A career change can be an exciting yet equally frightening time for many. Following the Great Depression, professionals of all ages and from all walks of life found themselves being forced to retire early or start over in a new field or profession.
Whether you made the plunge into career change on your own, or have been pushed into rethinking your profession, below are 3 simple yet important factors to help prepare you for your new career change transition.
1. Fatten your emergency fund before your career change
Depending on your current financial situation, your emergency fund needs could vary greatly. However, in simple theory, we recommend having at least 6 months’ worth of living expense put aside. This includes everything you need to truly “live” from housing to luxuries you just can’t live without.
And if you are starting your own business, we recommend having at least one year’s worth of living expenses. Yes, you heard correct, one full year of accessible funds to live off of. The bigger question at hand is whether you really know how much you are spending each month to know how much you are going to need? Feel free to explore our Financial Calculators Page to gain insights around budgeting, saving and more.
2. Have a clear understanding of realistic income levels that you can expect in your new career change
Seeking a new position or endeavor because you are passionate about the topic or focus is also a rewarding career change consideration to many. As long as you are realistic about your new career income expectations. Even the most seasoned professional or executive can simply misgauge how long it could take to reach the same income level they have become accustomed to.
If you are the plunge in order to work in a field that you are passionate about, then making less income may not matter to you at all. Which brings us to the next point…
3. Know your minimum income requirements before you make a career change
Do you have a clear picture of how much money it takes for you to “live” each month? Basic necessities, housing, and the dozen or so Starbuck lattes you enjoy each month can impact your financial needs significantly more than you realize. Just take some time to figure this important financial piece out.
Make it easy on yourself by downloading a free app such as the IOS Moneybard: Budget Money Spent to track your expenses for a solid 30 day period. Or jump right in and go old school with a trusty yellow legal pad to jot down everything you spend each day.
Career change is a life transition that can bring great reward and satisfaction to you at any age and anytime in life. The more that you prepare for the worst possible financial setbacks that can come during this time, the better off you will be. Because anything above that will simply be exceptional.