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Advice / Succeeding at Work / Money

A Career Changer's Guide to Switching Industries Without Going Broke

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So, you’re thinking about a career change, but you’re not actively pursuing it because you’re worried about money. After all, you know switching industries could mean a drop in salary as you work your way back up the ladder, and you're (understandably) afraid of giving up everything you’re accustomed to.

Well, I’m here to tell you it’s possible to take a pay cut for the sake of your dream career without giving up your life or your sanity or going into debt. Seriously! Read on for five steps you can take to set yourself up financially (and emotionally) to make your move with confidence.


Step 1: Figure Out What You Can Realistically Make—and for How Long

Before you jump in, you need to gather all of the relevant information. Find out what your new career would pay for the first several months as well as what you can realistically aspire to be making in a few years once you gain more experience. Do online research, look at salary calculators, and go on informational interviews to get an accurate range.

Then figure out what you’re spending now. Try using a service like Mint that actually tracks it—rather than just guessing. For many people, this is truly an eye-opening exercise: Sometimes just getting a clear picture is enough of a shock factor to make some serious spending changes.

Now, consider the big picture—what your life will look like when you first take a pay cut, as well as in the distant future. Think about your desired lifestyle in five years: How much will it cost you? While a temporary sacrifice is fine (and likely necessary), keep in mind that you should not cut things like your retirement fund.

Knowing that your end game will work for you matters when it comes to your happiness and peace of mind. If you think this move, while it may mean some lifestyle changes in the meantime, will be worth it in the end, proceed to the next four steps.


Step 2: Stack Your Savings

You’re going to want to set up a separate savings account specifically for your career move. I interviewed author and sales expert Kim Duke and asked her how she prepared to leave her extremely high-paying sales career to launch her own online consulting business. Her reply: “I lived off of one paycheck per month and stashed the rest in an account that I called ‘The Dream.’… I was so focused on funding my company that I was willing to let go of all the fun stuff for a year. Pedicures, manicures, massages, eating out, travel, fancy cheese—you get the picture.”

For Duke, trimming back on expenses and living off of one paycheck a month in the short-term meant that down the road she’d be able to have those things again (plus a job she loves!). While it surely wasn’t always fun, it was doable.


Step 3: Spend Your Money Like You Mean It

Wondering how exactly you’re going to find that extra money to dump into your savings account? It starts with bringing some much-needed awareness to your spending. But deciding how to spend your money and paying attention to where it’s all going isn’t always easy. That’s where what I call the rather factor comes in.

The idea of the rather factor came from my friend Robyn when she shared with me that she had just shelled out $100 for an expensive birthday dinner for a friend. She sighed and added that she would rather have put that money toward a trip she wanted to take to Paris—and the rather factor was born.

The idea is this: Spend your money on what actually matters to you. (As often as possible, of course; we’ve all had those birthday dinners, bachelor parties, and other obligatory friendship events.)

To put this in action, write out a few examples of what you really value. Ask yourself: What do you really want to align your spending with? I love writing out my rather factors on sticky notes and putting them right on my credit cards. For example, I choose coffee from my favorite coffee shop, date night with my husband, and weekly yoga. But when I'm wandering the aisles of Target, ready to mindlessly throw three $15 t-shirts in my cart, I pause and check my list of priorities.

Cutting out the mindless purchases that can really add up, and when you’re shelling less out, you can afford to be bringing less in. (You can grab your own rather factor template here.)


Step 4: Live Large on Less

Making the career move of your dreams and taking a pay cut doesn't mean you should feel guilty about every cent you spend on yourself. Who would want to follow through on a plan that entails that much suffering? Enjoy the things that really matter to you, just do it for less.

Instead of meeting up with your friends for dinner at a fancy restaurant, suggest lunch or even happy hour. Cut the gym membership and find free ways to exercise. Cancel your cable, give up your DVR, buy in bulk, buy store-brand labels at the grocery store, and get a library card. Yes, I know you’ve heard these before and you probably came here looking for a magic answer. But here’s the truth: You’ve heard them because they work.

For example, if you want a new look for a special occasion but don't want to buy a new outfit, plan a date with your friends to shop one another's closet. In just one year, my group of friends saved about $5,000 by swapping outfits instead of shopping for new clothes for dates, wedding, and work functions.


Step 5: Talk About It

Success loves company. Sharing your career goals and your money goals with like-minded, supportive friends can be a game changer. I spent years trying to figure out my money on my own, but it wasn't until I came together with four girlfriends to form a money club that everything changed. In one year we supported and inspired one another to collectively increase our savings by more than $40,000, negotiated promotions, and made huge strides in our careers and lives. We were so successful that Oprah invited us on her show to share our story! (I’m not guaranteeing you’ll meet Oprah, but you can expect a supportive base to help you meet your goals.)

Tanya Parlee, a woman who has since started her own Smart Cookie Money Club using the same method, says a lot of what her Money Club provides is help with the emotional side. “Everybody knows how to do math. But you’ve got to change your habits,” she says. “It’s more human nature than money.”



Keep in mind this plan works if your new career path will eventually catch up to where you are now financially. It’s designed to make you feel comfortable taking a temporary pay cut as you work your way back up, accepting a season-long unpaid internship, or attending a dev bootcamp.

But if you’re entering into a field that pays significantly less (let’s say, you go from being a lawyer to working at a nonprofit), then you’re not looking at a temporary savings plan, but rather an entire lifestyle overhaul that likely can’t be remedied in one article. That’s not to say you shouldn’t go for it or that you’ll be miserable if you do, but that it’s a big life change that cutting cable can’t quite fix. With that said, making a career change is brave and the fact you’re even thinking about it shows just what kind of determined person you are—so I know that you’ll figure it out.