So you quit your job and now make less money. Have you made a terrible mistake?
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Consider the hypothetical case of Jo, a project manager at an IT company. He made good money but hated his job. He’d been there almost 20 years and, at 41, felt like life was passing him by.
So, he decided to pursue his lifelong dream of becoming a designer. He quit his project management job and signed up for some courses, discovering in the process just how much he enjoys combining creativity with usability in design work.
But after investing in the pivot and earning a certificate in design, Jo struggled to find a job. Entry-level positions paid poorly and he wasn’t yet qualified enough for better-paying mid-level jobs. He finally landed an entry-level gig after three months of job hunting, although it pays 40% less than his old job — a significant hit to his household budget.
Additionally, during the job search, Jo used up most of the money he had stashed in his emergency fund. And now, with a job that pays significantly less than his previous one, he’s had to adjust his lifestyle, which included canceling an upcoming bucket-list trip.
Jo has some retirement savings, but they’re not liquid — and he doesn’t want to touch that money until he retires.
While he loves design work, he’s now constantly worried about money. Has he made a big mistake?
Financial implications of career regret
Jo isn’t alone in his desire to leave an unfulfilling job. Gallup data shows that, as of midyear, only 32% of employees in the U.S. feel engaged in their work. (1) “U.S. employees remain emotionally detached from their workplaces and most are still watching for the next opportunity.”
Many Americans have career regrets, including staying at a job too long (58%), according to a survey by Resume Now. And more people regret staying at a job (58%) than quitting one (38%). (2)
People react to those regrets in different ways, according to a 2022 study published in the Journal of Vocational Behavior. Some people job hop to similar roles, while others switch their career altogether. Others simply detach from their current job, putting in the hours and redirecting their energy toward hobbies or leisure activities. (3)
But there could be financial implications to career regret. If you’re unhappy at work and putting in a minimal amount of effort, you’re less likely to be considered for a promotion (and salary increase). If you leave, however, you may end up having to take a lower-paying job — at least temporarily.
Read more: How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement
If you’re worried about quitting over practicalities like paying your mortgage or receiving health insurance, you could try running “low-cost experiments” such as volunteering, Jon M. Jachimowicz, an assistant professor of business administration at Harvard Business School’s Organizational Behavior Unit, told HBS Working Knowledge. (4)
“There are so many ways that we can experiment that don’t require us to quit but remind us that we can consider quitting,” he said.
It’s a good way to test the waters, particularly in a tight job market and while the economy is particularly precarious.
Only 22,000 jobs were added to the U.S. economy in August, according to the Bureau of Labor Statistics. And the jobless rate ticked up to 4.3%, with more than one-quarter of unemployed workers remaining jobless for more than six months.
Plus, job hoppers are “no longer getting a big bump in pay,” according to an analysis by the Bank of America Institute, with job-to-job pay raises “moderated to around 7% in July.” (5)
According to BofA Global Research, “job prospects are likely to remain tough for younger workers as global trade tensions heighten economic uncertainty and some sectors swiftly embrace AI, potentially crowding out entry-level positions.” (5)
Coming up with an exit strategy
Since you could be job hunting for several months, it’s a good idea to make a plan before you quit.
Is your issue with the job itself or is there something larger at play? Maybe you’re bored and need a new challenge, even though you like your team or the company. Or maybe you like your job but don’t get along with your manager.
Consider whether you could look for growth opportunities internally, such as upskilling for a new role or transferring to a different department. Talk to your manager or HR about your career progression and if there are any opportunities to take on new projects or expand your role.
The good part is, if you get promoted, you’ll likely make more money, too.
If leaving is the best option, you may want to start job hunting before handing in your resignation. Research the job market (and salary range), speak to others in the industry about their experiences, update your resume and set up a few job interviews.
If you want to completely switch careers, like Jo, you may need to upskill or retrain, so budget for this as well. If that’s the case, consider online courses or night classes that you could complete while you’re still working (if such options exist). That way you’re earning money — not spending it — while you experiment with a new career choice.
If Jo had taken online courses or night classes in design, he could have tried out a few freelance gigs before quitting his full-time job. Maybe he would have been happy in his old job while pursuing his passion on the side (and even bringing in extra cash). Or maybe those side gigs would lead to full-time job opportunities in design gradually with time, once he’s built up his portfolio.
If you’ve decided to quit, try saving up at least three to six months-worth of expenses before you leave in case your job search takes longer than anticipated. If you have high-interest debt, you may want to focus on paying that off before you leave.
Remind yourself that switching to a new career takes time; you’re essentially rebooting your career and have to once again build up expertise and a new network of connections.
While Jo is making 40% less than he did at his old job, it doesn’t mean it will always be this way (assuming that’s not the industry standard). As he gains more experience, he may be more suited for mid-level jobs that pay more. Or maybe he can eventually run his own business and set his own rates.
In the meantime, he may need to rein in his spending and adjust his lifestyle to survive on a much smaller income or look for sidegigs to supplement his salary.
As Jachimowicz told HBS Working Knowledge: “The pursuit of passion is not a train with a destination, but a train with many different stops along the way. It’s OK if you take detours along the way to figure out where you’re going.” (4)
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Gallup (1); Resume Now (2); Science Direct (3); Harvard Business School (4); Bank of America Institute (5)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.