Changing careers: What to consider

 


Thinking through a career change

People change careers for a variety of reasons. Maybe your career goals or values have changed. Maybe you have developed new skills or interests and you want to find a way to weave them into your career. Maybe you’ve had a big life change outside of work, like a movie or a new child, and you want your hours to fit in better with your new lifestyle. Changing careers can be exciting, but it can also be daunting, especially if it could mean changes for your finances. As you navigate the process of changing careers, here are a few tips to keep in mind.

Do your research

If you’re curious about changing careers, it’s a good idea to zoom out and learn as much as you can about potential paths you could take. You may have ideas that aren’t entirely accurate about what it would feel like to work in your dream industry. Conversely, there might be industries out there that you don’t know about but would love to work in.

 

If you know people working in a field you are interested in, ask them if they would have time for a quick informational interview or coffee. LinkedIn can also be a great way to find people who can tell you more about a given career path. Even if you don’t know a potential contact very well, you might be surprised by how generous people are with their time and how willing they are to talk about their work. Remember to always pay it forward if someone asks to connect with you about career advice.

Know your worth

Once you have done your research and applied for jobs, you may find yourself in a position to negotiate your salary. When changing careers, it can sometimes be difficult to know what is normal to be paid in a new role. Do your research and reach out to trusted people so that you have an idea of how much you think you should be paid.

 

Although you might be in the applicant pool for a new job with people who have more years of experience in a given field, you should have confidence in the skills you have developed in your old career path. Companies are often eager for a fresh perspective, so coming from a different industry can be seen as a positive.

Dealing with your 401(k) when you change jobs

If you decide to leave a job that provided you with a 401(k) account, you will need to decide what to do with the account as you transition to your new job. One option is to leave your account as-is if your previous job will let you maintain your account and you were happy with the investment options the plan provided for you. Another option is to move your old 401(k) into your new employer’s plan. It’s a good idea to compare fees and investment options for 401(k) plan through your old employer and your new employer. Finally, you could roll your old 401(k) into an IRA. This kind of tax-advantaged account could give you a wider range of investment opportunities, lower fees, and more control over your savings. There are several different kinds of IRAs, such as Roth IRAs and traditional IRAs.

Update your budget

As you make the transition to a new career, think about how this move will affect your finances as a whole. If you are transitioning from a career in investment banking to teaching, you will likely have less money coming in. In order to make sure you stay in a good place financially, you could think about downsizing your living space or living in a less expensive place. You can also think about smaller lifestyle changes, like bringing your lunch to work instead of buying it, or biking to work instead of driving and spending money on gas.

 

Conversely, if you transition to a career that will pay you more than you were making before, you may be able to budget more money for housing, transportation, and other expenses. However, it is important to avoid what is known as lifestyle creep. This term applies to situations when people start to make more money but begin living more expensive lifestyles than what makes sense for their finances.

 

This is a good time to meet with an advisor to review your portfolio in light of your new position. Perhaps you can now allocate more money to your investment portfolio or your retirement savings account. Remember to review the risks of your investments before committing more capital.

 

Changing careers can be rewarding and fun. With some research and planning, you can stay in a good place financially no matter where your career path takes you.

Post a Comment

Previous Post Next Post