Preparing Financially For A Career Change

Understanding the cost of your needs and wants

I cannot state emphatically enough that the biggest component of financial freedom, successful life transitions, and getting through financial emergencies is knowing how much you spend and breaking it down into things you absolutely need and the things you want.

Food, shelter, clothing, transportation, communication tools, and medical care are basic necessities. Depending on location, health, and ability to split costs with others, the budget for these items can vary from a couple thousand to a few thousand dollars per month.

Much of what people spend are the “wants” – the basic needs can extend to going out to eat, living in “hip” areas, or having a nicer car then necessary. Add on top of that the easily identifiable wants – cable TV packages, the latest and greatest technology, designer clothes, second cars and homes, and much more.

In our mid 30’s at the top of the internet bubble in 2000, my husband and I were like much of America – spending like there was no tomorrow. As our income increased, so did our spending. Significant savings would have been needed to support our waste of money should we quit working.

When I decided to cut back in medicine in 2002, we evaluated our spending and cut everything we considered unnecessary. Cable TV – cancelled. Gym membership – cancelled. Eating out – no more than once every two weeks and at cheap restaurants. Expensive travel – forget it. When all was said and done, we cut spending by almost two-thirds our previous amount.

Starting a new business is tough. People tell you to not expect an income for a couple of years. It took me three years to break even and another two to match our reduced spending amount because I kept reinvesting in the business. Thankfully, our savings sustained us during that time. And guess what? Once the income increased, our spending didn’t go up – we didn’t miss much of what we cut out. Only recently have we loosened up and we are careful to make sure the spending is on things that provide treasured experiences, such as travel. Experiences have no ongoing carrying costs.

In a nutshell, by minimizing buying “stuff”, keeping normal carrying costs low, and saving any leftover money, it is much easier to break the chains of a career that is no longer satisfying.


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