Want a Career Change, But Worried About Finances? Here’s How to Prepare

May 29, 2015 -
Money is a big factor for most of us: whether we like it or not, most of our decisions rely at least partly on how much cash is in our bank account — and this applies to careers choices as well. Is money holding you back from a career change? What can you do to be comfortable enough financially to make big changes for your career? Take back control of your career with these simple actions. Here are some steps that will help you move past this financial roadblock so you can pursue a career that makes you happy.

Diversify your risk

Nothing will give you more peace of mind than diversifying your financial risk, and one of the best ways to do that is having different streams of income. (Click here to tweet this bit of financial advice.) Instead of relying on a single paycheck to pay all your bills — which could leave you financially devastated if you’re handed a pink slip — spread out the risk by finding multiple ways to bring in extra money. Whether this comes in the form of a side hustle, a weekend job, or some freelance work, look for other money-making avenues to complement your day job. Don’t get discouraged if you don’t have much time, or that you’ll have to sacrifice your social life to build up more streams of revenue. This is only a short-term sacrifice until you’ve created enough of a financial cushion to help you transition careers successfully.

Spend less than you make

When was the last time you looked at your budget? Do you have a spending plan, or do you simply spend all the money you make? If you want to make a career change, you need to have control over your finances to the point where you’re spending less than you earn. It’s just that simple. Take time to perform a thorough review of your monthly bills to see where your money’s going, and where you can cut back. If  you’re truly spending on your priorities and still don’t have much to save, then maybe it’s time to focus on bringing in more money.

Create an escape plan

Don’t allow money to hold you back in life, or force you into a career you don’t like. Once you’ve created an escape plan from the day job you currently have, be sure to include a backup plan in the event you end up in a tight financial bind. Think about your worst-case scenario. Would you be homeless on the street, or would you simply have to move back in with friends or family for a while? Remember, your backup is a short-term sacrifice for long-term gain! Work out the different scenarios and paths that your career change could take, and find solutions to each problem. You’ll feel a lot more confident about your situation if you have an escape plan.

Start a career change fund

The more money you save up before making your career change, the easier and less stressful the process will be. Open a separate savings account at a different bank than where you regularly do business, and start a “Career Change” fund. When I was quitting my job to become self-employed, I called this account my “Taking the Leap” fund. Whatever you name your account, create a separate savings that isn’t easily accessible like your other money. Set aside little bits of extra cash, bonuses and money from side jobs to deposit into this account. If you’re planning to move to another place to follow new career pursuits, save all the money you make from selling your belongings in this career fund as well. How much money should you save up before making a career change? This number will be different for everyone, but generally speaking, you want to save up at least three to six months’ worth of your bare-minimum monthly expenses. That way you have some time to find a new job or another stream of revenue if your original plan fails.

Find an accountability partner

There are no quick fixes when it comes to changing careers, so you have to be patient during this process. It will take some time to save up enough money, diversify your streams of income, and put your escape plan in motion. But all of your time and effort will be worth it once you reach the goal of being in a fulfilling career. But don’t procrastinate or make excuses. All the money in the world won’t help if you don’t leverage it to follow your dreams. Reach out to a friend and ask them to be your accountabilibuddy — someone you can check-in with on a regular basis who will keep you accountable to your goals. If you know a coworker who’s in a similar position, ask them to be your accountability partner. If you want to take it one step further, hire a business or career coach to help you through this process. That’s the route I took, and it was well worth the few hundred dollars each month. You don’t have to go through this process alone. Reach out for support and find someone who will can help you stay motivated. Don’t let fear of the unknown paralyze you into inaction or from seeking the career change you’ve been dreaming of. Follow these steps and you’ll be able to make the leap into a new and more satisfying career. Carrie Smith (@carefulcents) is a writer and business consultant for freelancers and entrepreneurs. In 2013, she quit her accounting job to pursue full-time blogging.