Before changing jobs, it’s advisable to assess the financial implications associated with a career change. Equally important is understanding the current job market and the factors that could influence a career shift.
Here’s what you should be aware of and the initial steps to begin planning.
What’s the current state of the job market
Preliminary estimates of employment, unemployment, underemployment, participation, and hours worked as reported by the monthly Labour Force Survey.
In the context of trends, the October 2023 statistics are as follows.
In raw data:
- The unemployment rate held steady at 3.7%.
- The participation rate saw a decline to 66.8%.
- Employment numbers surged to 14,145,400.
- The employment-to-population ratio remained stable at 64.4%.
- The underemployment rate stayed unchanged at 6.4%.
- Monthly hours worked experienced a decrease to 1,937 million.
In adjusted data:
- The unemployment rate rose to 3.7%.
- The participation rate saw an increase, reaching 67.0%.
- Employment figures increased to 14,173,500.
- The employment-to-population ratio saw a rise to 64.5%.
- The underemployment rate stayed consistent at 6.3%.
- Monthly hours worked increased to 1,939 million.
Breaking down employment types:
- Full-time employment rose by 17,000 to encompass 9,828,000 individuals.
- Part-time employment witnessed an increase of 37,900, reaching 4,345,500 individuals.
Changing jobs often demands a significant amount of time, usually spanning three to four months for individuals in mid-management positions. This period involves activities such as exploration, self-promotion, submitting applications, and attending interviews. However, considering the current scenario where numerous job seekers are pursuing similar opportunities for self-reinvention or better prospects, this timeline might be extended.
How much should you set aside?
The specific sum you should allocate before changing jobs hinges on various factors, such as homeownership status, family circumstances, and lifestyle expectations. Nonetheless, having a minimum of six months’ worth of expenses saved up for this transition.
Conducting a comprehensive financial assessment before taking the leap is highly recommended.
Assess your financial standing by starting with your everyday expenditures and considering your long-term financial objectives, including plans for retirement. If you haven’t already started a budget, begin monitoring your income, expenses, and savings.
Additionally, consider ways to adopt a more frugal lifestyle while adjusting to your new career. For most individuals, there are opportunities to reduce expenses in some areas.
Consider your potential future earnings
While maintaining a savings safety net holds significance, it’s essential to contemplate your retirement savings (superannuation) and the possibility of a salary reduction in your new position. This consideration becomes particularly crucial if you’re shifting from a field where you hold significant expertise to one where your seniority level might decrease.
Individuals changing jobs should be aware that their retirement savings might be impacted if they take time away from the workforce for studying or if they experience a financial setback while transitioning careers.
Nevertheless, it’s possible changing jobs without change to income, although this largely relies on the capacity to transition to a new profession without additional educational pursuits, instead relying on transferable skills.
Regarding skills, it’s important to remember that you’re not starting anew. Recognising your transferable skills can help you understand the assets you already possess.
Steps to take before you quit
With any difficult task, transitioning to a new job or career is most effective when broken down into manageable steps.
1. Evaluate your prospects
When pursuing any position, considering the statistics and the probability of success is crucial.
Questions to consider may involve the current state of the industry, the demand for such positions among companies, and the level of competition among candidates. This approach isn’t intended to impose negativity or limitations on oneself; rather, it aims to foster a realistic understanding and gain a more precise estimation of the duration and challenges involved in the process.
While some of these enquiries might seem daunting, using them as a framework for research can be beneficial. One method is to explore various industries and job roles to assess the number of job openings, forecasted job growth, and the typical salary range available.
2. Investigate and evaluate salaries associated with various positions
Delving into the salary ranges for roles that pique your interest can assist in assessing the viability of a transition. This research can establish a reference point for yourself as you progress to the interview stage for different roles.
3. Prepare your finances
Escalating living expenses are making saving more challenging, yet setting aside any amount can alleviate the transition during job changes or sustain you while seeking new employment. The greater your financial cushion, the more leeway you’ll have in your job search. Ensure your funds are easily accessible, perhaps in an online savings account rather than tied up in long-term investments like stocks, retirement funds, or property.
For those who have already left a job, consider withdrawing from your safety net on a weekly basis, a similar or slightly reduced amount compared to your usual spending.
This approach ensures that the resources will cover your needs throughout the specified period. If you secure a job within a month, that’s great. The surplus can then be directed to savings. However, it’s prudent not to panic until the fourth month, at which point reassessing job prospects might be necessary, possibly shifting focus from pursuing the ideal job to securing employment.
4. Talk to industry professionals
Thoroughly investigating your desired career path is beneficial. This not only provides insight into the most promising growth areas, but also reduces the likelihood of dissatisfaction with your new job.
Explore ways to expand your network online and consider reaching out for coffee, virtual meetings, or informational interviews. Inform people about your intention to switch careers and express interest in gaining their industry insights. Enquire about job roles, associated challenges, preferred workplaces, and recommendations for further details within the field.
5. Have a well-thought-out plan
Creating a strategic career transition plan can aid in maintaining focus, minimising stress, and allocating adequate time and resources for the change.
While the urge to swiftly switch careers might be strong, taking gradual steps is often advisable. Transitioning from full-time employment to becoming a full-time student, for example, can be immensely challenging.
Exploring the possibility of studying part-time while retaining your current job or reducing work hours to garner experience in your desired field could be viable options.
Initially, a career change might appear daunting. However, the present job market could offer the ideal conditions for you to take that leap. By conducting thorough research, seeking advice from others, evaluating your financial situation, and constructing a long-term plan, you can begin moving in a new direction.
DISCLAIMER: This article is for informational purposes only and is not meant to be considered official career or finance advice. QUICKLE has no relationships with any career counselling service, digital portal, or recruitment firm. Please consult your financial advisor.
