Taking the leap: How to make a career switch and land on your feet

Imagine this: You’ve gone to college—even grad school—to pursue a career path you always thought you wanted. But after a few years and many tuition dollars spent, it suddenly hits you: If you have to write one more press release, it might push you over the edge. If this is the case, it’s time to consider how to switch careers.

Transitioning careers is not unusual. The only problem is, if you are unsure of how to make a career change and whether it will be a financially sound decision, you might be hesitant to make the leap.

“No one wants to change careers without knowing the chances of success,” says Mark Anthony Dyson, host of a job-seeker podcast that helps those in career transition. “Adequate preparation can make all the difference.”

So how can you be sure you’re prepared for your career transition? Learning how to prepare for a career change financially and finding out which skills you’ll need in your new career are great places to start. Take these steps to understand your career intentions, then determine the best financial strategies for achieving them:

Figure out if a career change is right for you

Before preparing for a career change, start by doing an honest self-assessment on whether a switch is right for you. This is important, says Dyson, because you’ll want to weigh the advantages and disadvantages of changing careers versus exploring a job transition within your current field. Doing the latter might make more sense for you if you aren’t quite ready to go through a full-blown career transition, especially if you need to save money for a job change. Either way, taking the time for self-reflection will help you get to your desired career path sooner.

When you are thinking about how to make a career change and wondering if it’s the right time for you, Dyson suggests asking yourself these questions:

• What are the professional and financial impacts if I stay on my current career path? A quick list of pros and cons might help your analysis.
• Are there other opportunities in my current field that I haven’t yet considered? Talk to a human resources professional or research online to understand the qualifications, salaries, and opportunities for advancement within your area of expertise.
• What does my ideal career look like?
• Do I currently have the skills and experience that can transfer to a new career?
• What are the possible financial and professional outcomes if my new career doesn’t work out?

Kelan Kline, a jail deputy-turned-blogger for a personal finance blog, felt stifled by his previous job and the limitations it imposed on his time. He believed that to achieve career growth and increase his money-making potential, he would have to change careers. “I knew I was done working for others altogether,” Kline adds.

You may not think you have the skills and experience necessary to transition into a new career, but one of the most important tips for changing jobs is to consider the skills that have led to your career success thus far. That’s what 10-year human resources veteran Lisa Cassella did when she decided a new career direction was in order and wanted to follow her passion for real estate.

“As hiring and program manager for a senior living facility, I met face-to-face with people every day,” says Cassella, now a licensed real estate salesperson for a brokerage firm in Hastings-on-Hudson, New York. “Sometimes you have to have some difficult conversations,” she continues. “It’s the same in real estate. But for the most part, you are helping people—which is what I enjoy and a strong connection between both careers.”

Sasha Korobov, a career and success strategist, agrees that among the best tips for changing jobs is using your current skills as a foundation for a new career. Having undergone a career change herself, she advises people to “really think about what you want to do next, and see if you can start getting those skills and experience in the job you’re already in.”

Once you understand your motives and capabilities, you’ll have the groundwork for what needs to come next: smart ways to financially support yourself through the transition.

Prepare yourself financially for making the switch

One of the best things you can do when figuring out how to make a career change is to have a financial plan. Depending on how you approach your career change, the steps that you take to move to a new industry could impact your finances in various ways.

For example, when you start out in a new industry, you might be taking a lower-level position than what you had in your previous career. This may come with a dip in income, for which you will need to adjust your budget as you progress in your new career.

If you plan to take any time off before you make the switch, you may experience a gap in income. “You have to think about how many months of income you need to save to get over that hump,” Cassella says. Cassella planned in advance, so she had at least six months of income in the bank before she made the switch to her new career.

As you consider how to switch careers, you also want to explore whether there is a cost investment required in moving to the new career you have chosen. For example, you might need to spend money on additional education, training, certifications, and other measures before you can move into your new role. Your financial plan will have to consider dips in income that could occur if you need to reduce your hours or quit working to get the training and education your new career requires, Korobov says. Cassella had to get licensed before moving into real estate sales. She quit her job and took a two-week course, then immediately took the state test.

