5 Money Experts On How To Financially Prepare For A Career Change
Are you considering a career transition? Keep in mind the modern job search can take time, and as we all know: time is money.
While the good news is that the IRS considers some job search expenses tax deductible, the bad news is that those expenses can be hard to prepare for in periods of employment uncertainty.
I sat down with five of my favorite finance experts to gather their advice on how to make the most of your money during a career pivot.
1. Pad Your Savings
“A career change is a major life transition and shouldn’t be taken lightly. We typically spend more during life transitions and a career change is no different. Prepare for your overhead and fixed costs but also think about any one-time special expenses you may incur. Is the corporate culture and dress code different where you are going? Are you expected to cover more or less costs up-front for work-related expenses? Make sure you’re saving for these transition costs well in advance of your quit date.”
Tonya Rapley, My Fab Finance
2. Know How Long You Can Float
“Have a good understanding of your monthly expenses (what comes in and what goes out) and beef up your emergencies and opportunities fund in the months prior to your departure. This will help you know where you have room to cut back and make adjustments, and have the confidence of knowing exactly how long a period of time your savings can carry you with less or no income.”
Cris Caruso, Ameriprise Financial
3. Budget For Your Future
“Create a future budget. Use sites like Glassdoor.com to help estimate your next job or your new business’s earning potential, but also don’t forget to adjust for additional expenses your new position will entail as well. Are you moving for this new job? How much will your relocation cost you? Once you’re settled in your new place, consider changes in rent and utilities, your commute costs, and lifestyle adaptations that might follow a new job with a whole new schedule. Create a monthly budget to be sure you’ve factored in all you can predict about your new fixed expenses and new income.”
Tiffany Aliche, The Budgetnista
4. Maximize Your Earnings
“Remember that your salary isn’t the only piece of your compensation that you can negotiate. Think about how much you want to be paid, and then decide what else matters most to you. Is it vital to you to have several weeks of vacation every year? The option to work remotely once in awhile? Maybe you can get your metro fare paid for. Be sure to ask about a retirement match. You’ll be able to save so much more if your employer contributes as well. All of these benefits matter just as much as your paycheck.”
Maggie Germano, Financial Coach
5. Consider How Much Your Career Change Is Worth
“When making a career change, you may have to take a step back financially to take a step forward into a new career. While reviewing if your career pivot is viable, don’t let your financial situation completely stop you from pursuing your goal. Keep your eye on the prize and be willing to be flexible and even sacrifice if you want to make your dreams a reality. At the end of the day, money might not be the most important factor for you when maximizing other components of your work/life satisfaction.”
Dominique Broadway, Finances Demystified
How does money factor into your career plans?
Has money prevented you from making the career transition you desire? Did you experience a costly job search or end up making even MORE money through your pivot? Weigh in with your questions and experience in the comments below.