Life Happens Part 1: Managing Finances Throughout Career Changes
By Allison Scott / 06/01/2020 / Your Money
While some front-line workers and medical professionals have accepted new job opportunities, others may be facing reduced hours, furloughs or job loss. These tips may help guide you through a number of situations.
Moving right now requires extra planning and patience as well as attention to detail with finances.
- Factor in the cost of living. Spend time researching your new home and the costs associated with it. Even if it's an adjacent state, things like car insurance, home prices or rent, and taxes can differ greatly.
- Be intentional with credit. When you’re buying things for the new digs, remember to keep track of your spending habits. It can be easy to rack up debt if you’re not careful, so focus on covering essential needs and postpone your wish list until you've paid off existing balances. If you are relocating for your career, you may be able to negotiate with your employer for real estate and moving costs.
If you suddenly find yourself without a steady source of income, it’s an understandably trying time. However, there are ways you can weather the storm while waiting for things to calm down.
- Put your emergency fund to use. If you have it, now is the time to use your emergency fund and cover any expenses that might cost you in interest down the line. You can replenish the fund once you're back on your feet.
- Go back to budgeting basics. Focus on covering living expenses first and, from there, you can determine the best approach moving forward.
Job tip: GM Financial is looking for great people to join our team. Check out our careers site to see if there are any openings that interest you.
Whether out of choice or necessity, altering the trajectory of your career is a big, exciting risk. You’ll learn a lot and grow from this change, but it can be difficult to navigate finances during the transition period.
- Invest in your future. Additional education or training to further your career might be an expense upfront, but it can pay off in the long run. Be patient and make smart spending (and saving) decisions in the meantime.
- Consider using savings. If you took a pay cut to explore a different path, it can be hard to adjust your lifestyle to fit your new income. While you figure it out, remember it’s OK to use your emergency fund. Just make it a priority to add back into it once you’ve adjusted to living within your means.
Career progression is something to celebrate — especially when it means more income to work with. But knowing what to do with bigger paychecks isn’t as cut and dried.
- Bulk up your savings. Getting a raise is the perfect time to increase your contributions to savings. If you were able to comfortably live off your previous income, consider putting your raise into savings or investing in your future.
- Pay down debts. Getting a raise provides an opportunity to increase your contributions. Whether all at once or in small increments each paycheck, lowering the amount owed will benefit you. And while you’re at it, commit to paying your credit card in full to avoid interest charges.
After years and years of hard work, early mornings and outlined schedules, you deserve to relax. However, retiring is also an entirely different budgeting beast.
- Reallocate your budget. Lots of changes can accompany moving into the retirement phase of life, especially if you’re an empty nester. Fewer mouths to feed likely means more money in your pocket, but there are many options to consider when reallocating your funds. Deciding to pay down debt, splurge on a new vehicle or contribute to savings depends on your goals and current situation.
- Organize your finances. Since money coming in might be originating from a variety of places, it can be hard to keep up with what’s what. Lay out your assets and what you can expect to bring in as the first step in setting up your finances. If you were comfortable and confident in your budgeting approach leading up to retirement, you may be able to continue on that path.
What to do
Life happens, and it can clearly impact you financially. In another story, we recognize a few personal life events that can shake your financial security. Either way, look at it as a challenge to push yourself to find new solutions, so you’re better prepared for whatever comes your way next.