How to figure out if you and your significant other can afford a career change.
We know you love your man for more than how much he reminds you of Don Draper when he puts on his suit and tie every day, just like we know that you aren't with him for his paycheck. That said, a voluntary career change involving a serious pay cut isn't necessarily easy to cope with. If your significant other has come to you wanting to talk about a career change, hopefully it's something you can believe in, like supporting his lifelong desire to be a teacher, not joining his little brother's garage band. But even if your heart's behind him and your relationship's rock solid, it doesn't mean that your finances will be, too. Cathi Doebler, author of Ditch the Joneses, Discover your Family, offered this advice for deciding whether a major career change is right for your family.
Identify all the impacts to your budget. Your partner probably thought long and hard about this before ever coming to talk to you, so ask plenty of questions. Doebler recommends: "Questions you should ask about this change include, 'What are the benefits for our family with this career change? What are the challenges? How will this impact our family benefits, such as health care, life insurance, and 401K options? Will the reduction in income be long-term? For example, will he start out at a lower salary, but build up again to a higher salary over time? Will the reduction in income be permanent? How will this impact our tax bracket? Will the reduction in income reduce your taxes significantly?'" While at first the idea of slashing your income may sound painful, it's possible your man has thought it all out and has a plan that will soften the blow. The Frisky: Why Does My Success Send Men Running Scared?
Get a clear picture of your current budget. Hopefully, you and your partner both have a pretty solid idea where your money goes, but even so, you need to go over your current financial lifestyle with a fine-toothed comb. Doebler says that looking at this budget is critical in determining whether you're financially healthy enough to absorb the blow of a voluntary pay cut. "Some ways to do this include tracking your spending on everything from the electricity bill to coffee at Starbucks for at least three months, and looking back at your credit card statements and checkbook for the last year." Doebler says that this close look will allow you to see what your lifestyle really costs. Even if you're very careful with your budget, realizing that you blow half of your disposable income on eating out may be a realization you need to have before that disposable income vanishes.
Distinguish between your needs and wants. With your budget detailed on paper, it should be easy to identify what you're spending on needs for your family and what you're spending on things just because you want to. It's OK—we all spend money on wants. The key here is just to identify whether you're willing to give those up. And make sure you're honest about what category you're putting your expenditures in; while you may argue that red wine is obviously a need, it belongs in the want column. "Needs are critical to your family's survival. Wants are not critical to your family's survival," Doebler clarifies.