Thinking about changing careers? This is how to make sure your career dream is financially viable.
Finances are one of the top considerations for people thinking about a career change. Over the years, Head of Advice at Dixon Advisory, Nerida Cole has helped many people work out the financial impact of changing careers.
Cole says that there are three main headlines when it comes to financially preparing for a career change: stretch, boost and crush.
This refers to stretching out your income from your existing job to get as much from it while you are there. It also includes stretching yourself with different experiences to see whether your chosen industry or career is going to be the right fit.
Once you’ve decided you want to make a career change, Cole recommends thinking about what you need to do to boost your income in a new role as quickly as you can. And for that there is only one thing to do.
Prepare.
Cole recommends asking yourself these questions:
“Asking these questions ensures you don’t repeat past mistakes, and that you make your next career move a strategic and successful one,” says Cole.
It’s important to be ruthless with your spending in the face of a career change. “You want to crush your spending to the bare minimum,” Cole says. “You need to know what you need to live off and know your cash flow.”
Often people want to resign from their job immediately, but caution is recommended. “How much is it going to cost if you resign today?” Cole asks. “You need to realise that maybe you can’t afford to take the exit ramp today, but with planning, you could do it in a few month’s time.”
Having a financial buffer and an idea of how much you need to live can relieve some of the anxiety around career change. “Often just knowing what your options are financially takes the stress off,” Coles says.
Putting a financial plan in place tends to gives you clarity and focus, and more often than not, it makes your current job more manageable and enjoyable until you decide the time is right to move on.
Here is a great resource to help you with your budget planning.
Keeping these three headlines front of mind when you’re considering a career change can help to keep you focussed and ensure you’re setting yourself up for success.