How to Finance a Career Change Later in Life

There may be a point in our lives where our current career just doesn’t suit us anymore. Perhaps the spark that once led us to that career has well and truly gone out. Perhaps we want to choose a path that allows us more family time. Maybe a new career opportunity has sprung up that didn’t exist when we left school. No matter what the reason is, starting a new career can be intimidating no matter your age.

If you are over 40 and looking to jump into a new industry or career, there are important risks you need to consider. Dabbling with careers is fine for a 20-year-old with the Bank of Mum and Dad to fall back on; at our age, we are the Bank of Mum and Dad.

If you are over 40, it’s likely you have at least two children around late-primary school age, according to the ABS statistics. Over 70% of couples who live together have children aged 15 years old.

A survey conducted by the Australian Scholarships Group showed that families will need to come up with half a million dollars to give their child a private education, compared with about $60,000 for public school education. Multiply that by two or three and it gets very costly, very quickly.

However, our wellbeing should be our priority no matter what age we are. A happy person is a productive person after all. But you need to do some homework first.

Before you hand in your resignation letter (as tempting as that sounds), you need to look at your finances first. What are your expenses? Does your current (combined) income just barely scrape by after you’ve paid the rent/mortgage, school fees, grocery shop, utility bills and sundry items like gym memberships, streaming accounts, and kids’ sport or activities subs? This is an important activity not just for a career change, but helps you brace for unforeseen changes in financial circumstances.

“Cutting down expenses is always a good strategy, whether you’re changing careers or not,” says personal finance expert and Savvy Finance Managing Director Bill Tsouvalas. “It’s important to get a snapshot of your finances so you can shore up any weaknesses before jumping into a new job market. How long can you live on savings? Do you have investments? Can you consolidate or reduce debts before making the plunge? These are all questions you need the answers to before making any big moves.”

Now that you have a snapshot, you need to set a budget and stick to it. This means grouping all your major expenses into “pools” or “buckets” and making sure you only spend what you allocate to it. “This gives you security knowing where every dollar goes each month without having to think about it,” Tsouvalas says. “It’s actually easier than ever to account for outgoings thanks to NetBank apps on your smartphone.”

Most bank netbank apps can be “trained” to categorise spending so you can see where your money goes at a glance. It can also tell you how much you spend relative to your income.

“Ideally, you’ll have money left over for a rainy-day fund or paying off debts. If you have multiple credit card debts, it makes sense to pay them off in one hit with a consolidation loan.”

A debt consolidation loan is a personal loan which “wipes out” smaller, high-interest debts and replaces them with one repayment at a single interest rate. “With interest rates as low as they are, it’s never been a better time to consolidate debts this way.”