How to reduce career change risk in 6 simple steps

Feb 14, 2019

Do you dream of changing careers or starting a business, but have a lot at risk? You’re anxious about leaving a secure income. Or, you have big financial and other life commitments and time out is hard.

It’s wise to consider your financial responsibilities, minimise risks and make a plan. Yet too often, money fears bring our career transition plans to a complete standstill.

And the belief “I can’t afford to make a career change” leads us to abandon our dream role before we ever get started.

Below, I provide some practical tips to help you plan ahead. These recommendations are based on my career changes and experience supporting many clients through their career transitions. Of course, be sure to seek independent financial advice before making any career change.

Follow these 6 steps to minimise money fears and de-risk your next career move.

STEP 1 – KNOW YOUR NUMBER

How much money do you need to cover your essential personal living expenses? Here, we’re talking mortgage repayments or rent, food, utilities, transport. Simply the basics you need to survive.

List out all your essential monthly expenses. Work out your total living costs for the year. This final figure is the number you need to know. The minimum budget required to meet your basic annual personal living costs.

Consider – have you got enough money to cover your annual living costs – or an alternative way to fund yourself?

STEP 2 – MAKE ADJUSTMENTS

Create a budget. If you’re unclear about your spending habits, review your recent bank statements to track where your money is going.

Next, ask yourself – where can you eradicate unnecessary spending or reduce your expenses further?

Cutting one expensive meal out per month could be a short-term sacrifice to get you closer to the career you desire. Consider re-negotiating any larger annual expenses, such as health or car insurance payments. Make adjustments and update your budget accordingly.

Finally, test out living on your new budget (or less) while you still have the security of your regular salary.

STEP 3 – CALCULATE CAREER CHANGE COSTS

How much money do you need to fund your career change? If you’re switching careers, consider any salary reductions or education expenses required to requalify. Add your annual living expenses. And if you’re starting a business, include basic business costs, bearing in mind the time it might take to begin earning a profit.

Do you have the savings required to cover these expenses, gaps or any time off?

Start saving while you’re still employed. Set your target and put aside a regular amount of savings each payday. Reward yourself as you reach small goals along the way. Stay motivated by realising you’re working towards making your dream a reality!

STEP 4 – CONSIDER YOUR SITUATION & RISK PROFILE

Your personal situation, lifestyle commitments and appetite for risk all determine how quickly you can embark on your career transition.

If you’re fairly risk-averse, you might want to save the equivalent of your annual salary before leaving. Or, stretch out your career change over multiple moves, working through a series of roles that get you closer to your ideal career.

With a higher tolerance for risk, you may happily take a reasonable pay cut to immediately get started in your dream career. Or, perhaps you’re prepared to take a career break between roles and quit without another job to go to.

Weigh up your options, consider your commitments and tolerance for risk and make informed choices accordingly.

STEP 5 – MANAGE YOUR MIND

Will I be able to sustain my current lifestyle? Can I even afford to live? You’ve now got a solid financial plan in place. But, your money worries and fears of financial ruin may see those plans come crashing down!

Fears and limiting beliefs present any time we’re trying to make major, permanent changes in our lives. The secret to overcoming them? Learning how to manage your mind.

Check out my recent article on overcoming one of the greatest career change fears to find out how.

STEP 6 – GET STARTED NOW

The best time to get started on your career change is when you’re still employed. Consider starting a side hustle before you leave your job. Freelancing or volunteering allows you to test out ideas and gain experience in the industry you want to move into.

Evaluate your exit strategy, for example, negotiating an extended notice period, taking a career break or long service leave. You could also reduce your hours to part-time or look at consulting arrangements with your current employer. Maintaining a regular income as you transition into your new career or business, is a smart way to reduce risk.

Final thoughts…

Moving out of a career you’ve invested years of time, money and energy into can be an agonising decision. And money fears can certainly hold you back. By considering the practicalities of your career change, such as how you’ll finance your transition, you’ll alleviate these fears, minimise risks and gain the confidence to act.

These steps have successfully supported me through two career changes and have helped many of my clients de-risk their career moves. I hope they assist you too!

 

Need further support to make the leap into your own business? It’s tough to transition from your corporate job when you don’t know how or where to start!

Get the complete step-by-step framework to launch your dream business. It builds on the steps outlined above + dives a whole lot deeper! Get it NOW.

Stacey Back is a Career Strategist, Leadership Coach + Founder of Profile Careers. She helps high-achieving corporate leaders and business owners at a mid-career crossroads find the work that lights them up, increase their income, impact and create a career + life on their terms.

Stacey also supports professionals to transition from their corporate job into their own consulting business. She works virtually with individuals based across the globe.