Shifting between jobs is a decision that requires a lot of thinking, not just career-wise, but money-wise as well. Whether you’re becoming a freelancer, doing a complete career overhaul, or anticipating corporate restructuring, coming up with a plan to support yourself financially in the meantime is crucial for a smooth transition. That said, here are a few ways to take control of your finances and guarantee a stable financial position during your career shift.
Quick side note: If you want to demonstrate your value and expertise more effectively, giving you the upper hand in salary negotiations and setting a strong foundation for your financial stability, download my quick, two-page, annotated resume cheat sheet where I break down exactly how a marketing manager was able to double her initial offer. Get your copy by submitting your information below:
Name*Email Address*Submit
Beef up your emergency fund
Before shifting careers, it’s important to have funds you can tap into for your living expenses during the transition — but how much should you save up? While most would agree that you should save anywhere from three to six months of living expenses, it still depends on your situation as you may need more or less. To start, this “Emergency Fund: What it is and How to Build One” article recommends cutting costs and reallocating money towards savings, along with setting aside tax refunds and bonuses for the months you’re still employed. The bigger the cash cushion, the easier and less stressful the process of switching careers will be.
Budget with your new income
The financial uncertainty of transitioning to a new job can be daunting to face, which is why the importance of budgeting cannot be overstated. An article written by CNBC, “How to Budget Money: Your First Step to Financial Security” explains that creating a budget simply entails listing all your expenses and sources of income either on paper or a spreadsheet. I personally love using Mint.com. From there, closely review your current monthly expenses and see where you can cut back to accommodate your future income stream and expenditures. If you don’t know how much you’ll be making, give yourself a reasonable estimate. Additionally, don’t forget to make sure your budget is within the means of your emergency funds — you should be able to survive for the number of months you’ve saved up for. When budgeting, it’s important to hope for the best but plan for the worst – it’s better to stay prepared just in case your career transition doesn’t go as planned.
Have the mindset of living within your means
While budgeting is the key to saving up for an emergency fund, it won’t be enough if you can’t stop yourself from impulse buys. To live within your means requires a lot of discipline and, in some cases, a huge lifestyle change. This is a lot easier said than done, but you can make small steps to achieve it. A lot of gurus recommend avoiding eating out or having your daily Starbucks, but in my opinion, that’s a direct route to misery if these things bring you lots of joy. Instead, cut back on making purchases that don’t give you so much joy. For example, if you’re not really into fashion, buy long-lasting generic clothes instead of name brands. If you really like running outside, invest in a nice pair of running shoes and end your gym membership. If you enjoy cooking, buy items that are in season. Lastly, stop relying on your credit card in order to avoid incurring any (more) debt. Once you let go of the small things, everything else will come easier with practice.
Don’t be afraid to negotiate
Whether you’re being paid an annual salary or a consulting rate at your new job, don’t be scared about asking for more. Consider what your product or service is worth to your employer or customer, or what unique points you are offering, instead of just taking the minimum. If you’re not sure where to start, try conducting research on a good figure via websites such as Payscale or Glassdoor. If they push back, take less, but negotiating can ensure you know your upper limit instead of missing out. Don’t be afraid to negotiate other benefits, such as stock options, vacation times, or flexible work schedules — all of which can be equally important.
Set up multiple sources of income
One of the best ways to set yourself up for financial stability is to have more than one source of income. This could mean having a small online business, having a part-time job, or freelancing on the side. Regardless of what career you’re shifting to, there’s always a way for you to form another source of income, whether it’s passive or active. Business Insider recommends a long list of passive-income possibilities, such as renting out unused space on Airbnb or writing a blog. While it may take a lot of energy and eat up your free time, having another source of income is a great way to build your emergency funds and set you up to handle whatever challenges may lie ahead.
Recommended Reading
To receive valuable insights from experienced resume writers, interview coaches, and networking experts, subscribe to our emails:
[]1Step 1Emaila valid emailemailGet me on the listkeyboard_arrow_leftPreviousNextkeyboard_arrow_rightFormCraft – WordPress form builder
