The decision to change careers can be a difficult one to reach. You have likely found yourself wondering is the new field where I want to be? Is it the right time? What are the financial ramifications? How will it affect my personal life?
Am I comfortable starting over and what if it doesn't work out? It's impossible to know the absolute answer to all of the questions before making the leap, but a little planning can go a long way toward making the transition a smooth one.
Economic considerations: Before making the jump into a new career it's a good idea to have a solid understanding of the job/market prospects in the field, especially relating to where you want to live. Friends or family in the field may be able to give you a better idea. Another great option is to find a business mentor in the field to provide these answers and help guide you in your new endeavor.
Education/Training considerations: What are the education, training, and licensing requirements for the new career? Depending on the requirements, you may be able to obtain some or all of these before completely making the jump to a new career. With night and online classes so readily available it may be possible to continue working while acquiring the needed education or licenses.
Financial considerations: This area can vary widely based on the specifics of your situation and the requirements of the new career. It can also be one of the biggest factors determining how smoothly the transition goes. In no particular order:
Understand the cost of new education/training/licensing as part of the transition.
Understand the typical pay structure in the new field. Will income change or the way you are compensated?
Be realistic and create a budget. Also a good time to consider reducing expenses and outstanding debt.
Establish an emergency fund. This is very important so that unforeseen financial expenses don't prematurely derail you in the career change process.
With the cost of healthcare these days, the availability of benefits is important as well.
Finally, avoid the temptation to use your retirement accounts to finance the transition. Your long-term retirement goals are very important as well and using the funds prematurely can be costly.
The process of making a career change can be overwhelming, but a little planning can make it much easier. If the new career is where you want to be, it could be well worth the effort.
Your Turn: Did we miss anything? What other considerations did you have when you changed careers? Let us know in the comment section below.
Randy A. Schaller, CFP®
Photo credit: Ben Chaney
Return to the Smart401k Blog homepage>>
Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at Smart401k.com.