Changing Careers? 5 Ways to Be Financially Prepared
Ready for a life change like quitting your job to pursue a new career, starting your own business, or going back to school? Making a jump is both exciting and risky. Find out what financial steps you should take before leaving a comfortable work situation to follow your passion.
Quitting your job to pursue a new career, start your own business, go back to school, or take a sabbatical is both exciting and risky. Before you follow your heart and make a leap, it’s wise to make sure that your finances will support you.
I interviewed Mike Lewis, Founder and CEO of When to Jump, a global community of people who left one path to pursue a very different one. Mike launched the platform in 2016 based on his experience leaving his job as an investor at Bain Capital Ventures to chase a dream of playing professional squash.
Goldman Sachs named Mike one of the 100 Most Intriguing Entrepreneurs of 2017. And in January 2018, his first book When to Jump: If the Job You Have Isn’t the Life You Want will release worldwide.
We discuss what financial steps you should take before leaving a comfortable work situation to follow your passion. Some topics we cover include:
- Common trends among people who have made successful jumps.
- How to create a budget and “pitch deck” that prepares you for a jump.
- Whether you should tell other people about your desire to jump.
- How to let yourself be lucky after doing the right amount of preparation.
- Stradling the line between being pragmatic and taking enough risk.
I had the job and lifestyle I had thought I wanted, yet I secretly held out hope—for a knock on the door, for some-one to enter my tiny office, walk up to my desk, and give me permission to leave: ‘Mike, it’s July 1, time to go chase your dream, remember?’ – Mike Lewis, Founder and CEO of When to Jump
[Listen to the interview using the embedded audio player or on Apple Podcasts, Stitcher, and Spotify]
The following tips were contributed by Mike Lewis.
Financing a Jump: 5 Steps to Prepare Before Chasing Your Passion
For just about everyone, the idea of taking a risk to chase a dream starts with tackling one big hurdle: cash. A lack of funds can be the best excuse not to jump.
“Welp, I need $X and I only have ½ of $X, no jump for me.” Or, “I can’t jump without A, B, and C figured out, and they’ll never be figured out. So, I’ll stay here at my cubicle and scroll Tumblr instead.” Sound familiar?
Sadly, I can’t give you a one-size-fits-all solution or a get-rich-quick scheme to guarantee success. But from the research I’ve done and the stories and content shared across our global When to Jump community, these 5 steps can help you prepare for a successful jump:
1. Save a set amount each month.
Choose a dollar amount to save from each paycheck. It could be as little as $100, but try to save as much as you possibly can in a dedicated savings account. Call it “Jump Fund” and promise yourself not to touch it until you jump.
2. Budget for the bad.
Imagine your jump going poorly and create a worst-case scenario budget. Consider expenses for the following:
- Staying alive—includes necessities such as paying for rent, food, and health insurance.
- Working capital—for a new business, such as hiring employees.
- Kitchen sink costs—include everything else, such as travel and entertainment.
Then add up these costs, multiply by 1.5, and you’ll have the total amount you need to save,
3. Buy what you need for less.
Identify what purchases you’ll need to make before you jump. Put on your detective hat and track down the most cost-effective solution.
Scout websites and wholesalers for products, use Craigslist for part-time labor, check the classifieds for deals on equipment. The sooner you start, the more likely you’ll be to stumble on great deals before you jump.
4. Beg, borrow, and barter.
Play the classic bootstrap game by never paying full price or paying for anything until you absolutely need to. Tap into any connections you have, such as fourth cousins, a neighbors’ friends’ sister, and an old boss. Anyone who may help you get off the ground.
Expertise, an extra hand, a friendly legal review—they all add up if you find the right people who believe in what you’re doing. And when possible, barter to avoid using your precious cash right off the bat.
5. Prepare and then let yourself be lucky.
Have a clear, simple, but real-world view of how you’ll financially survive your jump. While you can’t plan every aspect of a major career or life change, you need a general idea of how you’ll support yourself during this jump.
While you can’t plan every aspect of major career or life change, you need a general idea of how you’ll support yourself during this jump.
Don’t pull the classic millennial, “My app will be bought by Google,” or “My music will go viral,” or “I’ll just move to Bali and it will work out.” It typically doesn’t.
Talk to people who know the career or business you want to jump into. Take them for coffee (yes, you should use that precious cash here!) and pick their brains. Ask for five other folks they think you should talk to.
Finally, it’s time to J-U-M-P! You won’t have it all figured out, financially or otherwise. But if you followed these five steps, you’ll have some cash and thoughtful considerations under your belt and typically meet luck on the other side.
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About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.
