Why a new job might be best treated as an emergency

LimboPhoto courtesy of Paul Sableman

I just got a new job! (Don’t worry, I’m not shutting down this site.)

Getting a new job is an exciting and terrifying time, one of the big life transitions. As it’s not a stretch to say that we spend a good third of lives working at a job, changing it can make a large difference in your life. To me, it’s up there with moving (which I hope not to do for a long time).

Everything is good on my end, with no concerns at all. And yet, I’m considering my situation of moving from one job to the next an emergency. And if you’re in a similar situation, it might be a good idea for you to do the same.

Why? I never thought you’d ask.

Emergency recap

Remember the criteria for an emergency (the three U’s):

  • Unexpected
  • Urgent
  • Unavoidable

And remember what you do when you have an emergency: you use your emergency fund.

Job limbo

What does this have to do with a new job? Timing.

Some people close up shop on one job on Friday, and on Monday they show up at their new job.

Other people, either intentionally or not, have a gap. The old job ends, and then there’s a period of days or even weeks before new job starts.

You’re never totally unemployed, per se; instead you’re in job limbo. (That’s kind of like the mathematical difference between zero and null. One is still a value, and the other is a lack of a value. You see? Never mind.)

Zero vs Null

Zero on the left, null on the right. Source

If you’re in job limbo, then most likely it means that you’re not earning income during that time. And with a loss in income, if it’s in any way significant, that’s going to affect your money plan. You may not have enough money to cover your bills and expenses. (Remember, here’s a glossary.)

And if this is the case, you need to treat the period in which you are not working like any other time that you’re not working: as an emergency.

Don’t panic, plan

I’m not saying you should panic. I’m not even saying you should panic even if you don’t have another job lined up. An emergency just means that you need to adjust your plan of how you make ends meet.

Remember, you still need to balance out this equation:

Income = Bills + Expenses

And with a corresponding loss or reduction of income, you have two options:

  1. Reduce your bills and/or expenses
  2. Supplement your income from your emergency fund

I’ve talked about ways to reduce your bills, but the timing might not work out for you.

You can reduce your expenses too (“tightening your belt” temporarily), but you can’t reduce them to nothing. At some point, your belt will run out of holes, and you won’t be able to breathe.

And that leaves one directive: you need to supplement your income with your emergency fund.

Unlike other emergencies, this one is relatively straightforward: because it isn’t open-ended, you know how much money you need, and when you’re going to need it.

This contrasts with a straight job loss, where you’re really just guessing how much money you’re going to need until you land a new job.

Now, since you probably know your salary at your new job, but haven’t actually received it yet, you may not know what your net paycheck at your new job is going to be yet. (There are calculators for that.)

The important thing to realize is that the job transition can create an irregular income situation that will need to be dealt with, and proactively, lest you find yourself running out of float in your bank account.

For me, my job transition means that I’m down around a thousand dollars. A serious amount of money, no doubt. But it’s doable, because I have an emergency fund. I’ve got this.

Do you? Can you handle a break in income right now? I’d love to hear about it in the comments below.

Mike Pumphrey

Mike Pumphrey

I'm the founder and author of Unlikely Radical, a site to help people succeed with money, achieve their goals, and live intentionally.

I offer a free phone consultation to anyone who is interested in changing their financial narrative. Are you ready? Click here for details.
Mike Pumphrey
Posted on September 18, 2017