It’s the New Year and new resolutions abound. The holidays are often a time for reflection on life and career. Perhaps you are considering making a change in direction in 2016. It could be a new job, a new business venture, returning to study, or even a sea change.
Whatever it is, it’s important to consider how you can make the change and still maintain your lifestyle and your financial needs. We’ve put together these four steps to help you get there:
- Set your goals
Think specifically about what you want to achieve and how you’ll measure this. Every successful organisation sets clear goals that it achieves by having clear benchmarks and evaluation systems. Your goals are no different. No matter what change you are considering, identifying appropriate indicators to track your progress and help manage risks. These should be clearly measurable and set within a timeframe. For example, if you are starting a new business, you may wish to have a certain number of clients or income in your first quarter; if your goal is work-related, it may be that you wish to secure a specific salary, or alternatively a particular job position within a set number of months. Measuring success against indicators allows you to objectively identify when things are not going to plan and find an alternative course of action if you need to.
- Do your research
Often in life when we become excited about an idea, we are prone to making decisions out of an optimistic view point, or only consider information that confirms what we want to believe. Whatever the change you are considering, it will benefit you to do first-hand research and find out what you know and don’t know. Where you are seeking advice on a particular issue, make sure the person advising you is capable of providing a balanced opinion or go to an independent professional.
- Consider the financial impact and how you will manage it
Take time to assess how the change may impact you: what are your outlays? How long do you expect them to go for? How will this affect your family? If your change is likely to impact your income or expenses, make sure that you have a financial buffer that allows for some leeway. Where you don’t have this, you may like to consider putting extra savings aside first as a safety net. If you are taking some time away from work, consider if this will impact your ability to repay your mortgage or other debts, and the effects on your super entitlements or life insurance.
- Plan the transition, be realistic and create a budget
Take time to plan for the transition to your new life style. Creating a budget to reflect how personal finances will be affected before, during and after the change is important. Where more significant financial adjustments are involved, it could be valuable to see your financial adviser. Even if the decision you are considering primarily involves you, make sure that everyone in your home understands what is going on and what outcomes are possible. Importantly, be realistic and understand how you will manage the positive aspects of your decision as well as how you will recover from a negative outcome.
Change can be exciting and herald the beginning of many positive things in life. It also represents many unknowns, so it’s important to make sure that you are aware of the impacts and in a good position to manage them. And remember to talk to your financial adviser to ensure that you have a financial plan in place or to review any impact on your existing plan.