For the past several months, I've been writing about the financial decisions that young adults face. This month, I'm switching gears to talk about a different kind of transition that could happen at any point in your working years: leaving a job.

Whether you're taking a new job, being laid off, or retiring, there are probably more financial decisions and ramifications than you might think.

• The most obvious one is managing the change in your income. How will you change your spending to adapt to a drop in income? Or, if you're moving to a better paying job, what plans do you have for that additional income?
• If you have employer health insurance, how will you obtain health insurance after you leave the job?
• If you have an employer retirement plan like a 401(k), will you leave your money in the plan or roll it over? How and when can you start taking distributions?
• If you have a pension or you're eligible for Social Security, when will you start those benefits?
• Will you receive a lump sum for severance or unpaid sick leave or vacation? If so, how will that additional income impact your income taxes?
• How much will you owe in income taxes, and how much has been withheld? Will you owe additional taxes? Will you owe a penalty for underpayment? Or will you be due a larger-than-expected refund?
• How will your income and income taxes change in future years? Will you need to file estimated taxes?
• If you have a Health Savings Account or a Flexible Spending Account, what happens to the money? What special rules apply when you leave a job?

More to Come

I've raised a lot of questions, but I'm not going to give you many answers today. Each of these areas deserves thoughtful consideration. In the coming months, I'll address each one. You'll find those future posts by clicking the category Job Loss on the right side of this screen, or you can subscribe to our e-newsletter for links to all of our new blog posts each month.

I'll be speaking from both a professional and a personal perspective, since I went through this transition myself when I left my full-time position as an Extension Educator three years ago. And my husband received his layoff notice last week, so we'll be going through this process again. He was planning on retiring in the next year or two, so the news isn't financially devastating. But it will still require a lot of re-evaluation and decision-making.

But for now, let me start with an analogy to point out three things you should be doing right now.

What I Learned From My Dad

My dad was a state trooper and later a sergeant with the Virginia State Police. He gave a safety talk to my class at school one year, and I still remember one of the things he told us:

"The definition of a safe driver is someone who knows what's in front of him, what's behind him, and what's on both sides. If a driver pays attention to those things, he will know what to do when the unexpected happens."

Three Things To Do Right Now

Just like the driver of an automobile, you can safely steer your finances if you monitor what's going on around you. Doing three simple things will give you the information you need.

Know what's behind you: Track your spending and compare it with your income. You'll know whether you've been saving money regularly, or going deeper into debt each month, and by how much. You'll know how much your lifestyle costs, and exactly where the money goes. Now you can predict how leaving or job or any other change will affect you financially.

Know what's on either side: Write down your debts and your assets to create a net worth statement. For your debts, look at how much you owe, the monthly payments, and the interest rates. List each of your savings or investment accounts, savings bonds, IRAs, etc. and think about which ones you could tap in case of an emergency.

Know what's in front of you: Write down your goals and expectations for the future. Will you need to buy a new car soon? Or will you be paying off your car loan, freeing up money for other things? Do you have a child starting college? Will you stop work or reduce your hours to care for a child or an aging parent?