Can You Afford to Change Jobs?

dream-job

A friend of mine has dreamed for years of jumping off the corporate hamster wheel (aka leave her job as an attorney) to pursue her passion of becoming a pastry chef. She just can’t seem to pull the trigger. Her hesitation is understandable. She is the primary breadwinner for her family, and pursuing her dream would likely involve a serious pay cut as well as potential startup costs. I’ve encouraged her to set aside time to see if a change is actually possible. All it would take is some research and a little bit of math to determine if her dream life is financially doable. Once she’s painted the picture, she can choose whether she really wants to go down that path and when.

My friend is not alone. Many people stay in a job they don’t enjoy because they think they can’t afford to make a change. This can lead to unhappiness and a feeling of being stuck. If you’re in this boat, instead of staying stuck, decide that you are going to chart the path toward your dream job. Let that information help you decide your next step (instead of letting a lack of information keep you where you are).

Use the following five steps to chart your path to the job of your dreams. I’ve included tips for thinking about each step.

Understand why you want to change jobs.

What is your dream job, and what attracts you to it? What is it that you don’t like about your current job? If you had to make financial sacrifices in the short term to obtain your dream job, would it still be worth it to you? Once you have decided that a job change is emotionally worth it, determine how to make it a financial reality.

Assess your current financial situation

Create a budget or closely review the one you already have. If you don’t know where your money is going or have only a general sense, sign up for a finance tracking system like Mint.com. Once your budget is in place, review these three items:

  • Spending. Review at least three months of expenses to get a good sense of your spending habits. If you are spending more than you are making, can you change anything so your budget works? Would the changes be feasible if you knew they were the path to a happier future?
  • Savings. Make sure you have an emergency cash fund. Aim to have at least three to six months of expenses saved for a rainy day. Increase that to six to 12 months if you would need to spend time without a job or if the income in your new job would vary month to month. Set up a separate savings account for any big expenses coming up in the next few years—for example, house repairs, a car or training for your new job (more on that below).
  • Debt. Debt can feel like a deep hole you can’t climb out of, let alone climb anywhere else! Have a plan to get out of debt, and stick to it. You don’t have to be debt-free before switching jobs, but you do need to stay on top of your debt payments. If your income would likely decrease significantly or be less reliable in your new job, you may need to build up more savings before changing jobs to avoid missing debt payments.

Create a “dream job” budget

Once you’re confident in your current budget, make a copy and call it your “dream job” budget. Change any items that would be different if you were going to take a new job. Research the typical or average income for people in your dream job when they start and the maximum you could hope to earn after you’re experienced. Identify any expenses that would change with the new job. A couple of items to remember are health insurance costs and taxes (maybe the latter would be less—hooray!). If necessary, think of the new budget in phases. Maybe you’d need to cut way back at first, but as you gained experience, you’d have more room in your budget because your income would increase.

Calculate startup costs

Once the new budget works, calculate any startup costs for switching jobs. Would you need to pay for training (for example, culinary school for my friend)? If training is required, how long would it take and how much would it cost? Would you be able to work at your current job while training? Is there financial aid available?

Determine whether the changes are worth your while

Decide if the financial changes you’d need to make are worth it. If yes, go for it!

The road map to your new job may include staying in your current job for a short or long period of time to build up savings and pay down debt. That’s much easier to do if you know the light at the end of the tunnel is your dream job (especially if you’re unhappy in your current position).

I’m confident my friend can afford her dream job, and I look forward to helping her chart a path to get there!

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