If you’re thinking about making a career change, it’s important to know that you shouldn’t skimp on the basics of your financial life. It’s hard enough to make a living when you’ve got everything together, so why would anyone want to take on new responsibilities while their finances are in disarray? If you want to make the transition from one job or career path to another, here are some steps I recommend taking before making the leap:
Don’t buy a house.
I’m not saying you shouldn’t buy a house. If you’re ready to settle down and have the money for it, go ahead! But if your goal is simply to save for retirement, there are better things that can be done with your savings than just throwing them into a mortgage.
The thing about renting is that it’s cheaper than buying–and even if you don’t think so now, it will almost certainly be cheaper in the long run. It’s also easier to move when needed or desired; no need for months-long escrow periods or waiting for closing dates! And as long as your landlord allows pets (or doesn’t mind if you bring them yourself), there’s no reason why having roommates has to mean losing out on companionship: many renters choose this option because they want more space than they could afford otherwise while still having company around all day long–and some landlords even offer perks like free cable TV or WiFi! The money saved on rent can then be invested in other assets like stocks (which pay dividends) or mutual funds (which grow over time).
Get your financial life in order.
Once you’ve decided to make the leap, it’s time to get your finances in order.
- Pay off credit card debt. If there is any type of debt that needs to be paid off first, it’s credit card debt–and not just because it’s expensive! As soon as possible after starting a new career, use all available cash flow from your new job (and even some from side hustles) toward paying down this type of loan.
- Start saving for retirement and other financial goals. After getting out from under any high-interest payments such as those on credit cards or student loans, start building up an emergency fund so that if something goes wrong with one paycheck or another unexpected expense comes up, you’ll have money available without having to borrow from friends/family or put yourself further into debt by taking out a loan with high interest rates like payday loans.*
Stop spending money on things you don’t need.
Stop spending money on things you don’t need.
It’s not easy, but it’s one of the most important steps in making a career change. If you’re like most people, you probably have some debt and may be struggling to pay off student loans or credit cards. That’s why it’s so important to stop spending money on things that aren’t important to us–like going out to eat every weekend or buying clothes we don’t even wear anymore (or ever).
Start saving for retirement now.
You should start saving for retirement as soon as possible. The earlier you begin, the more time your money has to grow and compound, which means that even a small amount will grow into something substantial over time.
In addition to contributing to your employer’s 401(k) plan, there are other ways to save for retirement:
- Open an IRA at an online brokerage such as Fidelity or Schwab (and read our guide on how IRAs work).
- Make automatic monthly deposits from your checking account into a savings account dedicated solely for this purpose–and don’t touch it!
- If you live in Australia, you will probably be familiar with Super. So, it’s advisable that you get superannuation advice in Australia, and leverage the max benefits of your Super.
Learn about how to invest money.
Investing is a long-term process. You have to be patient and wait for your investments to grow, but when they do, it can be very rewarding. If you’re interested in investing money as part of your career change strategy, here are some things that might help:
- Learn about how to invest money by talking with a financial planner or reading books on the subject.
- Investing is not just saving–it’s putting your money to work so that it generates returns over time instead of just sitting there unused (or earning interest).
- You want an investment strategy that allows you flexibility while still providing security against market downturns and inflation over time–this is called “diversification.”
Don’t quit your day job.
The first step to making a career change is to make sure you have enough money coming in to support yourself. And that’s not just about being able to pay rent and buy groceries–it’s also about having enough money left over for savings and investments, so that you can retire comfortably someday.
So before quitting your job, consider these questions:
- Do I have another source of income?
- Can I make ends meet if my side hustle isn’t bringing in any income right now?
Be patient with yourself.
If you’re thinking about making a career change, the first thing to do is be patient with yourself. It can take time to find a new job or start a business, so don’t rush into anything until you’ve given yourself enough time to explore all of your options and figure out what would be right for you.
