Realizing your career goals aren’t in line with the career path you’re on now? Don’t be afraid to make a career change, even if it’s dramatic.
In an economic environment where we generally have more open jobs available than job seekers to fill them, job quality and worker satisfaction continue to become more important than ever. Unfortunately, many workers are in less-than-satisfactory jobs.
Making a break from your current career path and starting anew in your dream job — whether for more money, satisfaction, or work-life balance — is intimidating. And it feels financially risky. A little preparation and few smart money moves can set you up for a smooth and successful transition.
9 Money Moves to Help You Make a Career Change
A job search could feel like a full-time job in itself. Researching, interviewing, volunteering, interning, networking, and studying all take a lot of time.
If you have bills to pay in the meantime, you might have to make money while you look for your dream job.
A career transition is a lot easier if you have a comfortable financial cushion. If you’re leaving your current job, prepare for a change over time through some strategic financial planning to stay on top of your bills while investing time into a career search.
1. Don’t Quit Your Day Job
If you already work, you don’t have to quit your job as soon as you decide you’re ready for a career change. Keep your day job in the meantime to keep money coming in, and think of your career hunt like a side hustle or hobby.
Your day job can also prove a valuable resource to help you make a career transition. Lean on friendly colleagues and coworkers who can help you build up your skills while you’re in your current position.
Ask your manager and coworkers for as much feedback as they’ll offer. You can even discover your strengths through assessments like CliftonStrengths and Meyers-Briggs — especially if your employer is willing to foot the bill. You might also be able to take advantage of training programs or learning stipends at your current job.
Even if your company doesn’t provide formal training, you can build skills by taking initiative and accepting new responsibilities within your current role. Taking on responsibilities that would normally fall outside of the scope of your job could be beneficial if they help you hone skills you’ll use in your next career.
2. Budget and Cut Living Expenses
An easy way to reduce how much money you have to earn is to spend less. By budgeting intentionally and reducing your monthly expenses, you’ll save money and cut back on how much you have to work to cover them — so you don’t have to rely on loans or credit card debt to get by.
Lower expenses could give you the flexibility to cut back hours at your current job or leave it altogether and take on part-time work that gives you more freedom to pursue your next career.
Assess these common lifestyle expenses you might be sinking money into to cut your monthly expenses:
- Soda and Other Sweetened Beverages. Americans spend an average of $2,238.80 on these treats — not counting their impact on our health care costs.
- Bottled Water. Bottled water costs 2,000 times more than drinking tap water. Could you switch to a filter or use a watercooler service to enjoy clean water without the high cost?
- Food Waste. The average annual cost of wasted food at home is about $1,500, according to CNBC — meaning the average American household throws away almost one-third of its food. Meal planning, food prep, and creative uses for old produce could significantly reduce your household food waste and costs.
- Lunches Out. Lunch costs averaged $11 per meal per American worker. By preparing your own lunch at home, you could save $1,976 per year.
- Coffee Shop Drinks. A Starbucks latte runs about 13 times the cost of a cup of Starbucks coffee brewed at home. Drink coffee provided at the office, and you could save 100% of your caffeine budget — nearly $900 per year if your daily drink of choice is a latte.
- Cable TV. Cutting the cord could save you an average of $1,274.40 per year. Put a fraction of that toward a streaming service, and you’ll enjoy savings and maintain easy access to entertainment.
These small changes can add up to surprisingly big savings. But if you really want to make a dent in your monthly expenses fast, consider bigger changes, like downsizing your home or vehicle, moving to a less expensive area, or teaming with another family to exchange free child care.
3. Liquidate Some Assets
To have extra cash on hand, liquidate (sell) some of your assets.
That could mean selling big-ticket items — like your home, vehicle, or furniture — and replacing them with lower-cost alternatives. Or it could mean selling off stocks in an investment portfolio to move the money into a bank account you can access quickly and easily when you need it.
Similarly, you could withdraw cash from your 401(k) or IRA or other retirement accounts, but that’s likely to come with fees and taxes if you’re younger than 59 1/2.
Before you pull cash from investments, retirement accounts, or a life insurance plan, talk with a financial advisor or financial planner to figure out the best moves to support your career change while preserving your financial future.
4. Build Your Savings and Emergency Fund
Start building your savings account and emergency fund — if you haven’t already — as soon as you decide to change careers.
A hefty amount in savings could help you afford to cut back hours at work and survive on a lower income or take a few months off entirely. Grow your savings easily by squirreling away a little of each paycheck through direct deposit or automated savings apps.
5. Seek Funding
If your exit plan includes moving into self-employment or scaling up a side hustle, seek grants or startup funding that supports small businesses.
Most private small-business grants require your business to show some history of success and revenue, but government-backed grants for new businesses exist to support entrepreneurship in underserved communities. Keep an eye out for this type of opportunity.
6. Arrange for Health Insurance
If you or your family members rely on health insurance through your employer, arrange for health insurance through your spouse’s plan or the health care marketplace before leaving your job.
You may have access to COBRA coverage for a period after leaving your job, but check the marketplace for your options anyway.
Under COBRA coverage, you have to cover premium costs your employer has been paying. Depending on the company’s plan, that could be a lot more expensive than another plan, especially if you qualify for tax credits to reduce the cost.
7. Retire Early
If you don’t mind working in a high-performance career for a while, you could bank enough savings to retire early and pursue a new career path when you’re financially independent or nearly so.
8. Invest Your Time off
Instead of planning vacations, use paid time off from your day job strategically to educate yourself, explore careers, and attend networking events.
This helps you save money on career development, as you can take advantage of any paid vacation time and other resources available through your job to prepare for your new career.
9. Find Flexible Ways to Make Money
If you can’t orchestrate a career move while working your existing day job, find something more flexible that uses your skills, like remote work, freelancing, or a position that lets you work part-time. Or turn to gig apps for ways to make money on your own time without requiring special skills.
Final Word
Making a career change can be a daunting task for the most confident and prepared worker. There are no certainties you’ll be able to land a job or replace your income quickly, and no promises your “dream job” will feel like a dream once you’re in it.
But millions of Americans change jobs and careers every year, starting new companies and striking out in new directions successfully with no regrets.
You can pursue your new job without falling into financial ruin if you plan ahead carefully and make the transition deliberately, replacing your current income over time with side gigs and savings, and reducing your expenses temporarily.
