Changing Careers? 5 Ways to Be Financially Prepared
Ready for a life change like quitting your job to pursue a new career, starting your own business, or going back to school? Making a jump is both exciting and risky. Find out what financial steps you should take before leaving a comfortable work situation to follow your passion.
Quitting your job to pursue a new career, start your own business, go back to school, or take a sabbatical is both exciting and risky. Before you follow your heart and make a leap, it’s wise to make sure that your finances will support you.
I interviewed Mike Lewis, Founder and CEO of When to Jump, a global community of people who left one path to pursue a very different one. Mike launched the platform in 2016 based on his experience leaving his job as an investor at Bain Capital Ventures to chase a dream of playing professional squash.
Goldman Sachs named Mike one of the 100 Most Intriguing Entrepreneurs of 2017. And in January 2018, his first book When to Jump: If the Job You Have Isn’t the Life You Want will release worldwide.
We discuss what financial steps you should take before leaving a comfortable work situation to follow your passion. Some topics we cover include:
- Common trends among people who have made successful jumps.
- How to create a budget and "pitch deck" that prepares you for a jump.
- Whether you should tell other people about your desire to jump.
- How to let yourself be lucky after doing the right amount of preparation.
- Stradling the line between being pragmatic and taking enough risk.
I had the job and lifestyle I had thought I wanted, yet I secretly held out hope—for a knock on the door, for some-one to enter my tiny office, walk up to my desk, and give me permission to leave: 'Mike, it’s July 1, time to go chase your dream, remember?' - Mike Lewis, Founder and CEO of When to Jump
The following tips were contributed by Mike Lewis.
Financing a Jump: 5 Steps to Prepare Before Chasing Your Passion
For just about everyone, the idea of taking a risk to chase a dream starts with tackling one big hurdle: cash. A lack of funds can be the best excuse not to jump.
“Welp, I need $X and I only have ½ of $X, no jump for me.” Or, “I can’t jump without A, B, and C figured out, and they’ll never be figured out. So, I’ll stay here at my cubicle and scroll Tumblr instead.” Sound familiar?
Sadly, I can’t give you a one-size-fits-all solution or a get-rich-quick scheme to guarantee success. But from the research I’ve done and the stories and content shared across our global When to Jump community, these 5 steps can help you prepare for a successful jump:
1. Save a set amount each month.
Choose a dollar amount to save from each paycheck. It could be as little as $100, but try to save as much as you possibly can in a dedicated savings account. Call it “Jump Fund” and promise yourself not to touch it until you jump.
2. Budget for the bad.
Imagine your jump going poorly and create a worst-case scenario budget. Consider expenses for the following:
- Staying alive—includes necessities such as paying for rent, food, and health insurance.
- Working capital—for a new business, such as hiring employees.
- Kitchen sink costs—include everything else, such as travel and entertainment.
Then add up these costs, multiply by 1.5, and you’ll have the total amount you need to save,