For a variety of reasons, many workers in post-recession America find themselves with jobs that are less lucrative than the ones they had five or 10 years ago. Changing fields isn’t easy, even when it’s by choice, and it can often entail accepting lower wages and changing your lifestyle. But it doesn’t have to be the end of the world.
As Susan Johnston writes in a terrific U.S. News & World Report piece titled “Financial Tips for Career Changers,” it’s all about rethinking priorities and adapting. She cites as an example Diana Melencio, a 32-year-old woman who went from working in finance to being an entrepreneur and co-founding the website okmyoutfit.com. Even though Melencio had to give up cable and start walking to work and implementing a host of other personal austerity measures, she’s found the process of reeling in her spending quite satisfying.
No wonder, then, that Johnston’s first tip is to “separate wants from needs.” When a career switcheroo leaves you with less cash, figure out where you can trim some fat. The classic example is cutting out those Starbucks lattes, but if you’re like most people, there’s probably no shortage of frivolous things you buy all the time — perhaps without even realizing it. Johnston suggests couples make separate lists and then talk though which spending items to cut. Other options include moving into cheaper housing and adjusting premiums on things like auto-insurance policies, just to lower the monthly out-of-pocket expenses.
Johnston’s next tip also has to do with socking away money: “embrace the savings where you can.” She gives the example of no longer having to pay for dry cleaning after trading your high-paying job for something else. Maybe the new gig lets you bike or walk to work instead of driving or taking the train. Also, just because your new employer can’t match your old salary, it doesn’t mean you can’t be compensated in other ways. See about getting, say, a cell phone, or a higher-quality health plan or life-insurance policy.
Another great way to boost the bottom line is to “look for extra income sources.” This could entail anything from picking up freelance projects to renting out your bedroom to consult with startup companies, as Melencio often does. Just make sure the extracurricular activities don’t interfere with your main work.
Whatever belt-tightening measures you put in place, be sure to “keep saving for retirement,” Johnston’s final piece of advice. Providing for “future you” is extremely important, and it takes precedent over watching cable right this minute — even if there are some pretty amazing shows right now!