A job change is an ideal time to reflect on your overall financial picture. According to Spectrum Group/Access Research (2001), 50% of all job changers consulted a professional financial advisor to help them decide what to do with their retirement savings. Financial planning for most people is totally overwhelming, and so we have to make smart choices. I don’t pretend to be an investment advisor, but I do suggest you think about the following:

1. Goals - How do your career goals impact your financial goals? What are you willing to sacrifice to achieve your dream job or your back-up job? Develop a game plan that is going to meet your unique situation. This may include filing for unemployment insurance promptly and studying carefully the severance package.

2. Budget – Have you established a budget that works for you? Can you squeeze out a few dollars each week to start a business in 2 or 3 years? What money will you set aside for continuous learning? Have you consolidated your financial records to help you review your budget and make any necessary decisions? Be disciplined and systematic.

3. Cash Flow - Develop a reasonable spending plan and an emergency spending plan. Track your spending carefully so you know exactly where your money goes and thus where you might reasonably cut back. What are the necessities and what are the luxuries you can do without? Consider higher deductibles to lower your premiums based on what you could afford to pay out of pocket in event of a loss. Strive to pay your bills on time. Consult a credit counseling service if you need guidance on which bills to hold off on if that becomes necessary. Start a separate Emergency Career Fund in case you lose your job. Throw a couple of bucks in it each week and watch it grow.

4. Debt Management - Prioritize your debts. Talk with creditors before you get behind on payments. Monitor your credit report. You may access each of the three major services once a year for no cost, so use the strategy of checking each one once a year at four-month intervals. This free access doesn’t give you your credit score, but it does give you an indication of whether there are mistakes or anything amiss in your credit history (www.annualcreditreport.com).

5. Retirement – It may now mean going back to school, working part-time, consulting or starting a business. Since you may be spending one, two or three decades in retirement, what goals will you set for yourself personally and in your work life? If you need to tap investment accounts, go to non-retirement accounts first. Do not take the short view with your pre-tax retirement savings account (40l(k), IRA, etc). Make sure you understand the plan rules for your employer plan, and consider very carefully the ramifications of withdrawing funds from your retirement plan.

6. Taxes – Put on your Dream Team an experienced accountant that can help you with the complexities of taxes. Job search expenses such as resume writing and career counseling may be tax deductible depending on your situation.

7. Investing/Savings – Consider your short-term and long-term savings objectives? How much could you put away each week? Take a disciplined approach. What’s the right mix of short-term investments (i.e. CDs, savings and money market accounts, etc.) and long-term investments (i.e. 401(k), Annuities, IRAs and 529 plans, etc.)? It’s a good idea to think about where your savings fit into your future.

8. Insurance and Benefits – What are your health insurance options during this transition? What other benefits do you need to consider in making your next career move?

9. Financial Planner – Get someone that is highly trained and someone you trust to be on your Dream Team. Be sure to invest your time interviewing the right one, before you invest your money.

10. Review – Once or twice a year, review both your career and financial status. What modifications do you need to make in order to reach your goals?

Many career transitions are difficult, especially when it come to issues surrounding money. The stakes are high and the mistakes are costly. Step back, reflect, get help, and develop a sound financial strategy for career success.

© 2010, Dr. Thomas J. Denham, Careers In Transition LLC