Jesse Cramer The Best Interest Changing Career Tips

I recently made a major career change. I used to design satellite telescopes, including the James Webb Space Telescope which launched in December.

In 2018, on the side, I started a blog called best interest. I wanted to know more about personal finance and investing. I decided the best way to approach it was to basically learn in public and share my experience along the way.

But what I’ve found is that I love helping people achieve their financial goals. So in 2021, I took a huge leap and changed careers to follow my passion.

I now work in a RIA Trustee and I’m studying for my Certified Financial Planner designation. Now I can spend my time helping people and their finances, and I wouldn’t have it any other way.

But the career change itself required significant financial planning on my part. Here are the main financial considerations that prompted the jump.

Salary and my budget

With my job change, I took a short-term pay cut. That meant I had to revise my budget to take this into account. I’m saving less than I used to and have pushed some short-term goals, like moving into a new house, into the future.

But here is what is important. All my monthly expenses and bills are covered. And I’m still saving and investing money for the long term, even though I’m not contributing the same amount as before, yet.

With my budget, I spend less than I earn and invest the rest. And I know that my potential long-term earnings are higher.

One of the things that helped me during this time was a plan I made called the financial order of operations. It’s basically a flowchart that takes the guesswork out of how to approach various financial decisions. By breaking it down into simple steps, I’m less likely to feel overwhelmed.

Insurance and other benefits

Whenever you change careers, even if you don’t change industries, it’s good practice to make sure you understand what health insurance is available to you, what kind of coverage you have and its amount. Cost.

Fortunately, my old and current health insurance plans are almost equivalent. I spend about the same each month as before and receive the same level of coverage. But health insurance isn’t the only benefit to explore and possibly negotiate when starting a new role.

Depending on what your employer offers, you may qualify for benefits such as benefits, tuition reimbursement, and professional development that your company could cover, which could save you thousands of dollars in the long run. if you know how to take advantage of it.

I timed my career change so I could start the new year. This timing allowed me to use all my advantages at my old job. Many perks recycle on specific dates, with January 1st being the most common. And, for what it’s worth, it also gave me a clean break between tax years.

Travel and accommodation costs

Location is also an important factor if you are changing careers. If you move, it’s not just monthly housing costs you will need to consider, but the cost of moving and expenses like a truck or moving service.

Some companies offer a relocation package to reimburse you, so it never hurts to ask what your options are.

And when it comes to budgeting for a new place, I’m a fan of the data provided by Numbeo to compare the cost of living between localities.

Even if you’re not moving, it’s important to consider your new travel expenses. Driving costs can cost you dearly 50 cents per mile on average. If your new job adds 20 miles to your daily round trip, that’s $10 a day, $50 a week, or $2,000 a year. It is money to consider.

I stayed local and didn’t have to move. But my new commute is about 15 miles longer per day. It’s not a lot, but it will add up over the years, and I made sure to factor that into my financial plan.

Retirement plans

When changing jobs and careers, it’s good to compare pension plans. Here are some questions you can ask: What type of accounts do you have access to, such as a 401(k), 403(b) or an IRA? What, if any, are the fees associated with these plans? What are the investment options in these plans?

If you can, I would take advantage of an employer match if your company offers it. Personally, I keep maxing out my 401(k) to get my full employer because it’s free money in my pocket and invested for my to come up.

As to what to do with your old pension plan, you can explore a few options. You can transfer it to the plan of your new employer, for better consolidation or because it is a better plan. Or you can also turn it into an IRA that you can manage yourself, without being part of someone else’s plan, which is what I plan to do.

If you’re not sure, it never hurts to consult a trusted financial advisor.

Tax Considerations

Keep in mind that changing jobs or careers can affect how you manage your taxes, for several reasons.

I was able to stay local, but if your new job is in another state, it’s important to be aware that the amount of income tax you pay could change. I would also be mindful of your new tax bracket when you change jobs mid-year. If your new employer makes a mistake on the amount of your tax deduction, it could lead to a big surprise come tax season.

To make sure the deduction is correct, I would speak with your human resources department. A resident tax specialist may be able to help you. But if not, look for an accountant or a tax specialist.

New Supplies

Another big question to ask yourself is: will your new job require new things to go with it? It can be a different equipment, a new wardrobe or a change of vehicle. Some items may not be provided by your employer, so this is something to factor into your budget.

For example, as an engineer, I wore jeans and t-shirts most of the time. But now that I work in wealth management, I wear pants and a jacket almost every day. Personally, I like to dress up a little more. But updating my wardrobe cost money, around $750 for the new one office clothes.

It’s time to decompress

I left my old job in mid-December. Combined with Christmas, I had three weeks off. It was the perfect time to reboot, reload, and start fresh. But I also planned meticulously to make sure I had savings to cover those three weeks. without a paycheck. I know I spend around $3,500 a month, so I set aside $3,000 to cover my time between jobs.

If you want to give yourself some time between leaving your old job and starting your new one, I recommend setting aside enough funds to float you during this time. If you want to take a little more time off and can take more of a personal sabbatical between jobs, that’s fine, but it’s important to organize your finances accordingly.

I’m glad I was able to make this career change. I couldn’t be more excited to help people plan for retirement and achieve their financial goals now. Fortunately, these steps helped me make the transition while maintaining a solid financial foundation.

Jesse Cramer is the founder of The Best Interest, a personal finance blog. After seven years working as an aerospace engineer, he now works for a registered trustee investment advisor in Rochester, NY, where he lives with his fiancée and their foster dogs.

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