A career change can feel like a breath of fresh air, giving you a new sense of purpose. But before you take that big, exciting step, make sure your finances are in order. Financial uncertainty during a career transition can cause you unnecessary stress, but it’s avoidable with the right preparation. Read on for the steps to take to set yourself up for success.

1Assess Your Current Financial Situation

First, you need to understand your current financial situation. That means taking a deep dive into your income, expenses, savings, and debt.

• Compare Your Income and Expenses. Consider your current salary and any additional income streams. How might these change during your transition? Review your spending habits and categorize your expenses into necessities, like housing, food, and transportation, versus areas where you can cut back.
• Calculate Both Your Savings and Your Debt Burden. Take a look at how much you’ve saved and determine whether it will be enough to sustain you during a potential period of unemployment. Then, make sure you add up any existing debt – including all credit cards and loans – because payments toward these debts will impact your monthly budget and overall financial stability.

 

2Build an Emergency Fund

Changing careers might mean a reduction in income, costs related to relocation, or even a temporary break between jobs. This is where a solid emergency fund becomes invaluable. Aim to save enough to cover at least three to six months of your typical living expenses.

Put your savings into an easily accessible account, such as a high-yield savings account, and automate monthly transfers to help you stay on track. This cushion will give you peace of mind during your transition and allow you to focus on your new career goals.

3Reduce Your Expenses

To free up more funds for your career change, reduce unnecessary expenses. Scrutinize your spending and identify areas where you can cut back, such as:

• Dining out less frequently
• Reducing your streaming subscriptions
• Downsizing your home
• Opting for a less expensive mode of transportation

 

4Explore Alternative Income Streams

If your career change involves a period of reduced, or even zero, income, supplementing with additional income can ease the burden. Consider:

• Taking on a part-time job related to your new career
• Freelancing or offering your skills on platforms like Upwork or Fiverr
• Consulting for your current industry on the side

 

5Investigate Training and Education Costs

Some career changes require additional education or certification. Research the costs involved in these preparation programs, including tuition, books, and certification fees, and see if your savings can cover this training or if you qualify for financial aid like:

• Scholarships
• Employer-sponsored education programs
• Student loans

 

6Evaluate Your Employee Benefits

Leaving your current job means losing certain employee benefits. Make a plan for what you’ll do in place of these coverages and perks.

• For health insurance, will you continue your coverage through COBRA, an individual plan, or a spouse’s policy?
• Can you roll over your 401(k) to a new employer’s plan or into an IRA?
• Do you need to look into new life and disability insurance coverage?

 

7Update Your Resume and LinkedIn Profile

Once you’re financially prepared, it’s time to focus on your job search. Tailor your resume and LinkedIn profile to highlight the skills and experiences that are relevant to your desired career path.

• Quantify your achievements with specific metrics, whenever possible.
• Use keywords from your ideal industry to make your profile stand out.
• Craft a narrative that connects your past experiences with your future aspirations.

 

8Network and Seek Career Counseling

Building a network in your new field can open doors to job opportunities. Attend industry events, workshops, and conferences to connect with professionals and gain insights that may help you secure a new career.

Consider reaching out to a career counselor who can help guide your job search, refine your goals, and provide tips on navigating the transition process.

9Review Your Budget Regularly

Throughout the transition, continue to monitor and adjust your budget as your financial situation evolves. Keep track of any new income and expenses, and ensure you live within your means. Setting new financial goals and tracking progress will keep you on track.

10Seek Expert Financial Advice

Changing careers can involve complex financial decisions. Consider consulting a financial advisor who can help you develop a personalized strategy for budgeting, saving, investing, and managing any debt during your transition.

 

Want to learn more about maintaining financial health during a career transition? Reach out today.

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