If making big changes in your life were easy, you’d have already done them. In fact I guess if they were easy, they wouldn’t be considered BIG changes. The parts that make these changes difficult, are precisely the reason why some good planning is essential.
This is not a post on what your career or life change will be. I’m going to assume here that you’ve done plenty of introspection and have decided what it is that you want in your future. I’m also assuming you’ve done all the training, networking etc, and you’re now at the point of making your change.
So, let’s look at some key things that I’d suggest you turn your mind to before making the leap.
Define success
Often overlooked, but absolutely essential is the need to define what success looks like in your career or life change. Is the aim to get a better work/life balance, increase income, take on a new challenge, or be able to start a family?
This might be a bit old school, but for my big goals, I have them written on a piece of paper and bluetac’d to the inside my wardrobe. I don’t read them every day, but I certainly notice them enough to keep me from getting waylaid.
So take out a piece of paper and write “success =” and then write what your definition of success in this big change project of yours is. Then stick that somewhere prominent for you. This will become your North, your bearing point as you navigate your career or life change.
Identify obstacles
Significant changes are never simple, and so it is inevitable that you will have to overcome obstacles on your journey to the change your are after. Not all of these obstacles are foreseeable, but plenty are. So why not plan for them? Create a simple 2 column table – one column lists the obstacles that you can foresee, the other, what you might do in response.
So for instance let’s say your big change is that you’re quitting your current job to start a new business. You might have an expectation that it will take 3 months before any revenue starts coming in. But what if it takes 6 months? List this as an obstacle, and then note down a solution – perhaps you redraw on your home loan for instance. Maybe, in thinking this problem through you realise that it would be worth getting an extension on your home loan, so that if this problem arose, you would have funds available. The bank is likely to look much more favourably on you applying for an extension when you’re still in your current job, then after you’ve quit and things in your new business aren’t going quite to plan.
This process will also have the effect of reducing your stress levels. If you’ve thought through the most obvious obstacles in your path, and have solutions ready to deploy as needed, your stress levels will go way down.
Income
Whether you derive happiness from nice clothes and eating out, or living simply and frugally, you can’t get around the fact that it costs money to live.
Hopefully you will already have in place some form of Income Protection insurance. This cover replaces typically 75% of your normal income if you become unable to work due to illness or injury.
It would be well worth your time reviewing your cover before you make your change. As an example a friend and client of mine recently told me that he planned on resigning from his current job, and going in with 2 other guys to start a business. He’d continue doing the same type of work, but now for a business of which he was a part owner. As part of their business plan, none of the 3 were to take any wages for the first year of business operation.
Now he had Income Protection in place – I know because I arranged it. But it was a style of policy where the amount payable at claim time is determined by what you were earning immediately prior to you becoming unable to work. So I pointed out to my friend that at least during the initial 1 year period of the new business, his Income Protection cover was worthless.
We determined that this coverage was important in the broader context of his financial position, and so prior to him leaving his employer, we were able to get the policy changed to an Agreed Value type, which meant the payout amount was agreed in advance, irrespective of what he was earning at the time of claim.
Now most policies aren’t Agreed Value, certainly not those within super, but I suspect most people bounce along totally in the dark on this, only to be disappointed when the unexpected happens.
So I’d very much encourage you to review your Income Protection insurance, and perhaps all of your personal insurances, well in advance of you making you big career or life change.
Retirement savings
If your change is going to affect your income, then it will inevitably also impact on your retirement savings. Now if you’re embarking on a career change where your income drops for a year or two immediately upon the change, but then recovers and maybe even is higher than what you had been earning, then perhaps the impact here is not significant.
But in many other scenarios, the impact would be meaningful. So in pursuing this big change, how will you ensure that you won’t be living on beans and rice in your later years?
Perhaps you plan on making no or minimal contributions for 3 years whilst your new endeavour develops, but then make extra contributions from year 4 onwards to catch up. Or maybe the plan is to downsize your home upon retirement to free up cash that way.
The answer will of course be different for everyone but what’s important is that you’ve given this consideration
Budgeting
Finally, I know it’s not a fun word, but do you have a budget? Do you know that you can afford to make this change? I doubt anyone on the Financial Autonomy community would make this mistake, so I apologies for stating the obvious, but as observed earlier, it costs to live. Food, rent or mortgage payments, transport etc. Before you make you career or life change, work out what you spend now, and plan for how these expenses will be met after you’ve transitioned to the next phase of your life.
Well, there you have my 5 things that I think are essential considerations when making a career or life change. I hope they help you in making your change and gaining the choices in life that you so very much deserve.
This article derives from a podcast script.