You may be ready to resign, but have you ‘money-mapped’ your next move?
A New Year means a fresh start and a time for change – especially when it comes to your career.
2023 has just started and already people are searching resignation letters, career changes and hatching plans to start new businesses. But financial consultant and Young Money Blog (opens in new tab) founder Iona Bain asks, are you economically ready for change?
Change can be rocky and will undoubtedly have an effect on your finances, so before you take the leap you need to future-proof yourself and your money.
Here, Iona Bain shares her key tips for how we can all financially prepare for change.
1. Pay off existing debt
“In the months leading up to your move, pay off existing, non-essential debt. Start with credit cards, store cards or payday loans. Then move your credit-card debts on to a 0 per cent balance transfer card with a long interest-free period.”
2. Do a financial deep dive
“Sit down with your most recent bank statement and list all your outgoings last month. Now divide them into essential and non-essential categories with different coloured markers. Compare these with your new projected monthly income – whether it’s taking that lower-paid job, going freelance or setting up your new business. Do you have enough savings or a loan in place to cover these expenses while you set yourself up? This exercise should show you exactly what needs to be cut, and forces you to ask yourself if you’re really ready to make this sacrifice.”
3. Let HMRC know
“Going self-employed? Let HMRC know. You must also register to pay Class 2 National Insurance Contributions. Keep all receipts for business expenses, as they are tax deductible, and remember that your self-assessment form is due yearly.”
4. Save three months wages
“Hold off quitting if you can until you have saved at least three months wages. Put this into an easy access ISA and you’ll also benefit from tax-free interest.”
5. Look into mortgages
“Shop around for a low-interest, fixed-rate, five-year mortgage. This will keep your payments steady while you get your new career set up.”
6. Wait to secure your mortgage
If you want to buy a house, don’t give in your notice until you’ve secured your first mortgage. If you do, getting approval in future may be hard. Save as much as possible for the deposit and work out if you can afford the payments once you make the leap.
Iona Bain is the author of Spare Change, A Beautiful Guide to Bossing Your Finances.
Updated since its original publication.