How to factor in a career change into your finances
Changing industry or your entire career can temporarily be quite detrimental to your personal finances. While many people who decide to seek their dream job may expect this, it can be quite difficult to know how to factor this into day-to-day expenses. Most people who change their career path will still need to pay for utilities, living costs and potentially even family costs. Knowing how to plan around this change in income will not only benefit you and your family, but it will also leave you with peace-of-mind that will enable you to concentrate on your studies and experience.
Lose any conveniences
You may have expected some sacrifices when it comes to a change in career, but for many letting go of their creature comforts can be the hardest aspect. It’s absolutely fine to occasionally treat yourself while you’re studying for a new career. However, a glance at your weekly transactions should reveal what you are spending money unnecessarily on. It’s recommended that you take a critical look at what you spend in a month and split your expenditures into ‘needs’ and ‘wants.’ This will not only give you an eye-opening view of your spending habits but also force you to be a bit stricter with your spending.
In order to prioritize important spending, you may also need to consider some bigger issues with your budget. If you have credit card debt that can be paid off relatively quickly, it’s recommended that you make some progress with this.
Research your industry thoroughly
How much will you be earning in your new job? How long will you be living on savings and not a salary while you train? These are both important questions and ones that will need answering through research.
While looking online for a rough estimate is a great way to start off, if you can find a mentor this will give you a much more realistic perspective on what you will be living off until you’re fully qualified. Failing that, government agencies are also a surprising source of industry knowledge – and completely for free. You may be able to find this information in your local library, and it should give you an accurate sense of employment statistics in your area.
You may have also been given a rough estimate on how much you are likely to be earning in your new job – it’s a good idea to find out whether you will be on this estimated salary immediately or after a number of years working your way up the career ladder.
Decide on important investments
Your chosen industry might require some investments, whether that’s in uniform or equipment. For example, if you’re leaving a sales job to become a nail technician, you may need to spend some of your savings and salary on all the necessary tools to do your future job. If you’re a chef, you may need to spend what may feel like a fortune on decent knives that will last you throughout your career.
Before you jump into training, you will want to research these investments first. You will need to know where you can save money and where you absolutely can’t. For example, a hairdresser might be able to find sensible black clothing relatively cheaply, but they wouldn’t dream of scrimping on expensive scissors.
Your education might just be the biggest investment of all. If you’re considering a costly degree, then you may need to save regularly before changing careers, or agree on a finance option first. Ultimately, this investment will be worth it, but you need to be realistic about whether you can immediately afford this, and how.
To avoid the need for a student loan and the cost of living out at a university, sometimes online courses are a much more financially appropriate way to obtain a degree. If you are considering entering the real of being an architect or a civil engineer, you may not have the time outside of family life to go back into full-time education. Taking an online structural engineering masters degree, for example, would be one of the most flexible ways to approach this.
Be prepared to downsize
This may not be entirely appropriate for some families, particularly those who have more than just financial ties to a particular region or neighborhood. However, if you or your family are prepared to cut your losses and move to a much more affordable home, this is sometimes a measure that can be taken. While it may seem like a dramatic way of funding a career, it may make sense if you have to move cities for the industry, or if you’ve always had your eye on a much more affordable area. This is a serious financial move to fund your career change, so ensure that your family can agree how best to downsize and what you would be willing to compromise on.
Take up part-time work
If you have enough funds saved but want to still keep food on the table without eating away at them, taking up part-time work may be an efficient way of covering any costs. Part-time work may not be the most rewarding, but remember that it is part of a bigger strategy. Having roughly 15 extra hours a week to focus on your studies and take up work experience is incredibly convenient if you can afford to leave full-time work. If it’s possible, you may even wish to take up a paid internship in your related sector. Not only will this bring in a bit of money, but it will also be a related job on your new resume.
For many, the financial aspect of taking up a new career is the most frightening aspect. The knowledge that you will be streamlining your spending and lifestyle habits can cause a great deal of anxiety, particularly if you have a family. While some sacrifices might need to be made, you might not need to make drastic cuts if you plan carefully. Investigating part-time education and work opportunities and saving regularly will all help to give you a secure budget while you re-train.