If you change one career for another that pays less, or even more, you must be careful about the effects of this change on your pockets. Here are some quick tips to help you keep your mind and your money “right,” whenever you make a transition!
Identify your new margins
When you change, or plan to change, careers, it is important that you have a realistic idea of your “margins.” Will you be making more money than the average employee in your field, in that position, in your locale, with your credentials? Or will you be making less, or will you be making about the same? When you identify these margins, figure out whether you can sustain the new career, and still be financially safe.
Create expense pools
To help you stay “financially safe” in your new career, after you assess your margins, you need to create expense pools. Figure out if you can create a don’t-touch pool for your savings, a risk pool for your spending money on your dreams as you embark upon a new career, a living and expenses pool, and a miscellaneous pool. These pools will serve as your pillows in case you fall from plans to embark on your new career.
Have a longevity plan
If you’re going to switch from being a news anchor, for example, to being a doctor, or a dancer, have a timeline or framework for how you want to spend your time in your new career. Are you thinking five years, with the first year as x and the second year as y, or are you thinking 10 years or more? You need to have a longevity plan.