Facing Your Finances Head On

While it can be fun to daydream about quitting your job and starting something new, the reality of it can be incredibly challenging and take much more time than you’ve ever anticipated.

To prepare yourself before taking that leap, you want to make sure you’ve dotted all your i’s and crossed all your t’s. While there’ll always be unexpected obstacles, the more you prepare ahead of time, the better.

April is Financial Literacy Month, and if there’s one thing a person considering a career change needs in order to prepare, it’s their personal finances.

First, it’s important to note that it’s not called “Financial Black Belt Month!” No one’s asking you to get a Ph.D. in Economics or research derivatives or compare the P/E ratios of various stock holdings.

Financial Literacy Month is all about getting your money matters in order so you can achieve a certain level of “financial wellness.” It’s about de-cluttering your paperwork, understanding your cash flow, and setting your priorities so that you can support the vision you have for your life from a financial standpoint.

As a minimum, here are three areas of personal finances you should know when preparing for an upcoming career change:

1. Current Cash Flow: what’s coming in versus what’s going out each month

2. Projected Cash Flow: if possible, do a worst case, a best case and a realistic case scenario

3. Your credit score: check your credit reports for errors as well as your credit score.

I happen to be a quintessential “geek” when it comes to finances. I love getting all my paperwork organized and entering my data, so I can see the “big picture.” But I also know that not everyone shares my love of money matters and, in fact, that it can bring up a lot of anxiety.

However, if you can get a solid grasp of these three items before the month is over, you’ll be in a much stronger position to make informed decisions about your career and next steps.

You’ll know if it might be better to wait a few months in order to build up your savings and give you a bigger “safety net” or, if you’re actually in much better shape than you thought and could make the change even sooner.

You’ll be better equip to gauge the level of risk you’re willing to take. You can check in with yourself and see if, for example, taking a loan from your 401(k) and facing the penalties and tax consequences is worth it OR if it’s not something you’re willing to sacrifice at this time.

And, you’ll be able to come up with strategies beforehand for those unexpected fluctuations in income or expenses that may arise, and have a Plan B (and even a Plan C and D!) already in place.

Next post, we’ll talk about how to deal with the emotional part of that process and how to create a stronger “money mindset” to support you as you navigate through your career. Until then, share below which financial tasks you’re ready to tackle this month and how you’re going to accomplish them: