Money - fixing the biggest obstacle to making a career change

The biggest obstacle to making a career change

The other day a piece of research from the Nationwide Building Society floated across my screen.

What’s the single biggest barrier to doing the things we want to do? Money.

Okay, maybe that’s not a massive revelation. If we all had more money we’d have nicer stuff, go on more exotic holidays, all that kind of thing.

But I don’t think it’s strictly true that money itself is the problem.

It’s not always money that stops us from pursuing our dreams, it’s worrying about money.

Sure, if your dream is a trip into space on Virgin Galactic or owning a McLaren supercar, then *actual* money may be the issue!

But, as the Nationwide survey suggests, a lot of goals are more affordable than we might initially think.

Our own research has shown that concerns about money is one of the top reasons why people feel trapped in their current job.

Often making a major change can mean a dip in earnings – either during a period of retraining, or simply because the new job is more fulfilling in other ways.

But let’s be honest, if the financial pain of making the change is just too great then there’s a much higher chance of not surviving the transition.

If you have to give up everything you really enjoy, or if you’re losing sleep over money worries, then that paycheck from your current job starts to look a whole lot more attractive.

So how do you work out what level of “dip” is going to be okay?

Two steps to get you started. One fun. One a bit more boring. But both very powerful.

And the best thing is, even if you’re like me and you hate numbers you’ll find these super easy to implement. No algebra required, I promise!

Step 1: Track your spending

You may think you know how much you spend on the different parts of your life. But do you really know.

My husband and I did this over an 18 month period, and it was one of the most powerful pieces of financial planning we’ve ever done.

To know – precisely - how much you spend on all the elements of your life is incredibly empowering.

Suddenly the answer to that question, “how much do I really need to earn?” comes sharply into focus. You can plan. You can make choices.

You need to do it over an extended period to get a full picture, so the sooner you start the better.

Nowadays some banks and credit card providers are offering this sort of spending analysis as part of their services, or if you want something that will do the job across all your different accounts you could look at a service like Moneyhub.

If you prefer to just get going yourself, sign up to our newsletter and get the bulletproof spreadsheet we used to track our spending.


Step 2: Decide on your Target Income

Knowing how much you spend on stuff is important.

But trying to work out where you could then “cut back” is an overwhelmingly negative experience.

The whole thing becomes an exercise in “doing without”, and there are enough challenges in making a career change without loading that on top!

So how to turn this negative experience into a positive one?

Rather than working out how much you spend at the moment and then finding a job to support that level of spending, you turn that whole concept on it’s head.

Instead, think about the life you’d like to lead and then cost the different elements of it. This will give you your target income.

Grab a piece of paper and start to sketch out the lifestyle you want after you’ve successfully made your career transition.

[if you want to start putting some structure on this straight away then, yes, I’ve got a simple spreadsheet that covers this for you too. Just click here to sign up to our newsletter and get started]

Work through each element of your life. And wherever you can, get specific.

So if you love clothes, don’t just say you want to spend £4,000 a year on “clothes” (or whatever your number is). Break that down.

How many work suits do you want to buy every year?
How many pairs of shoes?
Do you want to budget for a splurge weekend once a year?

Look back at your actual spending (boring step 1) to help you fill in blanks like “how much do I need every month to keep the house running?”

When you’re done, you’ll have created a positive picture of how much after-tax income you need to support the lifestyle you want.

The whole “mindset” side to this is important. You’re in control of this process.

You are making positive choices about how much money you need, rather than the other way round (where whatever money you have available dictates what you are, and are not, allowed to do).

When you’re done, compare your Target Income to the after-tax income you’d expect to earn in your new job.

How does it stack up?

If it’s below what you’re expecting to take home from the new job, fantastic!

If it’s higher, start to look at specific pieces of your target income.

(Remember I said “get specific” earlier – this is why!)

Select items you’d be happy to forego in order to bring your Target Income below your expected income so that you can reap all the benefits from that career change.

Every time you need to make a trade-off, you can still see the all the remaining (positive) elements of your lifestyle that you can afford.

Your focus will be on these, and not the one or two things you’ve chosen to forego in order to make your career goal a reality.

If money worries are holding you back from changing your career for the better, get started on taking control now.

Here’s the link again to sign up to our newsletter and get those two spreadsheets that will help you take control of your finances.