Organize your Finances before Career Change
Building a career takes time, and the rewards include recognition within your chosen industry, advancements within the company, monetary bonuses and a higher degree of employment stability. Other benefits of an established career include profitable retirement plans, health insurance benefits and a certain expectation of standard increases in salary.
If you're considering changing careers, you should take into account that many of these rewards and benefits will not follow you into that new career. You bring your own life experience, but little else.
Retirement PlansMany retirement plans are now specific to the employee, and you can, if fully invested in the plan, roll it over to your new company or convert it to an individual retirement plan through your bank. Before leaving your current position, visit your bank and speak with an investment specialist about rolling your retirement fund over to a tax-exempt plan.
Your change of career may be one in which you start your own business or act as an independent contractor. Putting your current retirement plan into an independent account before leaving your current position ensures the money you've worked to save is safe, no matter what happens with your new career.
SavingsA career change usually means a cut in pay, whether you are self-employed or an employee. Assess your monthly costs and determine if your new income can cover your living expenses without you having to access your savings. If not, make a plan to reduce your living expenses and set a limit as to how much of your savings you can use to cover expenses should your income fall short.
Health InsuranceThough there are interim health insurance plans for those who are in employment transitions, these are costly and may prove too expensive for your new budget. Research options for independent health insurance coverage from well-established companies. Larger companies often provide affordable, minimal coverage plans for both individuals and families, but you will carry the entire cost. Build this cost into your new budget on your reduced income.
Career CostsA change of career may involve obtaining new certification or a degree. Assess the costs of classes or training, of going back to school and of possibly having to fulfill an internship in order to qualify for a position with a company. Research government programs and scholarships for financial aid aimed at those retraining for new careers. If you must bear the cost, consider taking the classes or training while still employed, providing it is not a conflict of interest. If you maintain your current income while training for your new career, you may reduce the financial risk to you and your family.
