Monica Molina Austin of Westwind Consulting Group spoke about strategies for making a midlife career change. Maura Griffin of Blue Spark talked about how to set the stage financially before you make the leap to a new career.
This quarter’s Wine & Finance focuses on a topic that many can relate to: Midlife Career Change. There are some in this room who have made a successful transition already. There are others thinking about it. Career change means different things to different people. Sometimes the career leaves you. Sometimes you leave your career. Sometimes you want more from your current career at your current company. Some people want the chance to do something more meaningful, or to be their own boss, or simply for a change.
We have a great coach here tonight, Monica Molina Austin, who is an expert at helping people transition through a midlife career change or to be bigger and better in the career they’re already in. When thinking about making a change, you should think about the financial aspects first. One of the biggest obstacles to making a change is money. Laying the groundwork is essential, and it’s tough to make a leap if you are not on stable financial footing. When you have worked in one field for a while, you become an expert, and your salary reflects that. When you want to change careers, you will likely take a cut in salary. That can be terrifying.
So, here are 10 tips for financial planning for a midlife career change.
1) Develop a master plan, a blueprint. Run through all the possible financial scenarios. Put it in writing. Better yet, put it in a spreadsheet. Have both a best-case and a worst-case model, and attack it from all sides. Talk to your friends, talk to your financial advisor, talk to your coach, and most importantly, talk to your family. You’ll want to get buy-in from them, of course, to even start – but it’s also wise to bounce the idea of success and failure off the people you love and respect. And be realistic. Set business goals and financial plans that are doable and possible to achieve.
2) Start to live WAY below your means. You need to do this, if only to ensure that you are not shocked by the wage reduction once you begin. Otherwise, career change could be out of the question. This immediately impacts No. 3 and No. 4.
3) Eliminate all personal debt (except your mortgage). Leaving a steady job to start a new career can stress your finances. Paying off your debt will put you in a much stronger financial position for making a job change. It may mean postponing your move for a year or two, but it will greatly improve your success by eliminating the pressure of making debt payments and the worry about credit while starting a new career.
4) Build up your savings. Another important step toward being financially secure during the change is to have reliable cash, as much savings as you can, to help carry you if necessary. Most career changes will involve a period of transition, and could leave you without a source of income. If this is the case, you want to have money set aside. Typically, there is a 12- to 18-month ramp-up time for a new career to gain traction. This is usually one of the biggest disappointments for those moving away from financially lucrative careers. Have your nest egg fat and ready before you jump to your new endeavor. You will want to determine how much you need. How much cushion should you have? It really depends on how long you expect to be without a salary or earning a reduced income.
Here’s a simple way to calculate it: first, figure out your basic monthly living expenses. Then estimate how long you may be without a job or working for less than what you need to cover your expenses. Now multiply the your monthly living expenses by the number of months you expect to need and add a few months (for emergencies and a safety cushion). Finally, add any career change expenses you will need to pay, such as training or travel. You don’t want to have student loans at age 80.
5) Work as long as you can while plotting. This helps with #3 and #4, paying down your debt and building up your savings. During that time, act as if you all ready have you new career. Read and study what people in your new field read and study, keep up with news that impacts them. Go to trade shows, seminars and workshops. Network whenever possible.
6) Look for the kind of employment that matches your lifestyle, or what you want your lifestyle to be. Think of financial flexibility: perhaps project-based work, part-time work, freelance work. Think of options such as changing locations – work in the summer then take winters off, maybe work in Florida or Costa Rica.
7) Spend start-up money wisely. Ask yourself questions like: is it better to spend $1,000 on advertising in a specific newspaper to get a certain audience? Or would it be better to spend $1,000 on several relevant networking groups? Can you get by with your old computer? A weaker economy can help in some ways; for example, you may be able to negotiate a better deal for retail space, or barter with someone who needs your skills and you need theirs.
8) Do thorough research. You greatly improve the odds for success by making an educated, thoughtful career choice. This means you’ve considered careers that make the most of your current skills and interests. You’ve identified what makes you passionate, what careers excite you. And, of course, you’ve examined the challenges and pitfalls of each career choice. Consider the risk factors and benefits of the type of business that you want to start.
9) Think of your work life as your “human capital” – a part of your portfolio. It’s helpful to think this way, because it allows you to see that a temporary decrease in income in return for a larger payout – whether money or happiness – could be worth it in the end. Look at your “work asset” as the sum total of your time, your talent, plus your potential – you should manage it to maximize its long-term total return, just as you would manage any other asset. A midlife career change that extends the time you can work can substantially improve your future wealth, thus providing more income and more security when you are ready to really retire. It’s an investment in yourself, in your life.
10) If possible, get the assistance of professionals, such as a financial planner and a career coach. A coach can help you make wise decisions in determining if a new business or new career is a good fit for you. You need to find someone who can provide you with the exploration, training and tools to help you succeed in your business. Get help to be accountable. We don’t achieve big goals alone, or in a vacuum. That’s simply not how the best and most powerful work gets done. Realize what you don’t know, and get outside help to support you. For example, Monica Austin has helped hundreds of people in their quest to find balance in work. She’s an executive career coach who identifies and builds on her clients’ strengths and preferences. She’s worked with individuals on their own as well as people in corporations such as the New York Times, OppenheimerFunds and Reebok.
