Whether you’re worried about your employment prospects or wanting to put a different set of personal skills to work for you, changing careers can be an exhilarating — or scary — step towards an unknown future. Fortunately, you can take steps to prepare yourself financially to help make your career shift less stressful. Here are some tips to help you breathe easier about your bank account as you’re preparing to embark on a new career.
If you have the option, begin thinking about your new career while you’re still working in your old one. Some people, unfortunately, may experience a forced career change. But if you start pursuing a new career while employed, you’ll look more attractive to firms than competitors who are unemployed. Moreover, having a source of income will give you some financial security while you’re contemplating your next steps.
Make sure your emergency fund can cover a significant period of time. It may be a while before you find the job you want in your new field, leaving you underpaid or even unemployed. (In June 2011, more than two-fifths of those unemployed had been unemployed for 27 weeks, or more.) Ideally, you want to maintain an emergency fund to cover at least a couple months’ worth of rent — up to six months, if you can afford it. Should your car break down or a medical emergency crop up while you’re making a career change, it will be a relief to have available cash in the bank to cover the situation.
Don’t let your health insurance coverage lapse. You may be able to extend your health insurance from your previous job via COBRAlegislation. You might also research individually-held plan options. Keep in mind that not being covered leaves you more vulnerable to later denials for pre-existing conditions. You will be more protected by staying covered at whatever level you can afford while pursuing opportunities in your new career.
Examine your salary expectations and living expenses. You can research salary information via such Web sites as Salary.com. This is especially important if your new career traditionally pays less than your current career, or if you find it necessary to move. For example, if you’ve traditionally worked as an accountant, but your dream is to move to New York City and become a Broadway actor or work in publishing, you can expect a severe salary cut at first — not to mention greater living expenses. You may need to adjust your monthly expenses to prepare for the change and give yourself more flexibility with your new aspirations.
Research training resources. Will changing careers mean going back to school? If so, you can investigate the kinds of financial resources you can draw upon to finance your education or training. You may be eligible for scholarships, student loans, or state-sponsored financial breaks. You’ll also want to know the tuition and fees you can expect to pay, and how long it will take you to complete the program you are interested in pursuing.
Following a new career path can be a daunting proposition, but perhaps made less so with some advance planning. Knowing how you will pay for your living until you can really MAKE a living at a brand-new pursuit is a great way to ensure your new life starts off successfully.
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