Can You Afford to Change Careers?
Money is one of the biggest concerns for job/career changers.
Lack of financial planning and money stress is one of the top reasons why career transitions fail and never even get started.
Most people have tons of financial responsibilities: a mortgage, rent, car payments, family & child expenses, bills to pay and let’s not forget; a future / retirement to save for.
Sure, you can't imagine waking up a year from now and still feeling as miserable at work as you do right now. But the financial uncertainty of a career change is so scary & daunting that you rather stay where you are, as miserable as you may be, and not risk financial ruin.
But it doesn’t have to be that way. Thousands of people, with all kinds of financial states manage to make successful career changes every year. They create a solid plan and make it happen.
Yes, this may require temporary change, sacrifice and hardship but with some smart financial planning and smart budgeting you can not only make a successful shift to a career that is more fulfilling but also increase your salary and income. That is a wonderful goal to shoot for.
When I guide my clients through their career change journey, the third step of my process is fully dedicated to preparing and planning for obstacles and challenges that the client will face including financial ones.
Of course, this is highly dependent on individual situation. It requires an assessment of multiple factors that are beyond the scope of this email.
But I wanted to share with you where we start.
To start our financial assessment & planning these are the questions that I ask them:
- What is your current income?
- How much saving do you have?
- How much are your expenses? (We make a list of 4 categories Must have, Want to have, Nice to have, and Can do without for now)
- How much can you cut back on those expenses?
- Can you "re-engineer" your finances (refi Mortgage, refi car payment, switch health insurance, consolidate credit cards, etc.)?
- What is your career transition time?
- Will you stop working?
- Will you go part time?
- Will you need training or education?
- How much will those cost?
- What will your prospective starting income be in the new position and what is the income growth rate?
- How long will it take to pay off your debt at your future income?
- Who else will be impacted by this (spouse, kids, parents etc) & how?
and many more questions.
Once we’ve done this financial assessment, it’s time to create a financial plan for their career transition (We create a plan A and Plan B ) which may include any combination of the following strategies:
- Reduce your expenses,
- Downsize your lifestyle,
- Tap into your current savings,
- Depend more on spouse’s income
- Build up your savings first to $X amount before making a change,
- Work part time (or side gig, freelance, etc.)
- Get grants or education loans,
- Get regular bank loan,
- Get interest free credit cards temporarily (This requires good credit & financial discipline),
- Find a sponsor (parents, friends, organizations, charities, etc.),
- Find work that will pay for your training/education,
- Get a bridge job that is a stepping stone to your ultimate job
and so many more options
From what I have seen work for the clients, the most successful financial plan for their career transition includes a combination of these strategies that on average lasts 5 to 6 months.
So, if you are thinking about making a career change soon or are in the midst of one, start by answering all of the questions mentioned above and then explore all the options that you have (get creative and go beyond the ideas that I have mentioned above). Try to create a general financial plan (a draft) of a 6-month plan.
As it has been said, failing to plan is planning to fail. Also, if you have a financial plan for your career change it will give you more motivation and courage to continue to move toward your ultimate career goal.
By Rafael Tomik, Career Transition Coach, BeGreat.com
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