Rethinking Your Career? Consider These 5 Things Before Making a Move,
1) Thoughtfully research where you want to go—and why It’s one thing to be dissatisfied or want to make a change; it’s another to know what will make you happier. Maybe you want to be more independent, or have more time with the kids, or you’re just tired of the commute. What type of job would get you where you want to go? Do you want to start your own business? Become a teacher? Get into high tech? Thoughtfully look at your natural talents, current skills, and temperament. Dig into the details of any new position. Transitioning to a new job or career takes more than money. It takes an investment of time and energy and commitment. Know what you’re getting into.
2) Make sure your family understands what it means financially for them Finding a new job may be personal, but if you have a spouse, partner or family, they also have to be part of the decision. It’s important that all of you understand both the short- and long-term financial implications. How will this affect your daily spending? Your long-term goals like retirement or a child’s education? Can your spouse or partner pick up the slack during this transition? If you have older kids, will they understand they too may have to give up some things or chip in more for things they want? Talk openly and honestly about the pluses and minuses of making a change and how it will impact your family finances.
3) Consider the benefits and perks you’re leaving behind Making a change always involves a certain number of tradeoffs. Depending on the position you’re leaving, they could be significant. Employee benefits can encompass everything from health insurance and matching retirement contributions to paid time off and childcare subsidies. And don’t forget about things like stock options and restricted stocks. You may be walking away from good money! Can you negotiate additional cash compensation if your next job doesn’t have them? It’s easy to take such perks for granted—until you don’t have them.
4) Do some upfront planning If you’re looking for a new job in your current field, making a change may be pretty straightforward. But if you want to do something completely different like open a café, get a teaching certificate or go to a computer programming boot camp, it’s going to take time and money—and upfront planning. What kind of new training will you need, and how long it will take? What’s the competition for your new business and how much capital do you need to get started? Are there local job opportunities in the field you’re considering or will you have to relocate? Best to map things out in advance.
5) Clear the financial obstacles You may be emotionally ready to make your move, but be sure to give yourself a smooth financial path before you do. Here’s what I recommend:
- Shore up your savings—Building your emergency fund is key. I usually suggest having enough cash to cover 3 to 6 months essential expenses. When making a job change, more is better. The bigger your savings, the longer the time you’ll have to pursue your new goal.
- Pay down debts—If you’re carrying credit card balances, try to bring those close to zero to free up the cash you’ll need for necessities during your transition. Make sure you can cover any essential recurring payments that may have been on hold like mortgage, rent or student loans.
- Rethink your budget—Wants and non-essentials may need to take a backseat to needs while you’re in transition. Take a good look at where you can cut back short term.
- Review your insurance—This is crucial, especially health insurance. If you’ve been covered through work, maybe you can switch to a spouse’s policy. If not, look into COBRA and plans through the ACA at healthcare.gov. Whatever you do, make sure you and your family have continued coverage. If you’ve also had life or disability insurance through your employer, check with your HR department about portability. Look into individual coverage to avoid any gaps.
Source: The Schwab Centre for Financial Research which is a division of Charles Schwab & Co., Inc.
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