After a year of uncertainty and major changes to the economic landscape due to the global pandemic, society is learning to adapt and continue to push forward in efforts to bring back a sense of normalcy. Whether you are a recent graduate, a laid-off employee, or seeking a new employment opportunity over the last year, it’s more than likely you experienced some challenges personally, professionally, or financially. The good news is, over a year later businesses are beginning to reopen, expand, or have found ways to hire more talent in order to grow their business.
Although there is still a long road ahead, you can learn to navigate this new normal in order to create a prosperous future as a young professional. By taking initiative today, you can feel more in control while finding ways to better combat uncertainty and future-proof your career during the road ahead. Keep reading for some expert financial tips and professional advice that can help you jump-start your motivation to start planning!
Set a budget that aligns with your goals
One of the most important parts of any transition plan is organizing your finances in order to prepare for the coming weeks to months depending on your situation. To ensure that you will be able to support yourself during a career transition or period of downtime, creating a budget that outlines your expenses, bills, or any payments you will be making is critical. Once you know your non-negotiables or required expenses you can estimate other areas you typically spend your money such as groceries, personal care, appointments, gas, or commuting. These expenses can be subtracted from your income to see where you land and then you can make a plan based on that information.
If you are breaking even, there might be ways to cut back a bit during a transition period to give you some wiggle room—especially if you will have a period without an income. For example, you might consider eating at home instead of going out to dinner. Furthermore, working out at home or outside during the summer months can temporarily cut costs of paying for a gym membership. If you know you’ll be making more money with this change, you can plan out some purchases or investments for the future while being mindful of not spending beyond your current means.
Prepare for uncertainty
If the past year has left you with one lesson, hopefully, it’s surrounding the idea that life is short and unpredictable, and preparing for the future is important no matter the circumstances. One way to ensure that you and your loved ones are protected, especially if you have others relying on your income, is to set up a life insurance policy. Although you might be concerned with adding another expense onto your plate during a time of transition, educating yourself about the options available is free!
Creating a timeline for your situation and determining when the right time for you to purchase life insurance provides you with peace of mind knowing that your future is protected. While you might have time to do some research now, you can begin educating yourself on the options available and decide what might be a good option for you in the coming months to years. Knowledge is power and the more you know about the ways to protect yourself, your finances, and those who depend on you, the more you can focus on and enjoy the present.
Reassess your tax situation
Changing jobs typically means adjusting your income one way or another. It’s common to take a new job or opportunity for a raise or better salary offer, however, this is not the case for everyone. Some individuals might have been making more money doing a job they are not passionate about and decide it’s time to make a change and work for themselves or take a job that pays less but they can look forward to each day. Either way, adjusting your tax situation might be a direct result of your change of income and something to be aware of.
It’s a good idea to reassess your tax withholdings when you change jobs and make sure you are not overpaying for underpaying based on your new income. In addition, you’ll want to evaluate if changes need to be made to your 401k or retirement plan based on how much you have saved with an employer plan. If you were not previously contributing to an employer’s 401k plan you might want to consider doing so at your new company and can evaluate your options when it comes time to set up.
Find a side hustle
If you do anticipate a period of paused income or reduced income, it might be smart to pick up a lucrative side hustle or find an alternative way to make some money. Moving, changing jobs, starting a family, or any lifestyle shift often costs more than you think. Having multiple streams of income can help you cushion the extra expenses during these times and provide you with extra money to support yourself should a new situation arise that requires your financial attention. Whether that means starting a dog walking business, refinishing old furniture and selling it, or picking up a part-time position, you can support yourself and your family throughout this period.
Consider a career or life coach
During a transition, you might feel extremely motivated while also feeling some stress and overwhelm start to creep in. That is completely normal and not something to be concerned about. Rather than keeping your questions or concerns inside, it might be beneficial to work with a career coach or a professional who can help support your decisions and provide some additional insight. With so much change happening at once, it can be easy to overlook the basics, and having a checkpoint can help you stay organized and on track to meet your goals.
Transition at your own pace
It’s more than likely that you are eager to begin your new adventure, whether that is with a new company, industry, or working for yourself. Although it can be tempting to drop what you have when you decide there is a better option for you, it’s important to do some investigating and initial planning to make sure you’re transitioning at the best time.
For financial preparation purposes, it’s not typically in your best interest to quit a job without a well-thought-out plan. If you have recently made a large purchase or investment and want to start your own business, you’ll want to make sure you have the funds to pay for your purchases prior to losing your income for a period of time. In addition, making small adjustments is easier than a huge lifestyle overall so starting with some budgeting and saving now can help you transition in the coming weeks.
This is an exciting time full of new opportunities for many young professionals testing out the waters of their very first career or a second chance for an individual to improve their professional career. Financial planning and preparation can make a huge difference in any transition and help provide a sense of security even during the uncertainty and angst of a big change. By thinking strategically about your future, both financially and professionally, you can set yourself for a successful career and exciting journey ahead.