financial stability in a job search

Financial Stability on a Job Search

Financial Stability on a Job Search

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For a lot of potential job seekers, the main thing that’s holding them back from chasing after their next career move, or even their dream job, is money. Nothing freezes up the idea of starting a job search like the fear of risking financial stability. 

If this is your current situation, don’t worry, the good news is that you can prepare yourself and take action to reduce money anxiety while taking the next step.

Making moves

It’s hard to argue that money plays a big role in making a career change. While for some people the lack of financial security can prevent them from moving on to the next thing, others can be triggered by salary dissatisfaction and rush into quitting without a financial plan.

However, neither freeze nor flight will do when making a fulfilling career decision. It’s all about making moves, the right moves. You should not start a job search without being financially ready so you do need to come up with a plan and act on it.

Unless you find yourself in an unsafe or unhealthy situation at work that demands putting your safety first, you don’t need to be hasty and deliver your 2-weeks notice when you don’t know if you’ll have any opportunities lined up by then. 

So, instead, use that drive to stay motivated through the pregame which includes a financial check-up and backup.

Face your finances

How does your bank account look today? Do you have a good income-expense flow or are you running out of cash just days before the next paycheck comes in? If you don’t know where you are standing financially, it will be extremely difficult to predict how long you could go without a steady income while you are looking for your next job.

Sometimes a job search can go on for months, whether you’re on the hunt alone or with the help of a recruiter. You don’t want to be pressured into taking a job you are not interested in or settling for a lower salary because you literally can’t afford to negotiate.

A thorough financial check-up is a great starting point since it gives you clarity. Now, depending on your financial organization, this check-up might take a while. But remember it will be the base for your next moves, and actually, it’s not that complicated.

Simple steps for your financial check up:

  1. Make a list of all your monthly expenses. Don’t just write down the concept, you need to add the cost of each of them.
  2. Split them into fixed and flexible. Your fixed expenses are the ones you need to pay for every month (housing costs, groceries, loans, etc.), and the flexible expenses are the ones you can spare yourself from spending if necessary (take out, movies, travel, and more). 
  3. Sum up your total monthly cost for your fixed expenses and get an average of your flexible expenses.
  4. Round up all of your income. Do you have alternative sources of income? Like money from a side hustle, commissions, alimony, investments or rental properties? Write it down.
  5. Once more, split your income into fixed and variable. For your variable income sources you might also want to get an average of at least the last 3 months.
  6. Now, subtract your expenses from your income. Even if you don’t have much left at the end, as long as you don’t get negative numbers, you are already a step ahead. 

Prepare for take-off

If your numbers aren’t in the red, then you might be ready to take the leap, but not without a backup. Remember, you don’t need to quit to start a job search, but if that’s the way you want to go about it then there are two things you need to consider:

  • A job search fund
  • A budget

Fundamentals of quitting

Do you have an emergency fund to get by for a few months in case something unexpected happens? Well, that’s great! You might even be tempted to use it for your job search. But since this is a planned decision, you should try to keep it safe for an actual emergency. 

If it’s possible, how about building a job search fund? You can calculate how much money needs to go into that fund based on your financial check-up. You know how much money you need to take care of your fixed expenses every month and which expenses you can let go of for a little while. 

Try to make that fund add up to at least 3 times your monthly fixed expenses so you can have a 3 month-window to devote your focus on your search. Yes, you might need to stay in your job for a while to build up your fund but if you are not in a rush to leave, this will be the most money-smart decision you could make. 

Budgeting for a job search

If you don’t have one already, you need to start creating a budget. Once again the base is in your financial check-up. If you already have savings, a job search fund, or any kind of financial backup you can design your budget to make that money last as long as possible.

Prioritize your fixed expenses and try not to spend on anything that was not planned or included in your budget. Should anything happen, then you can fall back on your emergency fund.

Making a temporary lean budget that allows you to cover your basic expenses will help you take the worry off your plate during this process. However, an even better idea would be to come up with a second budget for once you find a job offer you actually like. 

Your income is the sustenance for the lifestyle you want to lead so when you get an offer you need to come in and negotiate based on your ideal budget, not the temporary one. Just don’t forget to give that ideal budget a reality check before settling on it.

Stability and strong decisions

So there you have it! When it comes to strong decisions like making a career change, you can build your own stability and venture into your job search without the pressure of money. And, once more, remember that you can also start looking for a job without quitting to keep your cash flow. 

Lastly, some people consider that looking for a job can also cost you a pretty penny investing in resources like job boards, or even clothes and transportation to your interview.  The reality is that a job search doesn’t have to cost you a dime with options like online interviews or turning to a recruiter who’ll help you connect free of charge. Just try to keep yourself financially fit and you’ll surely make it with some cash to spare for a celebration dinner once you get your next job.

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