Clickbait articles will say things like “15 signs of when you should quit your job,” without saying anything concrete. Other articles give more concrete advice that’s generally in the form of “you should quit now and YOLO!”

Well, the thing with one-size-fits-all advice is like trying to take Ibuprofen any time you get sick with anything. It’ll only help with some illnesses, but the vast majority of the time, it’s the wrong solution.

Coming up: 4 modalities of when you should quit your job, depending on your own personal risk-tolerance.

Things Different People Say To Tell You When You Should Quit Your Job

In Peter Thiels’ Zero To One (one of my top 10 books of all time), he says: “In the most dysfunctional organizations, signaling that work is being done becomes a better strategy for career advancement than actually doing work (if this describes your company, you should quit now).” Even though I love the book, I take issue with it for 2 reasons: 1) How does he know you in particular will be able to find another opportunity to land, and 2) how does he know your financial situation well enough to just recommend this?

With that said though, if you’re born with a silver spoon in your mouth or comfortable making no income, you can quit the “aggressive way.”

Quit Your Job Whenever You Feel Like It (Very Aggressive)

The first way to quit your job is to not have a plan B whatsoever.

No job lined up. No side hustle income coming in. Nothing.

You just hate your job so much that you walk out.

Some might argue that “life’s too short” and that happiness is what matters most. Best solution = quit without any backup plans.

I’m too risk-adverse for this, and if you’re thinking about just quitting your job without any abandon, please consider the following.

Health insurance can cost $500-$1000/mo. If you don’t have enough saved up for you to find your next opportunity, you shouldn’t quit. If you want to quit aggressively, yet responsibly, I highly recommend getting a health insurance quote first and then quitting if you’re comfortable with your quoted health insurance expense + regular expenses.

Another way to quit “aggressively” is to have a plan B but it hasn’t panned out yet. I’ve seen a lot of folks quitting their perfectly good 9-5 job in pursue of a networking marketing “opportunity” or a business they just started.

Again, I’m too risk adverse for this since most ventures cost a lot of time, money, and will fail. If I only have a 5% chance of success, why risk my financial livelihood to do it? Why not do my 9-5 and my side hustle simultaneously until a tipping point where I can quit?

Some people have the excuse of YOLO or “burn all my bridges so I can focus on my business”. Bad news: burning bridges doesn’t automatically make your business successful, and nor does quitting your job. In fact, quitting your job lowers the chance your business will be successful because you’re more cash-strapped now. And to be frank, if you can’t handle a side hustle + job at the same time, you probably can’t run a successful business.

In own personal recommendation if you’re in white-collar work: just keep the same income while doing almost nothing while using the rest of your time doing your side hustle.

Quit Your Job When Your Expenses Are Covered

In this method, you quit your job once your side hustle covers your expenses.

This makes sense and you should use this method to quit your job when:

1. You really, really hate your job and your entire industry such that even if you had found a new job, you’d still be suffocating.
2. You can’t do almost nothing at your job (i.e. blue-collar) and still retain the same income.

The main advantage here is you can be a lot happier, quicker. You already know what your side hustle work “tastes” like and so you know if you’ll be happier if you quit your job to pursue your side hustle full time.

The main disadvantage here is risk: if your side hustle fails before it replaces your 9-5 income, you’re broke and back to square one since you’ll need to find a W-2 job again. And the risk here is that you might not be able to find one quickly, putting you into extreme stress.

Secondary disadvantage: less cash flow to make your business work. With a 9-5 income + side hustle income, you can pour a ton of money and take more risks to accelerate your business growth quicker. If you jump into your side hustle too prematurely, you’ll either need to take up funding (which will eat up your equity or wreck your cash flow) OR you’ll have to just endure very slow growth. “Very slow growth” is a risk since competitors that can move faster than you can shove you out of your market.

Since the disadvantages here can incur severe financial stress, I am also too risk-adverse for this. But I can see this being a reasonable “out” for someone if they can confidently find a job if they were to fail their side hustle, and if the financial stress of not having money is much less than the stress of staying at their job.

