How to Leave Your Job for a (Lower-Paying) Passion Project

You can do it without going destitute—we promise.
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You cushy corporate job gives you everything—except fulfillment. While it more than pays the bills, it doesn’t put a pep in your step, so to speak. What does get your career fire going is your side hustle, the job you work on the side so that you don’t turn into a work robot. Maybe it’s selling soy candles on Etsy—or perhaps it’s recording podcasts for beer connoisseurs such as yourself. Whatever it is, it makes you really happy, but it doesn’t yet pay the bills. What’s a woman to do?

If you want to leave your well-paying job for your low-paying—or un-paying—passion side hustle, you’re not alone. In fact, experts predict independent workers will make up 50 percent of the U.S. workforce by 2020. (Wow.) And not all of those workers are—or will be—completely destitute.

“A low-paying side hustle might end up being a well-paying job,” says millennial career expert Jill Jacinto. Plus, there are plenty of advantages to turning a side hustle into a full-time gig. “You get to call the shots, name your hours, and create work flexibility that can vary whenever you like.”

Of course, to reap all those advantages, you have to take some risks, some of which are downright scary. “But that shouldn’t prevent you from ever turning your dreams into a reality,” says Elle Kaplan, finance expert and founder of LexION Capital. “Having your financial [and business] ducks in a row can make the leap a lot less intimidating, and allow you to truly focus on turning your side hustle into a full-fledged career.” Here’s how to do just that.

1. Remove those golden handcuffs. And we’re not talking about some kind of fashion accessory. Golden handcuffs, as Kaplan explains, keep you shackled to your day job. “If you’re spending every single penny of your current salary and stuck at a job you hate, that’s the opposite of financial freedom and luxury,” she says. “To realistically quit a high-paying job, you’re going to need to adopt an affordable budget that can match the income of your passionate side hustle.” You can start by cutting out unnecessary expenses—think: an HBO subscription or your everyday latte—and aim to save 20 percent of your income instead, she says.

2. Save up six-months’ worth of living expenses. You’re making the leap from a well-paying job to a low-paying gig, which means your new nine to five may not earn enough to keep you afloat at first. That’s why Kaplan recommends setting aside at least six months of living expenses before you put in your two weeks’ notice. “This should give you plenty of time to land on your feet and avoid being dragged down into high-interest debt in the process,” she says.

3. Convert as many clients as you can. Your side hustle may not be steady for the first few months, but you can make the transition easier by garnering as many clients—or customers, as the case may be—as possible before you leave your day job. “They do not call it a 'hustle' for nothing,” says Jacinto. “Get to work working your network. Let them know that you will be starting your own business and outline the type of work that you do.” Their commitment will ensure you have some money coming in, says Jacinto, which you’ll need to funnel back into your business. Depending on your side hustle and your big dream vision, you may need anything from an office to a website, she says.

4. Know your limits. Or, as Kaplan puts it, “you need to know the length of your runway. If your business or side-hustle hasn’t taken off by the time you reach the end of your runway, you don’t keep driving.” And you’ll avoid crashing and burning in spectacular fashion if you can avoid going into debt while you get your business off the ground. “For instance, when I started LexION Capital, I knew how long I had for the firm to take off before I had to re-enter the corporate workforce,” says Kaplan. Not only will knowing the length of your own proverbial runway keep debt at bay, “but it can also give you realistic timelines and goals for becoming financially independent,” she says.

5. Pay down your debt. Speaking of debt, there’s a good chance you already have some. Stats show the average college graduate carries student loans, plus thousands of dollars in credit card debt. And, “debt looming over your head will prevent you from ever escaping your day job,” says Kaplan, “unless you start eliminating it now.” Start with your highest-interest debt, like credit card debt, and then move toward lower-interest debt, like those student loans. Kaplan says about 20 percent of your budget should go toward debt. “Try to make every payment on time—every single time—and aim towards cutting away at the principal rather than just making interest payments,” Kaplan recommends.

6. Protect yourself. Once you leave the corporate world and strike out on your own, the buck stops at you, not your boss. So, Jacinto says, “you need to make sure you’re covered and protected so that if a client isn't 100 percent happy, they cannot sue you personally.” One way you can do this is to set up your side hustle as a limited liability company (LLC) or partnership, depending on your needs. (Your accountant can recommend which will work best for you.) And, “it might be worth it to invest in liability insurance,” Jacinto says, for added protection. Eagerto is a popular option for freelancers.

7. Consider your health insurance options. For now, if you are younger than 26, you could still be on mom and dad’s health insurance plan. But if you’re past that age, it’s time to think of how you can cover yourself once you quit your full-time job. “You will need to budget and make sure you have enough saved up to start paying your monthly health insurance payments,” Jacinto says. As of now, if you don’t carry health insurance, you’ll incur a penalty when you pay your yearly taxes. It’s unclear how our health insurance coverage will change after Donald Trump takes office, but for now, it’s a good idea to maintain an insurance plan.

8. Talk to your family. Yes, you’ll be the one swapping one job for another when you leave your full-time gig for your side hustle. But your family, including a significant other, could be impacted by your decision, Jacinto points out. “Before you run off to fulfill your dreams, check with your family,” she encourages. “Whether you are living with a S.O, married, or have a family [who depends on you], you should include them in this decision.” Who knows: They may even have some ideas for how to get your business off the ground—and they’ll be a fantastic support system as you do.

9. Think about retirement. We know, we know. You just started thinking about this new career path—you’re not even close to retiring from it. But, “just because you’ve found your passion, it doesn’t mean you won’t ever retire,” points out Kaplan. “And you’ll definitely want to avoid dipping into your retirement accounts after quitting. This is especially true for tax-advantaged investments, like a 401(K), where you can be hit with a nasty tax penalty for withdrawing before retirement.” So, if possible, keep yourself from cashing in your retirement savings to keep your side hustle solvent. “Playing retirement catch-up is an incredibly costly game, so you’ll want to ensure you can keep investing and giving your wealth time to grow and compound before quitting your job,” she says.