The Three Types Of Career Changes And How To Manage The Costs

In spite of all the changes to work-life over the past few years following the pandemic, one thing that has stayed consistent is the sense of burnout among employees.

According to recent studies, more than one out of every two employees feel burnt out. It’s a trend that seems to cross industries. In my day job, I work with a number of private practice therapists, and in that space there’s an estimated 45% rate of burnout. Meanwhile, similar rates are seen in other professions, whether you manage, work in a white collar job, blue collar job, from home or in-office.

What does all this burnout lead to? A desire to switch careers.

According to a recent GoBankingRates survey, 58% of respondents said they are planning a major job change this year. Among this group, 12% stated that they would pursue a new full-time job or career.

But changing careers can be a job in and of itself. That’s because of the different layers you have to go through in order to figure out what’s next. And depending on what you want to do next, it can dictate how much you must manage the costs.

Since there are different types of career switches, manage the expected costs based on the type of move you want to make.

Making a Career Adjustment

When making a career adjustment, you’re essentially using your skills that you have to move towards a similar field in your same industry. It might feel like a completely different profession to you, but the requirements for the move will be less.

Maybe you will need another license. Or maybe your current employer doesn’t focus on the specific niche you want to narrow in on.

It’s like when an insurance salesman decides they want to become a financial advisor, when a nurse wants to shift specialties or a elementary school teacher decides to go into corporate teaching.

These adjustments to the current profession can pay off big in the long-term, increasing your expertise and improving your skill set in your field. Not to mention, it may allow you to match your job to your values better.

These adjustments are also, often, much faster to manage and far easier to afford. Maybe all you need is another license that you do not already have on hand, in such cases. Meanwhile, you can continue to work your current job, which only builds skills that you will translate to the next gig.

To price this out, you’ll need to see the costs of the licenses or skills you must acquire. Then begin the process of getting certified and landing the new job.

But you can use current cash flows to afford the credentials, and it will also pay for the job search. Then when the right opportunity comes along, you’ll be ready to pounce.

Making a Career Shift

The next style of career move is the career shift – or moving from the field that you’re in to a new field, but using the knowledge and skills that you gained from the old field.

For instance, I used to be a full-time financial writer. I focused on personal finance concerns and investing. I decided that I wanted to work one-on-one with people as an advisor. To do this, I could use my experience and diplomas to practice as an advisor. But I needed to increase my credibility and legal standing by having the right credentials. This required some school and some certifications.

It’s a shift that can cost a lot or little, depending on your new field. When I made the shift, I had to go back and take classes in financial planning. I could do it online, which cost about $5,000. Then I had to pass certification, which was an additional cost for a test-taking class along with the cost of the test – that’s another $1,500.

How can you (and did I) manage such costs? First, lean on tax credits if you can.

You can tap the Lifetime Learning Credit, which creates a $2,000 credit come tax time. You can use this every year you take continuing education courses. Your modified adjusted gross income needs to be below $160,000 before the credit begins to phase out if married filing jointly ($80,000 as a single filer).

For higher incomes, if you have a business, you might be able to write off the cost as an expense for your business – since it presumably is working to make you more money (eventually).

Making a Career Change

True career changes occur when you’re deciding to shift industries and careers entirely. My brother, for instance, was a carpenter at the beginning of his career and then decided to become a nurse. To achieve such a change, it requires potentially years of school.

That’s where planning will become key.

There’s so many questions you’ll have to ask yourself. In these situations, you very well may need to go back to school. How are you going to pay for it? Student loans? Out of pocket? Parents? Another resource? Thinking about the tactics you will use to afford the educational component will protect your post-career change income. The less you pay in loans, the better off you will be after you graduate. But sometimes it’s not possible to achieve it without the loans.

Second, how will you afford your life expenses while you make the change? This process could last a couple of years or more. In the meantime, you need to budget for housing costs, food and other life expenses.

Look towards any secondary funding sources that can help. Did you serve in the military? Then there’s resources for that. Moving to a career that is bereft of talent? They may have scholarships available to help you with the move.

Finding aid will be key. Hopefully, you can begin that new career sooner than you hope. But in the meantime, it’s important to reduce what you have to pay before the income comes in again.

That can limit the stress and help you to avoid moving from burnout in one career to burnout in the other.

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