Managing the Financial Stress of Career Change

The idea of moving from work you no longer want to be doing to your dream career can be invigorating. Once you have made the shift, you may very well be more content in your life. However, the process of changing a career can take time and is often accompanied by the realities of financial stress.

Whether you are moving from employment to self-employment (or vice versa), or are wanting to change the direction of your career entirely, you may be asking yourself things like:

• Will I be earning less money?
• What about the cost and time involved in reskilling myself or building something new?
• Will a career change affect my financial stability?
• Will I be able to maintain my current lifestyle or even just cover my expenses?
• Will I chew through my savings and not be able to replenish them?
• Will I be able to manage the financial stress of career change?

As someone who is on their sixth major career change over a 30-year career, I am all too familiar with the financial stressors that can come with the territory, and they are very real.

The best way to manage your money worries when shifting your career is to have a solid financial plan in place and then execute on that plan.

Don’t make rash decisions, such as quitting your job or selling your business before you know what your financial plan is, or you may end up scrabbling for a job you don’t want just to pay the bills. ?

A good plan will likely be a combination of more than one of the below money-management techniques, and will require dedication and a strong desire to make the career change for it to work.

Build a realistic financial cushion

Before I moved from a salaried job to owning my own business, I made sure I had enough money in the bank from savings and investments to last me for at least six months. Given that I was paying my own expenses and bootstrapping my business, I grossly miscalculated.

Similarly, when I wanted to move back into employment and a job I really loved, I needed to reskill myself. This required a new qualification which came at a cost and took a few months to complete, not to mention the time it can take to find a new job.

While most people say that you need six-months of money in the bank, I would recommend at least a twelve-month cushion, or alternatively have a six-month cushion but with other ways to supplement your income.

Change always takes longer than you think and cannot happen successfully when you are feeling stressed about finances.

Cut down on your living expenses

A career change comes with risk. Reduce your risk by reducing your living expenses before you embark on your new journey.

Before commencing my latest career change, I made a list of everything I spend in a month and immediately started cutting down on the things I didn’t need. There were a handful of monthly subscriptions that were nice to have but I could do without, such as music, TV and food apps. I moved from a contract phone to a prepaid one. I looked at my monthly grocery bill and got creative to bring it down and keep it low by shopping at cheaper supermarkets, cooking more instead of ordering in and by using loyalty discount cards.

Do you perhaps need to stay in a cheaper apartment, move in with relatives or reconsider the area in which you live during the time you make your career change? Are there ways to re-adjust your mortgage re-payments or other big financial commitments? ?Seek financial advice from financial professionals if necessary.

It may seem like a lot, but if you are serious about changing your life in the long term, you may need to make these sacrifices in the short term.

Ask for family support

My first major career change was from training company owner to entrepreneurship author and coach. It was a big dream of mine to write a book and help others succeed in their businesses, but the target market I was moving into was completely different and required time to build a following and brand credibility.

I could not have made the shift without the support of a family member who paid the rent while I took six months to write and publish my book, which gave me the credibility I needed to land coaching clients.

If you do have family who are in the position to help and who want to help, don’t be shy to have an open conversation with them about any short-term financial support you need. You can repay the favour when they need your financial or domestic support in turn.

Take a part-time job

A part-time job is great way to ensure you have a steady income stream, while giving you the flexibility to spend time on learning new skills or to work on your new career path.

A colleague of mine was highly qualified, but was not ashamed to take a part-time job serving customers in a retail outlet to cover her expenses while she worked on practicing new skills that she needed to make her career change.

In fact, having a part-time job that is less taxing than the work that needs to be done to develop your new career can be a boon, as it means less likelihood of burnout while you juggle your income source and the things you need to learn and do to achieve your new career goals.

Re-organize your working hours

If your current job allows, consider reorganizing your working hours to accommodate your career change efforts.

This might mean negotiating flexible hours, working remotely, or even reducing your hours to part-time. The extra time can be used to study, attend workshops, or work on building your new career.

With many companies being more accepting of a four-day work week, a friend of mine used the extra day to focus on completing her continuous professional development course, which boosted her CV in the direction she wanted to take her career.

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Learn while you earn

If possible, try to learn new skills at the same time as being employed in your current job. This approach allows you to maintain a steady income while preparing for your new career. Many online courses and certifications can be completed part-time, making it easier to balance work and study. Websites like Coursera, Udemy, and LinkedIn Learning offer a wide range of courses that can help you upskill.

Another approach to learning while earning is to apply to do a paid internship. While paid internships offer minimum wage and the skills required such as business development, content creation or marketing may not be exactly in line with your chosen career path, they can be a way for you to hone your soft skills and add work experience to your CV. If you impress, an internship may potentially be an ‘in’ and a way for you build a relationship with the hosting company. Companies like the The Grad Soc offer paid internships suitable for graduates and career changers, or you can apply directly to internships designed for graduates and career changers offered by large tech and consulting companies.

If you are willing and able to commit at least four years to studying while earning less, but want the opportunity for a virtually guaranteed new career usually in something tech or project orientated, try applying for a degree-based apprenticeship, offered by many universities in partnership with employer organisations.

Join Freelancing Platforms and Gig on the Side

Freelancing can be a viable option to generate income while you transition to a new career. It offers flexibility and the opportunity to work on diverse projects, which can also help you build a portfolio in your new field. Platforms like Upwork, Fiverr, and Freelancer provide numerous opportunities to find freelance work that matches your skills.

The only caveat with gigging is that you do need to build a reputation and testimonial base to land a lot of gigs. To minimize the risk of splitting your time between building a gigging career and a full-time career of your choosing, take on gigs that align to the new career path you are pursuing.

Conclusion

Changing careers can be a daunting yet rewarding experience. By taking proactive steps to manage financial stress, you can make the transition smoother and more manageable. Remember, it’s essential to have a plan, stay flexible, and seek support when needed. With careful planning and determination, you can successfully navigate the financial challenges of a career change and move closer to your dream career.

At ELE Hub, we are here to support you with your career and employability. Attend our upcoming event ‘Help for Career Changers’ where you will have the opportunity to ask top experts your questions and connect to practical experience opportunities.