Changing Jobs or Careers in Your 20s or 30s

By Eric Tyson

During your adult life, you’ll almost surely change jobs — perhaps several times a decade. Hopefully most of the time you change jobs by your own choice. But in today’s increasingly global and rapidly changing economy, job security isn’t great. Downsizing has affected even the most talented workers.

Always be prepared for a job change. No matter how happy you are in your current job, knowing that your world won’t fall apart if you’re not working tomorrow can give you an added sense of security and encourage openness to possibility. Whether you change your job by choice or necessity, the following financial maneuvers can help ease the transition:

  • Keep your spending lean. Spending less than you earn always makes good financial sense, but if you’re approaching a possible job change, spending less is even more important, particularly if you’re entering a new field or starting your own company and you expect a short-term income dip. Many people view a lifestyle of thriftiness as restrictive, but ultimately, those thrifty habits can give you more freedom to do what you want to do.
  • Keep an emergency reserve fund. You should have a “rainy day” fund to deal with emergencies and the inevitable curveballs that life throws your way. Keep it in a money market fund or savings account, and it should cover at least three months’ worth of living expenses.
  • Evaluate the total financial picture when relocating. At some point in your career, you may have the option of relocating. But don’t call the moving company until you understand the financial consequences of such a move. You can’t simply compare salaries and benefits between the two jobs. You also need to compare the cost of living between the two areas, which includes housing, commuting, state income and property taxes, food, utilities, and all the other major expenditure categories. There are various cost-of-living calculators online that enable you to compare different locations.
  • Track your job-search expenses for tax purposes. If you’re seeking a new job in your current (or recently current) field of work, your job-search expenses may be tax-deductible, even if you don’t get a specific job you desire. If you’re moving into a new career, your job-search expenses aren’t tax-deductible.