STEP 1 – KNOW YOUR NUMBER
How much money do you need to cover your essential personal living expenses? Here, we’re talking mortgage repayments or rent, food, utilities, transport. Simply the basics you need to survive.
List out all your essential monthly expenses. Work out your total living costs for the year. This final figure is the number you need to know. The minimum budget required to meet your basic annual personal living costs.
Consider – have you got enough money to cover your annual living costs – or an alternative way to fund yourself?
STEP 2 – MAKE ADJUSTMENTS
Create a budget. If you’re unclear about your spending habits, review your recent bank statements to track where your money is going.
Next, ask yourself – where can you eradicate unnecessary spending or reduce your expenses further?
Cutting one expensive meal out per month could be a short-term sacrifice to get you closer to the career you desire. Consider re-negotiating any larger annual expenses, such as health or car insurance payments. Make adjustments and update your budget accordingly.
Finally, test out living on your new budget (or less) while you still have the security of your regular salary.
STEP 3 – CALCULATE CAREER CHANGE COSTS
How much money do you need to fund your career change? If you’re switching careers, consider any salary reductions or education expenses required to requalify. Add your annual living expenses. And if you’re starting a business, include basic business costs, bearing in mind the time it might take to begin earning a profit.
Do you have the savings required to cover these expenses, gaps or any time off?
Start saving while you’re still employed. Set your target and put aside a regular amount of savings each payday. Reward yourself as you reach small goals along the way. Stay motivated by realising you’re working towards making your dream a reality!
STEP 4 – CONSIDER YOUR SITUATION & RISK PROFILE
Your personal situation, lifestyle commitments and appetite for risk all determine how quickly you can embark on your career transition.
If you’re fairly risk-averse, you might want to save the equivalent of your annual salary before leaving. Or, stretch out your career change over multiple moves, working through a series of roles that get you closer to your ideal career.
With a higher tolerance for risk, you may happily take a reasonable pay cut to immediately get started in your dream career. Or, perhaps you’re prepared to take a career break between roles and quit without another job to go to.
Weigh up your options, consider your commitments and tolerance for risk and make informed choices accordingly.
STEP 5 – MANAGE YOUR MIND
Will I be able to sustain my current lifestyle? Can I even afford to live? You’ve now got a solid financial plan in place. But, your money worries and fears of financial ruin may see those plans come crashing down!
Fears and limiting beliefs present any time we’re trying to make major, permanent changes in our lives. The secret to overcoming them? Learning how to manage your mind.
Check out my recent article on overcoming one of the greatest career change fears to find out how.
STEP 6 – GET STARTED NOW
The best time to get started on your career change is when you’re still employed. Consider starting a side hustle before you leave your job. Freelancing or volunteering allows you to test out ideas and gain experience in the industry you want to move into.
Evaluate your exit strategy, for example, negotiating an extended notice period, taking a career break or long service leave. You could also reduce your hours to part-time or look at consulting arrangements with your current employer. Maintaining a regular income as you transition into your new career or business, is a smart way to reduce risk.
Moving out of a career you’ve invested plenty of time, money and energy into can be a tough decision — and money fears can easily hold you back. By understanding how you’ll fund your career transition and having a clear plan, you’ll minimise the fear and risk associated with your next move. These tips have helped my clients and I approach our career changes with clarity and confidence — I hope they support you too!