The days of staying with one company until retirement seem to be a thing of the past. It’s now common for people to change careers more than once during their working years. Whether you are seeking a change in the environment or looking to increase income, changing jobs can sometimes be a good way to improve your financial situation.
During periods of financial uncertainty, some people seriously consider changing careers to help improve their overall financial picture. Perhaps the industry you selected years ago has changed dramatically or you’ve maxed out your earnings potential in your current role.
Whatever the underlying reasons, changing your career is a drastic solution. However, a career change can also serve as a way to significantly improve your financial situation. Here, we’ll look at the pros and cons of changing careers and provide helpful tips for taking the leap.
Do Your Research
Although understanding all aspects of a career change is essential, most people overwhelmingly seek change because they are dissatisfied with their salary and/or earning potential. Many companies offer yearly raises as an incentive. While that’s commendable, tenured employees’ compensation is not always commensurate with their experience. This—coupled with personal factors and industry shifts—can be enough to encourage a career change.
However, research plays a big role when changing careers. It’s easy to browse recruiting websites, but the most important thing is determining what you want from a new career path. Increasing your income regardless of what it entails can initially sound like the answer to your financial woes. However, comparing new opportunities to your current salary should not be the only factor you consider. Instead, think about the non-financial aspects of your work that you value most.
In addition to their finding that a new career will increase your income, spend some time researching the qualifications for the jobs you’re considering. You may need more education or specialized training, and it’s best to be prepared.
Also find out how your potential employer views frequent job changes. Most businesses prefer to hire employees who anticipate remaining in the same role for a certain amount of time. According to research compiled by ADP, being an employee for less than a year and a half can have a negative impact on how potential employers perceive you. This could affect your success during the job-hunting process.
Examine Your Current Financial Situation
Your current financial situation also needs to be considered. Landing a new, higher-paying position may be a quick fix. However, it’s also important to know where your current income is going.
High spending on subscription services, bills, debt, and food can have a negative impact on your finances. Deciding what is essential and what can be eliminated is key in changing your financial situation. If you can decrease your spending, you can maximize what you’re already earning.
After optimizing your expenses, you can start planning. Regardless of how well-considered your plan is, reducing unnecessary spending can save you should your situation suddenly change.
Fund Your Career Change
Having enough money to support yourself is critical during the career change process, whether you decide you want to start a business of your own or pursue a different job track. Prior to pulling the trigger on your career change, focus on paying down debt and building savings to give yourself the best possible fresh start. The less you have to worry about later on, the smoother your transition will be.
If you’re going the entrepreneurial route, minimizing your debt can increase your financial flexibility when starting a business. It’s easier to get approved for a business loan when your personal financial history is in decent shape. This is also why it’s important to budget and save. If you don’t want to wait, setting money aside for your business will give you some peace of mind and will keep your professional expenses down as you acclimate.
Consider Getting Help
It’s common to be unsure about where to start, and you may feel that your financial situation is out of your control. Fortunately, there are numerous ways to receive assistance with both budgeting and a potential career change. Even if you don’t want to start a business and are just trying to get a handle on your money, a financial advisor or career coach may notice opportunities you missed.
Whether traditional or virtual, financial advisors can identify habits that you may not have noticed. Virtual advising tools also help you manage things like your account balance and spending habits. Many banks and credit unions have these tools built into their websites and mobile apps, making it easy to see where you stand at all times.
Don’t Take Change Lightly
Changing your career is a big decision. While it is stressful, it can also give you the financial security you are seeking. While major changes take time, taking the proper steps can help you transition smoothly into your new life.
Prioritizing your goals and being motivated to change will be key to your success. While it may be a long road, keeping your future in mind will help you reach your financial goals before you know it.