How to Save to Quit Your Day Job & Pursue Your Passion | Budget For Your Dreams
Do you find yourself spending most of your working hours daydreaming about being literally anywhere besides work? You’re not alone.
For many, work doesn’t always align with passion. And it’s okay to both enjoy your job and have other dreams you want to pursue!
While “quit your job and follow your dreams” might sound like a cliche, it doesn’t have to be. In fact, it can be your reality if you set your mind (and budget) to it.
Although we’re all for doing what makes you happy, quitting your day job does require a solid amount of planning if you want to stay away from money troubles in the long term. Jet setting around the world doesn’t pay for itself, you know!
Creating a large enough financial cushion to quit your current full time position might sound like a daunting task, but with some due diligence and all the great savings tools you have with your KOHO account, it is possible. Here’s what you need to know to get started.
“Do you find yourself spending most of your working hours daydreaming about being literally anywhere besides work? You’re not alone.”
How much money you need to quit your day job
Life costs money. If you want to leave your day job behind, it’s critical that you have enough money in the bank to support you as you pursue your passion.
However, the amount of money you need to be able to hand in your notice with confidence depends on how long you plan to not work and what you plan to do with your time. If you’re looking to quit working for good, you’re going to need quite a bit more than someone that’s just looking for a few months or years of time off the clock.
Since the cost of living varies from place to place, it’s hard for us to give you a specific dollar amount that you need to save to chase your dreams. The best way to figure out how much you’ll need in your financial nest egg is to base your estimates off your current monthly expenses.
To keep things simple, let’s say that your monthly expenses are about $5,000. If you wanted to take a whole year off, you’d need around $60,000 in savings to stay afloat if you want to maintain your current lifestyle without working.
However, if you’re planning on selling your home or moving out of your apartment to travel, you’ll want to adjust your savings goal a bit to account for how much you’ll save by not paying rent or your mortgage. Keep in mind, though, that unless you plan on traveling on a tight budget, you’ll still have some pretty substantial expenses.
This is especially true if you’re planning on doing a lot of international air travel or if you’re going to stay in Airbnbs and hotels. In many instances, if you want to travel to places like Europe, which have a similar (or in some instances higher) cost of living than Canada, you’ll end up spending just as much abroad as you would have at home.
Alternatively, if you’re thinking that you want your work-free days to be permanent, then you’ll need quite a bit more to support yourself financially throughout your golden years. Most people need between $750,000 and $1,000,000 to retire, and even more to retire earlier in life.
“The best way to figure out how much you’ll need in your financial nest egg is to base your estimates off your current monthly expenses.”
Make enough money to quit your day job: the basics
If you think the amount of money above seems intimidating, we understand.
Saving that much money might seem impossible right now, but with reasonable goals and a whole lot of effort, it is possible for many of us to save up enough money to take at least a short time off of work. Here’s how to get it done:
1. Create a budget
The first thing you need to do is create a budget. Making enough money to quit your day job starts with lots of planning and a budget is your best bet at actually putting aside part of your income every month.
Without a solid budget, it’s hard to maximize the amount that you save while also balancing your other expenses. The good news is that our ultimate budget template can help you set yourself up for success as you work towards your savings goals.
If you’re thinking that you want to live the rest of your life without ever stepping foot in an office again, you might need to take your budgeting to the next level. People with aspirations of early retirement should consider checking out the FIRE method, which offers some good guidance for quitting your job for good by your 30s or 40s.
As you work out a budgeting plan, you can even use some of the awesome budgeting tools in your KOHO app to help manage the amount that you’re spending and saving each month.
2. Eliminate your debt
Once you have your sweet new budget in hand, it’s time to say au revoir to your debt.
Debt happens and there’s no shame in it. But if you want to leave your day job behind, your debt should go away with it.
Although building up your savings might be your ultimate goal, you’re not going to get far if you have hefty interest rates eating away at your budget. Whether you need to kill your credit card debt or pay off your loans, the short-term goal of your budgeting efforts should be to get rid of your debt first so you can focus on saving moving forward.
Even if it feels hard right now, there are ways to pay off your debt, even if you’re struggling to make your minimum payments. With your KOHO account, though, you can earn and save money on every purchase through PowerUps and RoundUps that you can then put towards paying off those loans.
“Once you have your sweet new budget in hand, it’s time to say au revoir to your debt.”
3. Rein in your spending
If you want to save more with your current income, you have to spend less. While there are some things, like rent, utilities, and food that we just can’t do without, our spending money on non-essentials is going to stifle your savings plans before you even get started.
To start reining in your spending habits, you first need to understand what motivates you to buy things you don’t necessarily need. If emotional spending is a major driving force in your life, finding ways to better control your shopping habits will make a big difference in the long term.
Regardless of why you spend money though, your KOHO prepaid Visa makes it easy to keep spending at a minimum. Unlike a traditional credit card, you can decide how much spending money you have on your KOHO prepaid Visa card. That way, you can fully control your expenses and save more for when you quit your job.
4. Have a good savings account
All those savings need to go somewhere, though, especially if you want to start building a source of passive income. Strategically putting your income into a high-yield savings account is a good way to make your money work for you when you’re taking time off from the job.
Depending on your savings needs, a TFSA or RRSP might be a solid option to help you build up a financial nest egg. Alternatively, if you’re looking to quit working for good, you can consider investing all that money you’ve saved through your KOHO account.
5. Save every penny
Finally, the last thing to remember when you’re planning to quit working to follow your dreams is that saving is your main priority in the short term. This means saving every single penny that you have and putting it towards your future living expenses.
Thankfully, saving is pretty darn easy with your KOHO account. Whenever you shop with your prepaid card, you get cash back on everyday purchases through PowerUps.
You can even take advantage of your account’s great RoundUps feature to make saving a regular part of your routine. If you want to take your savings game to the next level, you can opt for KOHO Premium for even more cash back and savings options whenever you shop.
Living your dream can be a reality
If you want to put your job in the rearview mirror so you can follow your passion, crushing your debt and becoming a savings guru is your best bet. With your KOHO account in hand and all the great benefits that come with it, you’re ready to take on your savings goals and live the life you’ve always wanted.
Originally published at https://www.koho.ca.
