6 Tips to Manage Your Money During a Career Transition

If you, too, have decided to make your career transition and trying to figure out how to manage your finances, read this article to know 6 tips to manage funds during a career transition:

1. Have realistic expectations about the potential income:

If you have decided to take a chance with your passion or new industry, you must keep realistic expectations about the hard work you need to put in and the income you will be receiving. If you are planning to join a company, you should check online about the monetary and non-monetary benefits that the company provides to the employees. In case you are not getting a clear idea through online research, it is best to check directly with the company's Human Resource Department. Getting this information before joining the company will ensure you make an informed decision.

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Once you know how much earnings you need to meet your expenses and how much the potential employer can offer you, you can make your decision considering your financial situation.

2. Start managing with your new salary from now:

If your new salary is significantly lower than your current salary, you might not be able to continue the same lifestyle unless you have extravagant savings. To ensure you do not have to suffer with the pay cut, it is advisable to re-adjust your budget according to the new pay check. However, making sudden lifestyle changes could be challenging when you are habituated to the same lifestyle for a long time. Hence, it is advisable to practice living on your new salary from now itself.

Apart from the salary, your current job might be providing you with certain benefits like a pick-up and drop facility, family health insurance cover, life insurance cover, reimbursement of mobile bills, etc. However, your new employer might not provide all the benefits. Therefore, you should check with the employer about what all facilities are provided and start working on the things you are required to do on your own. For example, if your new employer does not offer a family health insurance cover, you should buy sufficient health insurance cover for your family without any delay. Similarly, if your new employer does not provide a pick-up and drop facility, it is better to practice travelling on your own to understand how efficiently you can manage it.

3. Make a plan for relocation expenses:

If your new job requires you to relocate to a new place, it is advisable to make a plan for the relocation expenses now itself. The relocation expenses can be quite high, especially in metro cities. If your new job offers relocation expenses, it is better to get the details of all expenses covered in advance and plan accordingly. Otherwise, you will have to use your savings to pay these expenses. Hence, make sure you consider this cost when making a career transition.

4. Consider starting a side hustle:

If the pay cut is substantially lower to meet your future expenses and you do not want to miss the opportunity to work in your preferred industry/company, you can consider doing a side hustle that will help you with some additional income to meet your expenses. If you are physically and mentally ready, endless opportunities are awaiting you, such as freelancing and monetising your hobby. If you are planning on your own venture, it may take more time than expected for you to earn decent returns. In such cases, apart from working on your dream project, you may consider working part-time for a steady income.

5. Have a contingency plan:

Working on a start-up or in a new industry is more challenging than it may sound. Setting up your own business requires huge capital and time investments. There could be situations when you face a cash crunch or losses for consecutive months. Similarly, if you are working in a start-up or less explored industry, your employer may not be able to pay your checks timely. However, a financial emergency may come unannounced. Therefore, it is crucial to have a contingency plan in place to take care of your emergency expenses.

6. Try to make yourself debt-free:

When starting a new career that might not provide a steady income, it makes sense to enter into this new phase debt-free. However, if your existing debt is huge, you might not be able to clear the entire loan in a short duration. Hence, to make sure you smoothly manage finances during your career transition, it is advisable to clear off as much debt as you can. The reduced debt burden will bring peace of mind when you are already stressed about the new change in life.

To conclude:

A career transition may sound like a risky decision, but if it is well thought out, it can prove to be one of the best decisions of your life. Before making a move, make sure you make a proper financial plan to take care of your future financial needs without facing a cash crunch. Apart from taking care of the financial aspect, it is also advisable to start building your network in the same industry you are entering. The expertise and emotional support you receive from your family, friends, and experts from the same industry are crucial to build confidence in a new field.

Warm Regards,
Ketki Jadhav
Content Writer