5 Things You Should Know About Money and Changing Careers

Changing careers is a big deal.

It is scary and risky, but it can also be a rewarding experience. A significant reason why many people hold back from making that leap is that they worry about how making such a change will affect their finances. A career change may entail some difficult compromises when it comes to your finances, and most often prefer to play it safe. Let's be real. There’s that rent or mortgage to think of. Not to forget the electric, water, cable bills, childcare... The list goes on and on. 

Yes, the spark is losing its shine when it comes to your current job but it pays the bills, right? It is stable and reliable, so even if you want to get out of it, you think “It’s that not bad. I’ll give it a few more months before looking elsewhere”  but for how long do the few more months really last?

There are proven ways to help you take that leap of faith with confidence and pursue a career that will provide you with the satisfaction and growth you are seeking. You owe it to yourself to grab a better opportunity when it’s presented to you or to make your own opportunity when it’s not. It is a promise of a better life for you and your loved ones. 

It’s understandable to be scared because this might mean venturing far away from your comfort zone. Note that realistically, it will take some good planning and dedicated adjusting before you can shift careers (including finances) without a glitch.

One of my favorite sayings is “If you don't like where you are, move! You're not a tree.” In this case, it means to do something!  No worries. I'm here to help! Here are a few pointers to help you chase your dreams and make a seamless transition without making your finances extremely vulnerable. 

If possible, never make decisions from a place of ignorance. Do the research and find out the salary range of your new career. That'll let you know how easy of a financial transition it will be to move to the new career. It'll let you know whether you can just slide right on into the new career or if you need to be more strategic in financially preparing for the move. Once you've found out the salary range...

Yes, I know you haven’t made that shift yet. But it is wise to do this before you actually make that move, especially if you know you are going to be starting at a much lesser scale than what you are currently used to. 

Research the average salary in your new profession and then review your current budget. If it's lower than what you currently make, make any needed adjustments and identify what your permanent and flexible expenses are, and determine what you can cut back on. It could be a considerable financial change but you first need to live on less than what you are expecting to earn to see if it's feasible to take that lower salary. If you are successful here, then you can be confident that you’d be able to meet all financial obligations even at reduced pay. 

Here’s the thing though: Even if your career doesn’t include a pay increase (because let’s face it: who wants that?), it’s still a very good idea to revisit your budget and either confirm that you’re spending according to your priorities (more on that later) or if you need to make some adjustments to do that. 

Don’t know what a F You Fund (FYF) is? Well, you came to the right place! The FYF is the money that allows you to walk away from any situation that’s no longer serving you. That’s why some people call it a Freedom Fund. I like the emotion and power behind the name F You Fund. Ideally, you’d aim for the equivalent of three to six months of your current salary but if you can challenge yourself and aim for more than a year’s worth of savings then even better. Note that I said ideally. Don’t get overwhelmed or let perfection get in the way of progress. Start small and put something, no matter how small, away every paycheck. Keep this fund in a high-interest online savings account that's accessible, if needed, but that is mostly out of sight. You don't want to be tempted to dip into it for non-emergencies. This financial cushion will help you survive as you go through a professional or personal transition. 

Let’s be tactical and practical here. Before making the jump to another career or company, get the most out of the benefits that you currently enjoy. These perks may include healthcare so go ahead and get your annual physicals or other medical procedures done while you are still covered under your current insurance. Now would also be an excellent time to revisit your current benefits because you may have made flex contributions that you may be allowed to use even when you leave the company. 

Additionally, do research on the employee benefits that your future company offers. This allows you to anticipate any additional expenses you might have as you switch careers.

See, I told you we’d get back to this! Look, I know that you have some fixed expenses like rent/mortgage, student loans, electricity, etc. This section isn’t about those bills. It’s about your discretionary spending. Take a serious look at where your money is going outside of your fixed bills. Are you spending money according to your priorities? If you like to travel, are you putting money aside for your future trips so you don’t have to go into debt to pay for it? If you’re a foodie, are you allocating money to eat out and/or get the fancy ingredients for your new culinary masterpiece? 

I’m neither a fan nor a follower of the “Skip the latte and that’ll make you a millionaire” theory. I believe life is for living to the fullest and that you can adjust your budget to reflect the things that are important to you. For me, my “things” are books, wine, tea, and home spa products. I make sure that I set aside funds to scratch those itches each paycheck. My family enjoys traveling so we set aside money to save up for trips. It makes it a lot less stressful to know that we have that money set aside and it makes it easier to plan a trip around what’s in our Travel Fund. 

You don’t have to put a lot of money into your Fun Account. Look at your budget and see what you already spend on your “things” and set aside that amount. Correspondingly, look at your discretionary spending that isn't on your priorities and decide if you want to cut back on those things to either shift to your priorities or increase your savings.

What this all comes down to is that the concern about money in making a career transition is real and reasonable. I'm not here to tell you otherwise. What I'm telling you is that you can take steps to financially prepare yourself to make the move.

Remember, don't just sit there and complain. Make a plan and make moves! Remember, you're not a tree.

P.S. If you’d like help on how to take the first step in your career transition, I can help!

• You can get your free Tyche Career Change Roadmap here.
• Are you ready to finally take the leap and really start strategizing your career change? If so, email me at [email protected], and let’s talk about your goals and whether my one-on-one coaching package could help you reach them.