If your career change means starting your own business venture, you may have to prepare for all of the financial scenarios mentioned above. Your income might decrease as you establish your own business and gain traction, for instance. You might also have to pay for things that were once provided to you by an employer. For instance, you may have to budget for healthcare costs, computer equipment, software, and other supplies. 

Because of these potential challenges, one of the key tips for changing jobs is having a savings plan. 

Fine-tune your savings to prepare for a career change

No matter which path you choose, preparing for a career change may present you with some financial risk. Therefore, it’s beneficial to have savings set aside to manage the transition. With just a few small lifestyle changes that will save you money, you can build the financial safety cushion you need to prepare for a career change, says finance blogger Kline.

Here are Kline’s tips for changing jobs, plus the areas he focused on most when he prepared for his professional move:

• Reduce unnecessary expenses. As you figure out how to make a career change, consider cutting back on discretionary spending, such as eating out, entertainment, and vacations, and set that money aside for your career change. Don’t already have a budget to track your expenses? Now is the perfect time to brush up on some budgeting basics.   
• Pick the right type of savings account. You’ll want to put the money you save from reducing your expenses into the best type of account to support your career transition. A high-yield savings account, such as the Discover® Online Savings Account, will help you grow your savings. For a long-term savings strategy, a Discover® Certificate of Deposit Account might be a great fit.

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• Start an emergency fund. Similar to establishing a budget and picking a savings account, if you haven’t already started a rainy day fund, now is the time to start an emergency fund (or add to it if you already have some momentum with your savings). An emergency fund can help you prepare for unexpected expenses and the financial risks involved in changing careers. Experts suggest that you keep at least three to six months’ worth of living expenses in your emergency fund.
• Pay down debt. If you can, pay down debt, such as student loan and credit card debt. It will free up cash to save toward your career transition. Pay more than the monthly minimum to reduce or eliminate the debt altogether as you prepare for a career change.

Approach your new career at a gradual pace

For some, a slower transition, with moonlighting or side hustling until they are ready to go full time, has proven effective. When Jeff Neal started his online retail site selling bait and live feeders, he was still a full-time project manager in e-commerce, but not passionate about his day-to-day. He was able to use his skills from this position to build his own online ventures.

Neal says he started his online business as a side hustle, with the intention of always having a full-time job keeping his household afloat. He has now been able to transition into being a full-time internet entrepreneur.

Korobov, the career and success strategist, also started to prepare for her career change with a part-time entrepreneurial venture that grew out of corporate coaching. “I wanted to go into business for myself as a career strategist for women, and I knew that having corporate coaching experience would fast-track my credibility with a lot of potential clients,” she says.

“I began offering workshops and brown-bag lunches at my office,” Korobov continues. This experience was a valuable lesson for Korobov in how to make a career change, helping her boost her confidence and allowing her to tweak her workshops as she got more experience.

One of Korobov’s biggest tips for changing jobs is one she learned firsthand: “Your entrepreneurial ventures, even if done part-time, can make the transition into your career smoother, while giving you extra income to help with your financial preparation process.”

Ensure your path to career-change success

Making a career change can seem like a huge risk, since you don’t really know if it will work out in your favor. But with research and readiness, you can confidently prepare for a career change. Dyson, host of a podcast for job seekers, can’t emphasize enough that “preparation in every form—from updating job skills to financial planning and really taking time to think about what you desire in a fulfilling career—will be a huge factor in your career-change success.”

Understanding your goals and expectations—and trusting your gut—before you begin is a big step in the right direction. Says Cassella of her move into real estate: “It just made a lot of sense for me and my family. My expectations are that once I really get going, there is no limit to what I can make.”

Changing jobs can be a smoother process if you have a related side project in the works. These side hustles you can start today could be just what you need to kickstart your new career path. 

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