As the job market continues to shift, many are considering a career pivot or starting fresh in a new industry. While daunting in nature, the reality is that layoffs are continuing to happen, and the job security that once existed doesn’t seem to be rearing its head again anytime soon. The challenge that often arises when deciding to change career paths is the financial burden of trying to maintain the lifestyle you once had.
Preparing for a career change financially might mean cutting back in areas you used to splurge on or re-evaluating your expenses to decide how much to spend on household items without leaving yourself no financial wiggle room. While you can’t anticipate everything that comes with a career change, you can leverage your resources and community to make the transition smoother.
Here are three ways to prepare financially for a career change:
Start Planning Before The Idea Is Fully Developed
As nerve-wracking as it is to jump in headfirst into a whole new way of life, so is jumping into financial strain intentionally for peace of mind or upward mobility. Once the idea of changing careers comes to your mind, it’s crucial to begin planning for it, whether it fully comes to fruition or not. This planning will allow you to fully embrace the transition without the hassle of trying to take on so much at once. Planning for this change includes narrowing down what role or industry you may want to transition into, the steps it might take to get there, and how much you specifically need to stay financially afloat while on your job search. There may not be a guarantee that you can leave your current role for something new without a pay gap, so implementing a strategic plan will make a difference in the long run.
Build Up Your Savings Account
Saving money as you change careers may seem like a no-brainer, but many people underestimate how much they need to save to transition properly. These days, people are searching for a role longer than they were employed, so it’s essential to save as much as you can for expenses like rent, utilities, and groceries. It may even be worth investing in a high-yield savings account (HYSA) to help your savings grow over time. Use the plan you mapped out in the previous step to create a loose timeline for building your savings. If you have to leave your role sooner than you’d hoped or still haven’t reached your savings goal, it might be time to start a side hustle.
Utilize Side Hustles To Help Keep Liquid Cash Flow
In a job market where it seems like almost everyone has more than one stream of income, it may be worth exploring. From DoorDash to high-ticket sales to dog walking, everyone has found something that lets them bring in more cash in their spare time while searching for a new job. It’s best to think about what other skills you have that you can use or roles that other people don’t stay in long-term, such as retail or fast food. It could even be worth picking up a side hustle while still in your full-time role to build momentum so that, once you leave your old role, you already have a well-oiled machine running for additional revenue. This will also help you reach your savings goals faster.