in your notice. Moneybags journalist Jessica Anne Wood looks at what you should do before resigning.
The current economic environment in South Africa has many people struggling to make ends meet as the cost of living rises, along with debt. John Manyike, head of financial education at Old Mutual, highlights that in tough economic times it is important to be cautious when making decisions.
“Before making any changes that could affect your long-term financial wellbeing, carefully weigh up the pros and cons. This applies particularly to deciding whether or not to resign from your current job,” says Manyike.
According to Manyike, there are six main things you need to consider before resigning. These are:
Ensure that you have done your research on the company that you are looking to join. Are they financially stable? “Downsizing and retrenchments are unfortunately a reality for some in this challenging economic climate, especially given the recent downgrading of our economy,” notes Manyike.
Look for opportunities at work:
Before resigning, look at any opportunities at your current place of employment. If you are willing to enhance your current professional skills and invest in your personal development that may be more worth your while than the extra money your new job is offering you. You’re never too old to learn, improving or updating your technology skills and taking courses that will enhance your professional skills can help you advance your career, which means more money further down the line anyway.
Don’t let a ‘big’ salary tempt you:
While a high salary may sound wonderful, take a step back and consider the whole package you have been offered. It is important to compare the benefits you are getting with your current employer to those that have been offered by the new employer. While your take home salary may be lower at your current job, the other benefits you receive, such as medical aid and pension fund contributions, can add up.
Manyike advises: “Request a dummy payslip from your potential new employer to gauge what your future take home pay could look like. Remember that when your salary increases, you may enter a new (and higher) tax bracket.”
Location, location, location:
Consider where your potential new employer is based. If they are located further away from home than your current employer, factor in the added travel time and costs. Any salary increase you may receive could be cancelled out by your increased travel expenses.
Get expert advice:
“Speak to your financial advisor to review your financial plan, taking into account your prospective increased income and financial obligations,” says Manyike.
Resigning to access retirement funds:
If you are considering resigning to access your retirement funds in order to help pay off your debts or help fund your lifestyle and living costs, stop and think. Your retirement funds are there to fund your living costs in retirement when you no longer have a job and earn an income. Accessing these funds early will take away from your future and possibly leaving you facing financial troubles in retirement.
“This is a major concern, and one of the reasons why our savings rate as a nation is poor. People who cash in their retirement funds instead of reinvesting or preserving the proceeds invariably have to rely on the State and their children when they retired,” stresses Manyike.
If debt and financial issues are the cause of you resigning, there are other options available to you. Manyike emphasises that debt should not be the reason you resign. Debt counselling is one way that you can tackle your financial issues. Speak to a financial advisor on how to better manage your finances, or alternatively contact a debt counselling firm for assistance.