Financial Planning

Financial Advice During a Career Change

Financial Advice During a Career Change

All too often, it is fears about money which hold us back from the career change that we so desperately want. We might want to enter marketing, law or the world of music, yet we look at the mortgage, bills and other commitments we have and baulk.

Wouldn’t it be great to have the financial freedom to progress into your desired job or career?

If you honestly can’t see yourself waking up a year from now in the same job, then read on.

To encourage you before we dive in, just know that you are not predestined to choose between ongoing misery and financial stability on the one hand, and adventure and financial insecurity on the other. There are many practical steps you can take which can help you step out into your new career on the right financial footing.


#1 Save

Most financial planners recommend building a personal safety net of emergency savings. Usually, advisers suggest working towards an amount which equates to between 3-6 months of your living costs.

This set of savings is useful in the event that you find yourself unable to work for a period, or suddenly without a job. However, it can also provide valuable financial support when you do decide to eventually step out of your current job and move towards a career change.

Of course, this isn’t a simple matter of saving up a big pot of money and then jumping ship! There are some other vital steps you need to take as well, including:

  • Firmly establishing what you want to do next.
  • Getting a business plan together, if you are looking to start your own venture.
  • Make yourself aware of what new skills, qualifications and training you will need. In particular, can you do any of this whilst employed in your current job, or will you need to leave employment for a period in order to concentrate on your studies as you retrain?
  • Consider the difference in pay you are likely to face. If you have worked your way up in your current industry and have a higher salary, will you be able to face starting at the bottom of the ladder in your new career – which will likely bring a lower wage?


#2 Financial optimisation

For many people, their finances are fairly straightforward. For instance, perhaps you are a business development manager in your 30s and you have no mortgage or any other large debts. Maybe you even have 3-6 months’ worth of living costs saved up. Someone in this position obviously has more freedom to change careers and start again at the bottom compared to a man in his forties, with a large mortgage to pay and a family to support.

This does not mean that people in the latter category have no options. There are ways to optimise your financial life in order to free up your disposable income, and put this towards your career change (e.g. paying for a course required by the industry in question):

The simplest place to start is to take a hard look at your outgoings and figure out where money is being needlessly spent, which could be diverted instead into career savings. One way to do this might be to look at your bank statement and find those monthly audiobook subscriptions you are paying for but never use.

Another good idea is to take a notebook around with you for a month and to record what you spend each day. At the end of the month, tally up everything and divide your expenditure into relevant categories. From there, set a realistic budget. Are you spending too much on coffees, for instance, or impulsive clothes shopping?

Finding out where your money is actually going is the fundamental first step in optimising your finances, and getting them in order so you can position yourself more securely for a future change in career.


#3 Side-gigs

For certain people, they dream of leaving their current employment one day and starting their own business. It might well be in a field where you have little or no prior experience. In such cases, consider whether you could set up a “side gig” alongside your current job.

This allows you to build up experience in your new industry, as well as additional cash, whilst retaining financial security through your current job. For instance, perhaps you are a project manager but want to start your own graphic design business. In this case, you might consider taking some online courses in graphic design whilst you work.

After you have spent time building up your contacts, skills and confidence, you could then build up a portfolio of work by doing jobs for family and friends, or by tendering proposals for project briefs on websites such as freelancer directories.

Once you get some momentum going and a decent reserve of cash in place, you might move your project management job down to part-time so you can focus more on developing your graphic design income. Eventually, you could find yourself in a position where you can comfortably devote your efforts to it full time. In this case, you have not dived into a new career head-first. You have waded in cautiously and sensibly.


#4 Financial restructuring

Sometimes getting a side-gig is not an option for certain people. They are simply too busy as it is. Moreover, perhaps you have already optimised your finances as far as they can realistically go. What should you do if you find yourself in this position?

Such cases present no clear, universal answers. Speaking with trusted family and friends can sometimes shed light on your options. Talking with a qualified financial adviser is especially useful, as they can illuminate areas of your financial life which you might have missed and offer some new options to you.

For some people with large loans or mortgages to pay, it might be that you need to look at re-negotiating some of the financial agreements you have entered. If you are considering this option, then you should first speak with an independent financial adviser to discuss whether this is a good idea. Decisions such as extending your mortgage term in order to reduce your monthly premiums might sound like a good idea, but you need to consider the short and long-term view with an experienced professional before making such big commitments.


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