How to Financially Prepare for a Career Change in Singapore

Your income will drop when you change careers in Singapore, but you won't feel it if you make these financial preparations.

The SkillsFuture programme is in place, as is the Adapt and Grow initiative. While it’s never easy to change careers, there are fewer obstacles now than ever. If you’ve decided to take the plunge - by choice or otherwise - you’ll want to take some necessary precautions.

Don’t start the climb without a good, strong safety rope:

1. Research the Entry Level Pay of Your New Career

You’ll have to plan financially for your new career, and using median earnings is seldom accurate. For example, middle managers with five or more years of experience tend to make around S$6,000 per month. But at the entry level, these jobs have a lower pay of around S$4,000 to S$5,000.

Some other careers - particularly those that are sales related - have a higher disparity in earnings. An experienced property agent, who has made a career out of real estate, may generate over a million a year in commissions. But their new counterparts, who don’t have the same contacts and experience, may struggle along at S$30,000 a year.

Visit forums and sites to check the entry level pay of your chosen career. You should be braced to live at this income level for the first three to five years.

2. Find a Mentor in Your New Career

There are things you can learn from a professional that you will not learn from a book. Reach out to people already in your chosen new career, and get their advice. They don’t have to be the best in their field; they just need to be more experienced than you.

This is not just to build contacts and polish your skills (although those are important reasons). Rather, you should seek advice on what the industry will and will not allow you to do.

For example, you may be under the impression that, if you take up a job as a chef, you can still continue to make side-income for giving cooking classes, or moonlighting for a food stall. But many food industry professionals will warn you to read your employment contract carefully - there are employers that may require you to stop doing these.

See Also: 5 Things Job-Seeking Singaporeans Must Negotiate (Besides Salary)

3. Prepare Your Family for Major Lifestyle Changes

Some careers will consume more of your time than others. Creative and financial careers, for example, are notorious for work-life complications. Hours are long, and you are often required to work weekends. High-level sales jobs often involve a lot of travel, so your family may see a lot less of you.

If your family is not going to be supportive, think twice before making a career change. Even if you’d make more money, it may come at the cost of jeopardising your personal relationships.

In addition, remember you will probably spend much more time than usual on your job, at least for the first year or two. You may also need to undergo extra training, or get certification. Make sure you have provisions for these (e.g. finding a qualified babysitter while you go for night training sessions).

4. Identify Transferable Skills and Qualifications

This gives you an estimate on how long it will take to settle into your new career.

For example, say you used to work in the marketing department. You may have less trouble transitioning to a content developer, as you would understand some of the basic aspects, such as targeting a demographic. But if you are moving over from the accounts department, you will have fewer transferable skills for the job - that means spending more time and money on training.

Knowing which of your skills and qualifications translate will help you to budget.

5. Build an Emergency Fund Before Taking the Leap

It is ideal to build an emergency fund, of about six months of your income, before taking the big leap. This ensures you won’t have to resort to loans, in the event that regular employments proves elusive.

It can also compensate for a lower salary at the start of the job. Some companies will lower your pay while you are receiving training, and an emergency fund will ease the burden on your family.

6. Start with Smaller Companies if You Need a Job Fast

If you want to quickly acquire a job or experience, consider small companies first. There are two advantages to this. The first is that small companies tend to be more flexible when hiring. They will overlook some factors, such as if you are older and are looking at a midlife career change.

The second advantage is that the smaller the company, the more responsibility you will often have. This means more learning opportunities and recognition as a key player.

It is true that smaller companies can afford to pay you less. However, consider that - due to your lack of direct experience with the job - there is no guarantee a big corporation will pay you more anyway.

7. Consolidate Your Loans

Your finances may be a little less stable in the next few months, if you’re going to switch jobs. You can minimise the impact by consolidating your loans.

Look for interest free loans, or cheap personal loans, to pay off more expensive debts like credit cards. You can save significant amounts of money through lower interest. For instance, credit card loan has an interest rate of around 24% per annum, whereas a personal loan has an interest rate of around 6% per annum.

8. Take Initiative of Your Own Skills Upgrade

Skills upgrading is the key to switching careers. At every interview, be sure to ask employers for the core skills they’re looking for. Work on building these through certification courses, community workshops, or even going back to school if you can afford it.

The other advantage to doing these courses is that you get to experience what it's like. If you decide that you hate it, you will have room to try something else.

9. If You Work for a Large Corporation, See if You Can Get a New Role Within the Organisation

Large corporations need thousands of employees, in a wide range of positions. If you like your current employer, ask if you can change your job, but still remain within the organisation. For example, if you made a big midlife switch by going to law school, you might ask to transfer to your company’s legal department.

Many companies prefer to move employees internally, rather than take a risk on someone new. You will also be able to get your current superiors and colleagues to vouch for you.

Read This Next:

How to Become a (Financially-Prepared) Freelancer in Singapore