Whether you’re chasing a dream or looking for more income, flexibility, or other benefits, making a professional change can be a strategic, life-enhancing move. But it can also strain your finances. At least in the short term.
If you’re thinking about stepping away from your career and into another one, the first step is to ask yourself how much time you need to make that happen. Having a healthy sum in savings is key preparation for your career change. The more you’ve saved, the more time you have to search for the job that’s going to be the most professionally fulfilling.
Here are some suggestions to keep in mind:
Establish a “Freedom Fund”
If you’re going to be without a paycheck, you need to have a healthy savings account that will support you in the interim. This should be enough to cover at least six months expenses that include everything from rent to the monthly grocery bill.
Slash your budget
Map out your budget carefully to determine the cost of your current essentials; don't forget big one-off items that won't appear monthly, such as annual memberships and holiday gifts. Then find areas where you can cut. Be ruthless! These will be lean days; important to distinguish what you “need” from what you “want.”
Keep on saving
Any retirement contributions you make now maximize the time your money has to grow, so don't stop setting aside long-term savings. Even if you leave a 401(k) in place rather than roll it over, open an IRA and try to keep contributing there while going through the career switch.
If you have a burning dream, go after it with both hands. But doing some preparation in advance will buy you the time and peace of mind you need to go about it the responsible way.