Budgeting For a Job Change
In the past people trained for one job and worked for one company until they retired. Today people move around from one job to another in order to find the right career. People want more out of life today and are changing careers more often. Before changing careers you should get your budget in order so you and your family will survive financially while you are searching for a new position.
First Things First
Put together all your financial statements that include any income and expenses like bank statements, investment accounts, utility bills, and credit card obligations. Record all your income using your net income from your paycheck. Record all your monthly expenses like, mortgage, car payments, utilities, food, insurance, and everything you spend money on to purchase. The more information you can gather the easier it will be to create a monthly average of your income and expenses.
Fixed expenses
Fixed expenses are those that are a part of your way of life each month like, mortgage, car payment and garbage pick-up. Include any major credit cards, your car insurance, along with your expenses for cable and Internet services. These expenses most likely will stay much the same in cost each month and will be a big part of your budget.
Variable expenses
Variable expenses are those that you can perhaps cut down and save some money on if you change your habits. These expenses change from one month to another in cost. Food is essential but cuts can be made to save money, gasoline, entertainment, gifts and so on, will change in cost each month. Variable expenses will play a big part in your budget because these expenses can be cut down when trying to save for changing to a new job.
Totaling your Income and Expenses
Once you have listed all of your expenses and all the income coming into the house, your income should come out larger than your expenses. This means you have some money to put towards a savings or paying off a credit card to get rid of a payment going out. You will want to get rid of as many expenses as you can so you can live on one income coming into the house.
Budget a Saving account
It will be important to have some savings in the bank to allow for those times when you are looking for another career. Set up a saving account that will carry you for three to six months to cover all your monthly expenses. Treat your savings account like a fixed expense and make a set dollar amount deposit each month to the savings. This will be your emergency account so you do not have to rely on using credit cards to survive.
One Income Family
Before you leave your position, cut back to paying bills, buying food, and all your necessities with your spouse’s income. If you are doing a complete career change you will need time off from your working schedule for higher education. Between your schooling and study time, you won’t have time to bring in much of an income. Stick to your budget using just the one income while you test out your budget plan.
Cut out All Non-essentials
Cell phone plans can be very costly, and you can save a lot of money going to a cheaper plan. Cut down on the cable channels that you pay for, and cut out that expensive cup of coffee each morning. Take advantage of coupons for your groceries, and buy basic’s whenever you can. Entertain at home instead of going out to dinner each week and buy less expensive gifts for family and friends.
Before you quit your job, go over all the budget plans and test the budget for three or four months. Put your salary aside in the savings so you will have a good start on having enough income handy if finding a new job takes longer then you think. With proper planning, cutting down costs, and setting up a savings account, you should be safe to change careers and still live the way you are used to living.