One last note: I recommend using a T12 (trailing 12) or at least a trailing 6 months of side hustle revenue before quitting. For example, months 1-3 might cover your expenses but you might find that your business is seasonal and the 4^th month you made only $20. There’s no easy “takebacks” for prematurely quitting your job so make sure your data is solid before you do so.

Make Enough Money To Cover Your Income And Quit (More Conservative)

The main advantage of this method is your lifestyle doesn’t need to change.

Waiting until your side hustle replaces your income means that there’s a fair amount of time where you’re earning significantly more than your income.

This hopefully means you have a nest egg saved up so even if your business were to die all of a sudden, you have a ton of runway to pursue another opportunity.

With this method, I think you should quit your job when you’ve successfully replaced your income for 6-12 months. This will:

1. Give you enough time to build up a 12-24 month runway (assuming your expense is 50% of your W-2 paycheck).
2. Give you enough data to let you confidently know that your business will work out.

The only main caveat here is health insurance. Again, please get a quote for your health insurance when you’re self-employed and make sure that difference is also covered in your side hustle.

Example: W-2 you make $60k/yr but your job covers health insurance. Your side hustle make $60k/yr but you actually have to pay $12k/yr in mandatory health insurance. Well, you haven’t replaced your $60K income at all.

Quitting Only When Your Net Worth Is So High The Dividends It Spits Out Replaces Your Income (Ultra Conservative)

The main advantage of this is that the risk is minimal here. You literally can do absolutely nothing and your net worth will take care of you.

Unfortunately, the main disadvantage here is that most of us will be very old when this happens (or have to get very lucky). That is, this last way of leaving your job is extremely safe in the financial regard, but could be extremely risky in the time dimension.

As an example, with a 4% rule, you’ll need $1.5 million to replace a $60K/yr income. If your side hustle blows up to a business where you’re doing $750k/yr and you wait 3 years (not 2 years because of income tax), then you could just take the $1.5 million and put it in a high dividend portfolio and enjoy retirement.

But something about this picture is too risk-adverse to me: if you made $750K/yr for 2 years, there’s almost no reason to keep a 9-5. If anything the 9-5 is a time-waster preventing you from focusing on your business that’s already making you 10X and has already been proven to work.

I think you should use this strategy to quit your job if:

1. Your job is so passive in the first place that you can easily scale your side hustle and keep your job at the same time. OR
2. You bought some weird crypto at the right time, and exited at the right time so your after-tax net worth can spit out enough dividends to replace your income. In this case, a side hustle might be a waste of your time since any massive effort you make in growing your business is likely dwarfed by your doing absolutely nothing. Though you’re welcome to be greedy and get a high net worth + a great side hustle.

My Recommendation

I think you “should” quit your job in a relatively conservative position, but not too conservative. My recommendation would be quitting your job when your side hustle replaces your W-2 income + can pay for health insurance without impacting your quality of life.

But like Burger King, you should “do it your way” and quit when you’re ready to. Just because some stranger on the internet tells you that you should quit at some certain point doesn’t mean that’ll work for you.

If you’re much more risk-tolerant, by all means quit now. If you’re extremely risk-adverse, do the most conservative thing and quit only when your net worth’s dividends covers your entire W-2 income + health insurance.

With the whole “do what works for you” out of the way, I would say don’t quit so aggressively that you piss all your coworkers off. It might work in the movies where you go ahead and literally take a shit on your boss’s desk, but that won’t fly in real life. The reason for this is practical: you’re not trying to be nice – you’re trying to keep your options open.

We’ve heard many urban legends of people like Steve Jobs / Elon Musk dropped out of their school and YOLO’d into their ventures. This couldn’t be further from the truth. The truth is they withdrew from their schools instead of dropping out (withdrawing allows them to suspend their schooling for a certain amount of time, with an option to resume later on – dropping out means to formally quit school). They only actually committed to quitting school once they’ve found something that works for them.

So however you choose to quit your job, just remember: the best and brightest people keep their options open.