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Managing Your Money During a Career Change: 8 Helpful Tips

Aug 4, 2020

Managing Your Money During a Career Change
Not everyone will stay at one job forever—job transitions, layoffs, and full career changes are normal and will happen to everyone at some point in their life. Since you can’t always predict when this will happen, it’s best to actively prepare for an unexpected change now. How you prepare will depend on your situation; preparing for a financial emergency is very different if you’re single versus if you have a family to support, so it’s best to plan based on your personal circumstances.

If you are currently in limbo but don’t feel ready to take on the next few months, consult the following tips designed to help you manage your money effectively:

Negotiate a severance package.

If you’re being let go and your employer is offering some type of severance package, try your best to negotiate a better package to give you a financial cushion. Also, you should use this opportunity as a learning experience for the future, since you typically negotiate your severance package when you’re hired and have the most bargaining power.

Look into assistance programs.

There are many programs, namely unemployment benefits, that are specifically designed to help you during this transition, so do some research and see which program best applies to you and your situation. It’s important that even if you do file for unemployment or some other program that you view it as temporary, as this will help keep you motivated to find another full-time job.

Dip into your “rainy day fund.”

Rainy day funds—also called emergency funds—are designed to help you stay afloat during an unexpected challenge like a job loss, layoff, or something else of that nature. If you don’t already have a rainy day fund set up, consider starting one once you have figured out your job situation and have a steady income. Once you establish your account, it’s important that you only use that money to pay for essentials like food, bills, or other time-sensitive costs so that you can preserve funds for the future.

Create a strict 3-to-6-month budget—and stick to it!

Stretching each and every dollar can prevent you from running through your savings, so take a close look at your spending habits from the last six months and see which unnecessary expenses you can cut when creating your new budget. While evaluating your spending habits, try to cut out any and all impulse shopping, but don’t cut out entertainment like movies and dining out completely. As unintuitive as it may be, you’ll want to keep your spirits up during this time, so look for discounts on admissions tickets, restaurant deals, and more so that you can keep enjoying your leisure time.

You’ll also want to account for your bills in your budget, but there are ways you can actually lower the cost of your bills, like turning your thermostat down in the winter to help you save on heating or turning your thermostat up in the summer to help you save on cooling.

Adopt a “low-buy” or “no-buy” lifestyle.

To help you stretch and even save your money, you’ll want to avoid making major purchases unless they are absolutely necessary, like a time-sensitive home or car repair, medical bills, or something else that cannot afford to be put off. You should only prioritize necessities like food and bills, and if you need to purchase cleaning products or toiletries, try to find the cheapest version to save some money. Your best bet will be to buy these items in bulk so you don’t have to shop frequently, as value-sized products can last for about a month or two.

Lean on your network.

Now is a great time to reach out to old colleagues, bosses, and friends you’ve made through networking in your industry to see if they know of any available positions that you may be able to fill. You should do this in addition to posting that you’re looking for a job on sites like LinkedIn, Indeed, Monster, Facebook, or other platforms so that people know you’re available. While posting your resume to these sites can land you an interview, reaching out to those in your network who have worked with you before can help stimulate some inbound job offers.

Apply for part-time jobs.

While searching for a full-time job should be your main priority, don’t neglect part-time opportunities that come along—any level of income will benefit you, and that includes a part-time salary! Though it would be ideal to find a position in your field, keep an open mind when looking at all available jobs since you never know where that experience and any relationships you form there can take you in the future. Take this time to update your resume, upload it to hiring sites like Monster or Indeed, and send out cover letters to various hiring managers. If you do land a part-time gig, be sure to maintain your search for a full-time job, as this should be your ultimate goal.

Use this as a learning experience.

As you navigate these next few months, take some time to figure out where you’re feeling the pinch most so that you can avoid it in the future. For example, if you find that the budget you created based on your rainy day fund didn’t offer enough breathing room, try to add more to your fund on a monthly basis (once employed full-time) so that if you do find yourself in the middle of a career change in the future, you have that extra cushion.

Career shifts are likely to happen more than once in your life, but if you continue to evaluate and revise your financial plan, budget, and rainy day funds, you’ll be better prepared for the future. Most importantly, keep your spirits up, because somewhere out there, a door is bound to open for you.

erin_elis

Erin Ellis
Accredited Financial Counselor
Philadelphia Federal Credit Union
eellis@pfcu.com

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