In our case, after a number of years, lots of reflection, and a few costly mistakes, my husband and I decided that the career change was positive overall, regardless of financial setbacks. Here are a few ideas we learned to help manage finances while transitioning in life that might minimize or eliminate some of those challenges:
1. Know The Numbers. First and foremost, look into all of your hard finances, including: calculating what you earn from all sources; knowing how much you spend and on what; researching what kind of debt, savings, and investments you have overall; determining your credit score; and examining the employer-provided benefits you might need to cover. After crunching the numbers, write the information down in one spot so you can refer to it at a moment’s notice.
2. Make Sacrifices. Even if you have substantial savings, find ways to cut back and reduce your cost of living. It is best to alter aspects of your lifestyle early, before a real need for money arises. You may actually find that you won’t want to go back to some of the excessive spending once you make more money.
3. Maintain an Investment Strategy. Create and maintain an investment strategy so you remain connected to wealth and abundance during your transition. Choose something meaningful to you, even if it is not a number one priority. If saving for your child’s college fund is the most important thing to save for, do that instead of adding to your retirement fund. Transitioning is already an insecure time; keep stability by saving for something that matters the most to you.
4. Find Long-Term Financing. If you need to borrow money for a business investment, try to find long term financing so that large amounts do not need to be repaid before the business is profitable. Bank loans or equity loans that can be repaid over several years will give you breathing room to build cash flow and spread the payments over time.
5. Keep Life Liquid. Create access to your money. This is not the time to tie up your funds in investments that are difficult or costly to access. Liquid money is most useful during transitions.