Financial Planning Is Essential When Changing Careers
In this economic climate, financial stress is common for many of us—even if we believe we have stable jobs and careers. But, what if you’re considering changing careers? How do you manage your financial considerations in such a time of instability?
One thing you must concede is that you might be starting at a lower salary when changing your career. Yet, if you truly want to follow your passion to a more rewarding career, you can manage this situation with proper planning and the realization that your salary will increase over time as you gain experience, skills, and knowledge in your new industry.
So, it’s essential to work out the financial picture before you enter into a career reinvention. This includes how to prepare to live through your reinvention, thinking out what the hidden costs might be, and what you can live on when you’re hired for your new career.
Here are five things to do to help prepare yourself for the financial effects of this time of transition:
1. Know what you’re getting into: Find out how much you can make in your new career by checking www.salary.com, www.salaryexpert.com, and www.payscale.com. And, talk to professionals in your desired field to determine what salaries are available and what the long-term prospects are for compensation and advancement.
2. Make a realistic budget: Start tracking your current expenses, and determine where you could tighten your belt. Then, start working at accumulating a three- to six-months cash cushion. Consider setting aside additional funds in case your reinvention period takes longer than expected. Taking on extra work (overtime, part-time job) could help you build up your savings.
3. Plan for training expenses: Estimate how much you’ll need to spend for training and professional development. Ask those in your target field how much they spent on training, and research professional associations in your new field to determine how much they charge for training and certificate programs.
4. Don’t overlook additional expenses: Membership in professional associations, attending professional conferences, and technology equipment and training all are potential extra expenses that you must plan for, as they can be essential for landing that new job. And, make sure you haven’t forgotten to plan for medical expenses that can be costly if you are between careers and coverage.
5. Take some extra credit: Consider obtaining a line of credit while you are employed in your present job and have steady income. This might help relieve some stress and will help you feel more comfortable knowing that you have emergency funds available.
Don’t hesitate to ask your career coach for some advice in these areas. We have experienced our own career transitions and reinventions, in addition to those of our clients, and have planned financially for these times. We can help you determine if your planning, budget, and financial expectations are reasonable and realistic.