Transitions: Changing Careers or Starting a Business
What is the Money Date? A weekly time to check in. 3 things we review and update: 1. Spending 2. Earning 3. Savings
Change is awesome. Change is exciting. Gone are the days when people are stuck doing one particular job for all their lives. Embrace the change, take advantage of it.
I want you to be ready financially. Because it’s not going to be easy, and money is where most of us are going to fail if we don’t have it in order.
Here are my tips:
- Build a cushion: The good old emergency reserves. Call it a Freedom Fund. A general emergency fund is 3 to 6 month of living expenses. but if you’re planning a career change, I’d suggest at least 12 months’ worth, to help you cover costs without having to take a job you don’t actually want.
- Slash your budget: Map out your budget. What is absolutely essential? Don’t forget large ticket items. Then find areas where you can cut. Be ruthless: I was still single and supporting only myself when I didn’t have a paycheck, but I had to learn to say no to pricey social outings, travel, and dinners out. Parents have even greater financial responsibilities to cover.
- Plan your future: If you are not starting your own business, use glassdoor.com to figure out what kind of income you can make. Remember that salary is not the only part of the compensation package. What benefits are you going to get? What additional expenses will you have to account for? Will you have to move? What if you can’t make as much as you did before?
- Keep on Saving: Life keeps on going, even in the transition. Do don’t stop setting up money for long-term. Time is on your side. Even if you don’t have a retirement plan anymore, you can contribute to an IRA.