When you’re changing careers, many things are uncertain. It’s a leap of faith on many levels. So, in this delicate transition, you want to do everything in your power to maintain some stability.
And this means planning for some financial downtime.
Here are some tips to manage your finances while transitioning careers.
1. Pad Your Emergency Fund
Your emergency fund is meant to help you pay for those emergency expenses that inevitably come up. Most experts recommend having enough to cover three to six months of living expenses under normal circumstances. But when you’re transitioning jobs, try to add enough to cover two to three more months (or more, if you can swing it).
More backup money is always better, and it’ll make your transition a lot less stressful. Start by setting aside as much as you can each week before you make your career transition.
2. Create an Iron-Clad Budget
You aren’t going to make it through a tight financial time by sheer luck. You need a plan. Create a budget that includes only the necessities. First, get a good handle on your regular monthly expenses. Make sure you have money set aside to cover these for at least six months. And then, create a plan for the money you have leftover.
You’re going to create a budget for food, clothing, transportation, debt and anything else you need to spend money on during your downtime. And it’s okay to plan for some entertainment as long as your budget allows. Just be sure to keep it to a minimum.
When you’re ready to take a job in a new industry, you might have to start from the bottom. And this inevitably means a pay reduction. But that doesn’t mean you have to accept the first offer that comes your way.
Even a $500 increase over the year is better than nothing, and it’s not much of a consideration for your potential employer. If someone were to hand you that money, you certainly wouldn’t turn it down. And if you’re in a position to ask for more, always ask for more. The worst they can say is no, and you should still have the option of accepting the original offer.
Here’s one tip for making yourself more marketable in a new career. Instead of focusing on your hard skills, use a functional resume template to focus on your soft skills. These are things like leadership, communication and teamwork.
Soft skills are important in any industry, and they are usually things that can’t easily be taught. Be sure to provide any awards or certifications you have to back up your claims. Everyone says they are a team player, so how can you show that you really are one?
4. Consider Alternate Income Sources
While you build your reputation and income in a new career, you may want to supplement your income to avoid having to change your lifestyle too much. This will mean working a part-time job or taking on a side gig. It could also mean cutting back on some of the more frivolous activities that may have become a staple in your life, like your regular Asian massage or weekly round of golf.
Fortunately, it’s easier now than ever to make money online or outside of your day job. You can work for a ride-share company, one of many delivery services, or you can freelance. It does involve a time and energy commitment, but this may help alleviate some financial burdens of the change.
Changing careers can be exciting and nerve-wracking at the same time, but with the right financial plan in place, you can rock this transition and seamlessly flow into your new career. It’s all about being prepared.
And if you’re thinking about changing careers, don’t let the transition scare you out of staying in a job you hate. It’s important to love what you do.