Chase Your Dreams Without Going Broke 7 Smart Ways to Manage Finances

If you are thinking about changing careers, now may be the perfect time to do so. With the abundance of opportunities within the Malaysian job market, there may not be a better time to take a chance on a new start. But take note: While the promise of pursuing something new is exciting, it is always crucial for you to manage finances to prepare for a job transition.

Understanding your financial situation is a crucial consideration when carrying out your career change plans. It will help you make sound decisions, whatever your new career path might be. 

Taking financial management steps can ease any stress experienced along the way of a career change. With the proper preparation, you can make it a smooth transition.

Importance of money management during a job transition

Changing careers is an exciting time. For some, it can mean chasing a long-sidelined passion or finding a job that aligns with achieving values and goals. But for most, switching careers is an intimidating thought. After all, with change comes obstacles. You will most likely face financial challenges once you step outside your comfort zone and take a leap into the unknown.

A career change can be financially risky as career transitions do not always go smoothly. You might find yourself starting from scratch with a lower starting salary, or your job-seeking journey may take unexpected turns. You may be temporarily out of work, and without a comfortable financial cushion to back you up, this can be unsettling.

Preparing for a career change takes not only time but also strategic financial management. After all, you need to stay on top of your bills while investing time and resources into your new career path.

Ways to manage money for a career change

1. Assess your financial situation

You must understand your financial situation before looking for a new job. So you can better manage your finances, you need a clear view of your income and expenses. Assess your cash flow. Think about your spending habits. Look at your bank statement and comb it for outgoings that you can do without.

Explore the financial implications of switching careers — whether this means pursuing a job in a different industry, going freelance, or starting a business. Then, learn about your expected salary. What type of pay range can you expect? It is better to understand if the career leap is practical or will need a stable financial cushion.

Gather as much information about your new career path to help you gain a long-term view of the industry you want to join. Will you need to spend money on upskilling or reskilling? By assessing your financial situation, you will be able to pin down how you can manage finances along the way.

2. Determine your needs and wants

Once you understand your spending patterns, consider your needs and wants. Break down your expenses and prioritise what you need. This includes rent, utilities, food, and transportation. If you see that you are overspending on everyday extras, you will need to cut down on your wants.

Your needs and wants may also mean your career goals. Determine your long-term career goals. How do they fit into your lifestyle? Is your dream job one that has a promising future in the post-pandemic world? By understanding the industry you want to pursue, you will have a clearer picture of the future. Thus, you will also be able to manage your finances accordingly.

3. Invest in your time and in yourself

With an understanding of the financial impact of your career move, you will be able to assess where you should invest your time and in yourself. Depending on your desired field, you might need to upskill or reskill. This can open up some costs, so it is so important to have a plan in place.

Browse the job description of your desired role and take note of the skills, qualifications and qualities that frequently crop up. Find out what the top talents in your dream role are and identify where your skills gaps lie. You can utilise this by upskilling or reskilling in your free time.

Furthering your education is an excellent investment, so dedicate plenty of time to research where you can take classes. If possible, use your extra leaves to attend training programs. You can even try out free online courses relevant to your industry. Utilising your time and skills will help advance your career development.

4. Enter a side hustle

Reports show that the gig economy in Malaysia is currently flourishing with the wide adaptation of remote work. Employees now have the flexibility to earn extra while having a regular job. Having an additional source of income will help you transition careers successfully.

You can also take this opportunity to test the waters of the industry you want to enter. By taking a freelance job in a field you are interested in, you can gauge what skills you need to improve and invest in developing. This is also a great way to network and gain insights from fellow professionals. Consider this as doubling up, building up experience, and earning extra cash to support your career change.

Having an additional source of income will surely give you the chance to bulk up your savings and your skills before you leap. Extra gigs can take a lot of time and energy, be sure to have a system in place not to burn out. Remember: Your health is also an investment.

5. Build a savings account or an emergency fund

A career change is a huge transition and not something to take lightly. Unexpected circumstances may happen along the way. You might encounter hidden expenses through this transition, like having to invest in new equipment or needing to prolong the job search. The more money you have saved up, the easier and less stressful the process will be.

To manage finances, a good rule of thumb is putting 20% of your paycheck into your savings or emergency fund. Having at least six months worth of savings gives you ample cushion that will carry you over your career change. Open a separate savings account at a different bank that is not tied to your recurring expenses. 

6. Set goals and deadlines

While the idea of a new start is refreshing and highly attractive, it is easy to lose motivation when faced with challenges. This is why it is vital to set goals and deadlines. Setting goals is a great way to keep yourself in check and monitor your progress. 

The same goes for setting financial goals and deadlines. Start with short-term ones you can quickly achieve, like cutting out unnecessary expenses. Then, work slowly but surely towards your long-term goals. You can break down your long-term goals into shorter periods so that they are more manageable and achievable.

7. Find support

A career change is not easy, so prepare yourself to tackle some challenges. Before taking any major leap, make sure you have a support network to turn to when you need some guidance. The process is much easier when you have good support behind you.

Talk about your career change plans to your family and friends. Their encouragement and support will help motivate you in pursuing your dreams. Start building a community of professionals from who you can get insights and advice. Having a support network that can hold you accountable for your goals is one of the most valuable assets you can have when you are changing careers.

Summary

Making a career change can be a daunting task, even for the most confident professional. But, you can pursue your dream job without falling into financial ruin as long as you carefully plan. Meanwhile, learn to manage your finances so you can lessen the monetary burden of pursuing your dream career.

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