01 Jul 2022

Making Cents: Are you ready to take a leap of faith?

Making Cents: Are you ready to take a leap of faith?

Before making a big jump - crunch the numbers

I met a gentleman last month, who after 18 years of working with the same employer, is being made redundant.

He’s 54, but no need to feel sorry for him, the bad news is good news really, because it was a trigger or as he said, the kick up the back side he needed.

You see he always wanted to start his own business but he was worried it wouldn’t turn out well. And as great as he thought his idea was, he got used to that pay-cheque every month and why put that at risk when it was needed to pay his mortgage, pay school fees for his kids and so on.

Anyway, before he made a final decision, he reached out for help because he wanted someone to crunch the numbers with him. He knew they were important. As exciting as it was thinking about his new venture, he didn’t want to get caught up in the emotion of it either. His gut was telling him he could do it, but he wanted a sanity check, nonetheless.

When I ran the numbers and knowing what he needed to earn each month from his new venture to cover his personal outgoings and what savings he had at his disposal, it meant he had a significant buffer in place that would last for a number of years.

The comfort he had, was knowing that if it didn’t work out, that was okay as well. It wouldn’t break him because he had his walk away number. Yes, he would have lost money but not enough that he’d be devastated either.

As we talked this through and as good as it all sounded, I could see that he was still a bit unsure, so rather than continuing to write down notes for him, I began to sketch out a leap of faith doodle for him and you’ll see from my picture, that drawing isn’t exactly my strongest point.

In my drawing, this gentleman could see all of those different safety nets (he had four) and how long each would last before he fell through to the next.

You’ll see from my drawing (main photo) that I had the time period each safety net would be in place for, and that was influenced by what I put on the right-hand side which was the level of savings he needed with each safety net.

When I looked at my drawing after our meeting, I started to modify it a bit more and I thought, as simple as it is, it can be applied to many other areas i.e. taking a sabbatical from work, taking time out to mind an elderly relative, staying at home and becoming a full- time parent for a period of time, travel etc.

Regardless of whatever your reason is, what you don’t want to do is take that leap but discover you hit the ground sooner than you wanted to, wiping out savings, or having to return to a job or employer you didn’t like, or not giving that new venture the time it really needed.

And without a doubt, leaving a job to pursue a new business, new career, stay at home, travel or simply taking a break from work is exciting and terrifying at the same time.

But how can you overcome this paralysis of sorts, and is it possible to make that leap of faith a much smaller one?

I think you can.

You just need to be able to look into the future and see what that outcome will look like, good or bad.

And those series of safety nets I think are key, and I’m going to tell you how you can create them, and how they need to be broken up into different periods of time, which will show you how long you’ll be okay for, before things have to change or before you have to call time on your new venture.

The first safety net is:

Establishing your Emergency Fund

If things go sideways and they might, that’s when the emergency fund, will kick in.

And the general rule of thumb is that you’ll need three to six months of your monthly expenses.

Have that amount in place and when you’ve exhausted all of your other savings that have been used on travel, or re-training or a new venture, and it’s all you’ve left, that’s your trigger to start looking for a day job.

Pay Yourself an Income Fund

After you’ve secured your emergency fund you then need to work out how much you’ll need for say 12 or 18 months’ of replacing whatever income that needs to cover your fixed and variable expenses.

Ask anyone who’s ever started a business and they’ll tell you, that it can be a roller coaster ride, sometimes you’re up and sometimes you’re down. There could be periods of time where you’re in receipt of nothing, or less than what you need and that money has to be bridged from somewhere, and typically it will come from savings.

No one else is going to be paying you, so work out how long you can pay yourself for, because it will make the decision to make that leap of faith an easy one i.e. yes let’s give it a go, or I just can’t right now because that runway I have is too short.


Now you need to put a timeline alongside each of these amounts which will show you how long they’ll last for.

You’ve got to know, how long it will take before you fall through that first safety net, and if you do, how long before you’re through the second and the third or fourth and perhaps you only have one safety net, but you’ve got to know how long you can fall before you burst through it.

Walk Away Number

It’s also important you put a number on your cut off point, and that’s the amount where you don’t or won’t allow your savings to fall below.

It’s your, that’s enough number, and for some that might be a very low number and for others it might be a big number, it really depends on their tolerance for risk and their personal circumstances.


It’s exciting to follow your heart, of course it is, but you’ll need your head for numbers as well.

If you’re not good with numbers or you want to get what you’ve put together fact checked and validated by a third party, then you absolutely should. It will be more than reassuring and I guess will make any leap of faith if choosing a different employer or career, or new business start-up, or taking time out to travel less of a leap, and more of a very small step if anything, or one that’s just too big for you at the moment.

And I say at the moment, because once you know how much you’ll need, you can begin to work towards creating those funds and safety nets. And that may take time, but that’s okay, at least you know, when you get there, you’re ready to give it a real good go.

Liam Croke is MD of Harmonics Financial Ltd, based in Plassey. He can be contacted at or at

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