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The likelihood of experiencing financial hardship as a result of a career change, however, is one of the main barriers that prevent people from doing so.
In this guide, we will show you several ways in which you can afford the career change that you have been wanting to make.
Changing careers could mean giving up benefits that you've grown accustomed to or starting over at a junior level with a wage cut.
In spite of the fact that 58% of workers questioned said they would be willing to take a pay drop in order to change occupations, it can be especially worrisome during these uncertain economic times when it has become difficult to predict the future.
If you can manage it, it's good to have a sizeable financial safety net to fall back on while changing careers. It is entirely possible, however, that you might become unable to pay your bills while pursuing your dream job full-time. So if you're looking to change careers, you must make sure that your finances are on track in order for you to afford a career change.
In this guide, we will show you just how to do that, so read on.
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You are employed with decent pay. It has been running smoothly for some time and pays the bills. You've stayed in the same profession, toiling away day after day, year after year, even though you're not happy.
Most of us have experienced it at some point in our careers and we ask ourselves how we got here. Well, we all needed to pay our bills, therefore even if we didn't enjoy the work, we accepted the first job that offered a salary high enough to cover our expenses.
You can work a job for a while, but sooner or later you will start hating what you do because it is not aligned with your values, life goals, or ambitions and ultimately you'll need to change careers if you want to keep your sanity.
The only issue is that, whether you like the job or not, you still need a paycheck to pay the bills that are due each month, so you can't exactly walk out of your situation.
By the way, if you are seriously considering a career change here are two of our most popular guides that you should go through. They are full of advice from the top experts in the industry on the subject:
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Before you begin working on the journey into your new career, start by doing the math to see if you have enough money to support yourself during the transition without disruptions to things like paying your bills.
Utilize online search resources like PayScale.com, Salary.com and Monster.com to research starting salaries in your desired field. You can also study GlassDoor.com for actual job listings which provides more exact salary information.
It's critical to take into account all potential benefits, such as insurance coverage, incentives, or other perks like tuition reimbursement, when estimating the costs of a job transition.
For instance, if you switch from a position at a huge corporation to one at a startup, you might have to pay more premiums for inferior or no health benefits at all. You may need to account for the cost of COBRA in your initial financial calculations if you have health insurance via your current employer and your spouse's employer does not provide coverage.
If coverage is lost as a result of certain specific events, including voluntary or involuntary termination, COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985) gives former employees, their spouses, retirees, and dependent children the right to temporarily continue their health plan at group rates.
Also, keep in mind that you will probably be in a lower tax rate if you make a lower wage or go back to school. In dual-income households, where one spouse leaves their job to launch a home-based business, the requirement for child care may also disappear. Suddenly, there may be deductions you can take advantage of that you might not have qualified for before.
By the way, if you want a detailed guide into how to switch career paths that covers everything from beginning to end, check out this guide!
So you have done the math and your new career seems like it will financially support you at some point in time.
However, it's crucial to set up the financial foundation for a career move before you commit to an all-out transition. The suggestions below can help you get started on the new profession of your dreams. Here’s how to finance a career change.
For great rewards, you have to make sacrifices. If you want to make that career change you will have to make some cuts in your spending. Depending on how passionate you are about your plans you should be able to survive without many of the perks that regular people enjoy.
Here are a few tips to reduce those unnecessary expenses:
You probably have several subscriptions, including Netflix, Hulu, Spotify, gym dues, trendy subscription boxes, and Amazon Prime. Any subscriptions you don't use frequently should be canceled.
And when you buy something, be sure to switch off auto-renew. If you unsubscribe and later decide you can't live without it, consider subscribing once again—but only if it is within your new, more realistic budget.
After creating a budget, the majority of consumers are surprised by their real monthly grocery spending. Additionally, the typical American family of four (with two children under the age of 5) spends about $550 per month on groceries alone.
It's easy to go through those aisles, picking some ice cream here and a few bags of chips there, and then topping it off with the exciting treats at the checkout. But those modest expenditures, also known as budget busters, build up significantly and cause the budget to go over every month.
Getting rid of name brands is undoubtedly one of the simplest methods to cut costs. Marketing is typically the only aspect of name-brand products that is superior.
In comparison to their marked-up brand-name counterparts, generic versions of medicines, everyday foods (such as rice and beans), cleaning products, and paper products are significantly less expensive while performing equally well.
It is no secret that cable subscription costs are skyrocketing. With all fees included, the typical monthly cost of cable TV is over $217, which works out to more than $2,600 a year!
The good news is that you don't have to watch your favorite shows on cable anymore. Cut the cord and learn how to save a tonne of money utilizing network apps and streaming services as cable alternatives.
Don't go subscription service happy though. Only register for streaming services that you really need. You might actually end up spending more than the cost of cable if you sign up for everything available.
The decision to change careers might be scary, and many people think they can’t afford a career change. You can lessen some of the anxiety and worry associated with a career transition by cutting back on costs, and creating a cash cushion.
Even if this takes you a few years to finally be able to say, "I resigned!" it is still preferable to spending your entire working life in a job you despise.
Anyone has the ability to manage a change in career, according to all the top personal finance gurus out there. You just need to manage your budget, create an emergency fund, and start paying off debt.
You have power over how you define happiness, how you present yourself and your skills, how you plan your future, and how you manage your money. You don't have to be controlled by your job or your finances. You can devise a strategy to escape to something better and more meaningful to you!
In this guide, we showed you how to do just that and hope that it helps you to be able to afford that career change and that dream job.
