How to Navigate a Pay Cut and Career Change

July 4, 2023

In this highlight, we discuss how to navigate a pay cut or career change.

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Next up is a question from Jessie. She says, “I’m tired of my job, and I’m planning to not only quit but also leave my industry for something else. The downside is I’ll probably take a pretty big pay cut. Any advice on navigating this? My mom always used to say, ‘Failing to plan is planning to fail,’ right? I think if you’re going to go into this, Jesse, kudos to you for recognizing you’re in a job you don’t like and maybe in a career field you don’t want to be in. You’ve said, ‘I don’t like this, I want to change, I’d like to potentially be doing something different.’ That’s great that you recognize that. Now comes the hard work—you actually have to put the plan in place to figure out what makes that possible. I don’t know your situation. Are you married? Do you have children? Do you have debt obligations? What’s your rent? What’s your mortgage? All these things factor into it. You’ve got to figure out, ‘If I’m making X dollars, and I’m going to be making 70% of X dollars at this new job, how do I bridge the gap?’ We, here at our firm, have hired a number of career changers. We have former musicians, former doctors, former accountants, former engineers. One of the things that we tell them is, ‘Hey, you were very successful in the career that you were in, but here you might have to take a step back because you have to learn a new vocation, a new field, a new skill set.’ Have you done the planning necessary to do that? What they’ll say is, ‘Hey, you know what? I thought I was going to do this 24-36 months ago. I began working, thrown up again, saving up cash. I began building up liquidity so that I was able to maintain the lifestyle. Or I made decisions to shrink my lifestyle, like selling a house and downsizing, selling a car and downsizing, cutting off subscriptions—whatever that thing may be that allows you to trim expenses. I was able to figure out how I’m at X dollars. Now I’m going to change jobs, and I’m going to be able to make sure I can live at that lower rate. And then I have a realistic expectation around what my future salary will be. Some locations, you change to get back to where you were before; some you change and you never get back there. So you have to figure out, is this a temporary change that I need to make to my lifestyle, or is it a permanent change that I need to make to my lifestyle? What I don’t think you can do, despite what Tom Cruise would suggest to us, is just flip out one day, pack up your stuff, tell your boss that you’re gone, and leave. I don’t know that those circumstances lead to the highest probability of a successful outcome. Brian, you’ve done this previously. What are some advice that you would give?”

But it’s a “Jerry Maguire” reference, you know? I know we’re aging out on some of these references, but…

Both said it—you know, failure to plan. But I think you have to begin with the end in mind. I would first ask you, what is the long-term opportunity of what you’re leaving from to go to? If, you know, if you look at that in 10 years in the future, even five years in the future, is there a chance for you to make more money? That’s something positive. Or if it’s not to make more money, maybe it’s because you have had career changers here who they’ve done great at building money on the front end of the career, but now they just want to wake up in the morning and feel more purposeful. The money is not the actual driver. So you have to figure out the why. That’s the first thing. Is this to make more money or is this to be happier? Or is this a combination? Do that homework first so you kind of know where you’re trying to go to. After you’ve done the homework on it, we’ve got to figure out the bridge here because if you—if, and by the way, this is what’s so sad to me—the more successful you are in your current career, if you haven’t been actually saving and building a huge reserve behind you, it’s really going to handicap you because no change is going to be without cost. And because you—it’s just, you’re more than likely, if you’re taking a step back, you’re going to… Is this a two-year step back? Is this a five-year step back? Be honest with yourself. And that’s why I always say this is a measure-twice-type decision. You don’t want to just do it off the passion. I feel like so many things in our society right now are just, “Follow your heart.” Well, that could be great, but I’ve seen a lot of endeavors fail because, you know, you can’t pay the bills with passion. You’ve got to have enough resources to get the passion, the power, and the engine of success so that you actually can pay the bills. That’s why we always talk about putting on your 3D glasses. If you need a reminder every time you make a huge life decision, it could be starting a business, it could be changing a job, I want you to put on your 3D glasses and run a plan three different ways. And I want you to run a plan over multiple years. You choose, is this a five-year? Is this a 10-year? You figure out how far you want to go in this mini business plan that you’re doing with your 3D glasses. And remember, the first one is the fun one. That’s the dreaming. This is like, “Holy cow, we’re gonna be rich!” This is all just the unicorns and rainbows moment. I’m so glad I did it. The other one is the down-to-earth. This is what you actually think will happen. Make sure you put that plan in. This is where you go put all the contingencies, all the things, and break up B. Don’t write in narrative form. This needs to be a spreadsheet with line items by year where you’re actually putting expenses, you’re putting in revenue, you’re putting in how this is all gonna fly. Don’t just write a narrative. That’s not what I’m talking about. I want you to actually get into a spreadsheet, get your hands dirty. And then the third of the 3D glasses is, of course, the doo-doo. This is the one that you’d much rather plan for doo-doo hitting the fan than to actually live through this situation. So do the long-term plan assuming the worst of worst things happen so that you can come into this and be successful. And if you do all that, Jessie, and you haven’t shortchanged yourself, so you’ve built that bridge to get you to the point of where you are now to where you want to be, I think you’ll come out on the other side feeling pretty fulfilled because you went the road less traveled, but you did it in a smart way. You planned. You actually created a plan of action for all three scenarios. And now here you are. You’re ready. Now you can jump knowing that you measured twice, versus somebody who just said, “You know what? I just don’t like my job. Take this job and shove it. It’ll work out because I’m passionate.” No, life doesn’t work that way. It rewards those that are creating the plan.



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