How to Prepare Financially for a Career Change
Many people first start looking at a career change because they are hoping to make more money, but the reality is sometimes you’ll actually have to settle for making less money as you embark on your new career. This is because you will likely be starting out with a lot less experience than others in your field.
This means it’s vital to do some financial planning plan if you’re thinking about a career change.
Research what you can realistically expect to earn
Talk to people in your target field or industry – preferably people who have the power to hire new staff, although this isn’t vital. Ask them what position or level they would expect you to be offered given your experience, and what salary that position could be expected to pay. Be sure to ask more than one person to get a full picture.
Decide whether you can afford the pay cut
This may seem like an obvious thing to say, but when we really want something, we often skim over problems in our mind, telling ourselves that it will all work out somehow and ‘where there’s a will there’s a way.’ This is the time to confront the reality head on. Calculate your monthly expenses and see whether you can afford the pay cut.
What to do if you can’t afford it
The truth is that you may not be able to maintain your current standard of living and pursue your dream career. In this case, you have two choices. You can either reduce your expenses for a few years, or rethink your career change plans.
What you decide may depend on your age and situation in life. It’s much harder to accept a drop in lifestyle when you’re older and/or if you have family responsibilities. But even then, if you have the support of your family members, it may be possible to move to a less expensive home, manage with one car, and eliminate spending on meals out, entertainment and holidays for a few years.
If not, consider a longer-term approach. Continue to earn as much as you can now while you’re working in your current field. (You may even decide to apply for higher paying jobs in your current profession). Use this time to pay off any debts and save up as much as you can, so that you give yourself a cushion. Once you feel you have enough, you can start looking to make the change.
If you excel in your new career you’ll soon make your way into the higher pay grades. When this happens, you’ll be in even better shape because you put your financial house in order before making the move. Good luck!
Read more about Career Change.