It’s also important not to make any rash decisions that could end up hurting your finances in the long run–like quitting your job without having another lined up yet! Or deciding that starting an Etsy shop is going to make all those bills disappear overnight (it won’t). If at any point during this process something doesn’t feel right or seems off-base, trust those instincts and ask someone else for help–whether it’s family members or friends who have been through similar experiences before; an advisor at work; even just Google searches about how other people have succeeded doing what it takes for them personally so far down their own paths toward success stories like theirs.”
Build up an emergency fund, even if it’s small.
An emergency fund is the most important financial tool you can have. It’s what will keep you from going into debt when something unexpected happens, like losing your job or being hit with a medical bill.
An emergency fund should be made up of three months’ worth of living expenses–so if your rent and bills total $2000 per month, then your emergency fund should be $6,000 (or more). That way if something happens and no money comes in for three months, it won’t cause any problems for you or anyone else involved in paying those bills.
You don’t have to start with much: even just a few hundred dollars will help build up some security if something goes wrong later on down the line. The key here is patience; building up an emergency fund takes time! But once it’s done… well… then all those scary situations won’t seem quite so scary anymore
Consider a personal finance course or reading group.
To get started, you can consider taking a personal finance course or joining a reading group. A mentor can also be helpful for career-change advice; if you don’t have one, think about hiring a coach who specializes in career transitions.
If you’re interested in learning more about personal finance and investing strategies, consider reading books on these topics (and taking notes!). There are many options out there that won’t cost much money at all–for example:
- The Complete Idiot’s Guide to Personal Finance by Steven J. Anderson (Alpha Books)
- The Wealthy Barber Returns by David Chilton
Learn how to invest, even if you don’t have much money to do it with right now.
If you’re thinking of making a career change, investing is one of the most important things to do. It’s not just for rich people and it doesn’t have to be complicated–you can start small and build up over time.
There are many ways to invest your money: mutual funds, ETFs (exchange-traded funds), or stocks are all examples of investments that will help grow your savings over time if done correctly. If this sounds like something that interests you but seems too complicated or expensive at first glance, don’t let it scare you off! There are plenty of resources online where beginners can learn about how investing works without having much experience under their belts yet–and once they get started with some basic knowledge about how markets work and what kinds of companies make good investments according to experts’ opinions (which may differ from yours), then those same experts will help guide them through any decisions going forward based on those principles instead of relying solely on instinct alone.”
Focus on the long term, not the short term.
When you’re making a career change, it’s easy to get caught up in the short term. You might be worried about how you’re going to pay this month’s bills, or whether or not your kids will have enough money for school. But these concerns shouldn’t overshadow your long term goals–and they definitely shouldn’t be used as an excuse for making bad financial decisions.
When it comes down to it, focus on the big picture: what does success look like? Are there milestones along the way that could help keep you motivated and moving forward? Make sure those milestones are measurable too (for example: “I want $20k in savings by next year” versus “I want more money”). That way when things get tough or confusing along the way, at least there will be something tangible keeping them on track.*
Even if you want to make a career change, don’t skimp on the basics for your finances
Even if you’re ready for a career change, don’t skimp on the basics for your finances.
- Don’t spend money on things you don’t need. You might be tempted to buy a new car or go out for fancy dinners every night–but this is not going to help your situation and will likely make it worse.
- Don’t buy a house if possible. This can be difficult advice if you live in an area where housing prices are high and renting is unattainable, but consider moving somewhere cheaper until after the career transition has been made (or even just renting). The extra cash flow could help with savings, which will come in handy when making big changes later on in life!
- Keep working at least part time while learning about investing options like ETFs or index funds so that when retirement does come around again someday soon enough down the road there won’t be any problems getting back into work mode once more because now there’ll be plenty of cash flow coming from somewhere else besides just one source only (like say…a job).
Conclusion
If you want to make a career change, it’s important not to skimp on the basics of your financial life. Even if you don’t have much money right now or aren’t sure how much money you’ll need in the future, there are still some things that can be done today that will make tomorrow easier. You don’t have to quit your job right away; just start saving as much as possible so that when that day comes, at least some of those expenses won’t feel like such an overwhelming burden anymore!