If you want to start a new career you need to prepare your finances before you leave your job. Here is how to make your career change affordable.
A career change could mean starting from the bottom again and taking a pay hit, so make sure you:
Research and choose a career you will love
Are ready for a new challenge
The best way to make a career change is to have a new job ready to start as soon as you finish your existing one.
If this is not possible you can still leave your job and search for another, but only if you can afford to.
There are two things to think about:
Can you afford to live while looking for a new career? If you leave your job to find your ideal career, make sure you have the money to cover your outgoings.
Will a new job pay you less? This could have a huge impact on your lifestyle, especially if you have a mortgage or big outgoings each month.
Try and save enough money to cover your monthly outgoings for at least two or three months, in case you find it hard to find the right role.
You could create a budget to find out exactly how much you spend each month, and on what. This will help you work out where you could save money too.
Having enough money to support you financially should give you one less worry when switching careers. There are several ways you can prepare yourself financially:
If you do not have savings, put away as much as you can before leaving your job.
If you already have savings, make sure you can withdraw the amount you need.
For example, if your money is in a fixed term or notice account then you may get penalised interest if you withdraw without giving any notice.
If you have a current account, you might be eligible for an overdraft. An overdraft lets you go into a negative balance on your account. Contact you bank or building society and ask:
What overdraft you have already?
Can you get a higher overdraft, if needed?
When you use an overdraft, you pay interest on the amount you use, for example 19% APR, but it could be higher.
If you have standing orders and direct debits coming out of the same account as your overdraft, make sure you leave enough money to cover each bill.
Alternatively, you could apply for a new current account which offers a 0% overdraft for a set term, like 12 months.
This gives you access to money without the need to pay it back each month. However, you will need to pay your overdraft back by the end of the 0% term to avoid paying interest.
A credit card lets you spend up to the limit on your card, and repay over as many months as you want.
If you have a credit card: You could use it to cover any expenses you face when looking for a new job, but you may be charged interest on what you spend.
If you do not have a credit card: You could apply for a new 0% interest on purchases credit card. This lets you spend without paying interest, up to a set term.
You have to pay a set percentage of your balance each month when you spend on a credit card, for example 1% of your balance, or a minimum payment of £5, whichever is higher.
You could claim £251.77 per month or more from Universal Credit, while you are looking for a new job.
However, this is not guaranteed and the amount you get will depend on your age and circumstances so do not rely on this to cover your monthly outgoings.
You can start your claim as soon as you leave your job, but it can take six weeks before you get any money paid to you.
If you are worried about your employment, compare income protection plans to find the best cover, so you will be protected should the worse happen.