When you look at what you need to perform a good job search, most people would tell you: job skills, networking, stuff on resumes. Few mention great job performance that produces those results hiring managers crave. Fewer still will mention finances. I’m one of the fewer still.
Now, a thousand financial sites will tell you your finances are important. And you probably think that finances are important in their own right. And they are. But there is a particular reason why finances are important — specifically, a lot of money in savings — during a job search.
It’s bad enough when you know you’re going to lose your job — or you unexpectedly (read: you didn’t see it coming) lose your job. You immediately go into uncharted territory. You’re less sure of yourself. The ability to get a job, even if you have great employment security, is now staring at you in the face. Your family goes the same route. Uncertainty — even with confidence in finding a new job because you do well — is still there.
But, don’t have savings in the bank. Don’t have liquid assets you can use to buy food and pay bills. Look at that checking and savings total and know it won’t last long. Then look at how long it takes to apply to job openings, get the phone interview, get a face-to-face interview, go to a second interview, get the offer with a start date and then figure out when you get your first paycheck.
You know that first paycheck is a lot further out than your savings. That’s when the panic about finding a new job really starts. And after a few applications go out and crickets are the only response?
That’s when the desperation starts to take hold.
The kicker? You get the phone interview. Or the face-to-face interview. And your desperation comes across loud and clear to the person doing the interview. Which means you won’t get the job. No hiring manager wants desperate people on the team. They want confident people; people who can get things done.
Then the desperation becomes a vicious circle.
The only way to stop this circle is to prevent it from happening in the first place. The best position? Have a year’s worth of take home pay in the bank – not in your 401(k) or IRA. In savings. Tough to do. The better position? Have six months take home pay in the bank. The good position? Have three months take home pay in the bank. Anything less than that, you should seriously consider setting a goal to get your savings up and then execute against it.
The more savings, up to a year’s worth, you have in the bank, the less likely desperation will set in during your job search. The less likely you’ll take that incredibly bad offer because, well, it’s an offer — just ignore all the bad juju you feel about working for that manager at that company. It’s a job. One that will kick you in the pants later. Trust me.
Prevent the desperation. Save some dollars now while you’re working and feeling all good and safe. While you can. For your sake and the sake of your family. Great finances are the final piece of the employment security hierarchy.