I was recently asked questions about the financial impact of switching careers. I’ve shared the questions and responses below.
If someone wants to switch careers, how can they make sure they remain financially stable through the transition – especially if they’ll likely be making less money?
- Don’t assume that a career change always means making less money, do your research and focus on your transferable skills, demonstrate the value you do bring
- Most often you step sideways or slightly backward, you don’t necessarily start at the bottom
- Have a clear understanding of your baseline expenses and what you truly have to make to live vs the discretionary spending level you may be accustomed to. What are you willing to do without to make this work. How much of your savings are you willing to deploy to make this happen?
- Sometimes if this is really something you want to do you need to explore supplemental sources of income. Can you work part-time evenings or weekends to bring in additional money. Are you willing to make that commitment to support pursuing this dream?
What are some things they should be thinking about when it comes to their finances?
- What are your fixed expenses and your true living expenses?
- What discretionary spending are you willing to give up?
- What is your absolute floor? What is the minimum salary you can accept and survive? You need to know this and stick to it so you know when to walk away.
How can they make sure they’ll have enough money saved up?
- You have to fully answer the questions above to look at your expenses and potential income to determine what if anything you will need to draw from savings each month. What are you willing to invest in this transition and for how long?
- Can you avoid depleting your savings if you bring in supplemental earnings from a part-time job?
- Do a very honest assessment of what your “floor” is in terms of salary and benefits. Know what you must have to pay the bills. Discipline yourself to not consider anything below your floor. But taking a cut to get into a field you desire and where you can advance may be a good investment in your future.
Does switching careers automatically mean they have to start from the bottom in their new role?
- You may need to take a step back but you do not necessarily have to start at the bottom.
- Focus on your transferrable skills. If you do a lot of networking to learn what skills are required for success in your target organizations, you can really focus on selling your relevant transferrable skills. When you are bringing something of value to the table, your offer should be higher.
- Also consider interim steps to get you closer to your desired career path so you can maximize your value add. You can build experience in your target field by leveraging your current experience. For example: I have an undergrad degree in accounting and was very successful in my accounting career. I completed my MBA and realized my passion was marketing and managing customer relationships. My first marketing job was with a financial software vendor who valued my accounting knowledge, my experience with financial systems and my connections in that field. I was able to make a very significant career change without stepping backwards. After several years there, I had the marketing experience to pursue the opportunities of my choice.
- Identify what you bring to the employer that adds value and focus on selling those transferrable skills to avoid starting at the bottom.
- If possible gain some experience in the new field by volunteering to do a project for a non-profit or even join their board. Not only does it give you experience you can leverage in the transition, it also demonstrates your commitment to the change.
- Would education make a difference? Think about whether going back to school for a degree in the new field would propel your career forward in this new field. Explore options for scholarships and loans to support the expense. Consider programs that include valuable work experience in your new field.