Today, changing careers is becoming the rule rather than the exception. According to a long-term study conducted by the Labor Department, on average, people born between 1957 and 1964 held an average of 11.7 jobs from ages 18 to 48.
During the Great Recession, many individuals were forced to consider changing careers, but as the labor market continues to firm, more workers are seeking alternative careers. As of July 2018, the economy has experienced 94 consecutive months of job creation, and the unemployment rate remains near a two-decade low.
According to the Federal Reserve Bank of Atlanta, job-switchers can pocket 10 to 30 percent larger annual pay increases than those who stay put. If you are in the market to make a career change, whether due to financial or lifestyle considerations, there are a few aspects to evaluate before taking the plunge.
What’s your purpose?
First, you need to figure out why you are jumping ship. Sure, a bump up in pay can be great, but will it require longer hours and subsequently longer days? Will it result in a loss of benefits? Is there a pension involved? Would you lose precious vacation time that you love? Would a move require a longer commute?
Is this what’s best for you?
In thinking through the financial implications, you may want to seek the advice of a CFP® professional, who can help guide you through the various questions mentioned above, as well as additional scenarios that are available. After doing so, you might conclude that you are better off staying where you are and asking your boss for a raise.
Do you have a strategy?
If you choose to stay at your current job and ask for more money, it’s important that you do a little homework. Even though the labor market is tightening up, you still want to demonstrate your value – like how you make a difference to the company and what your position is worth in the market. Once you have the evidence and desired number in hand, think about your negotiation in a slightly different way.
When outlining your ideal salary, whether that means staying at your current job or moving forward with a new opportunity, researchers at Columbia Business School found that using a range, rather than a single number, may help you increase your compensation.
For example, if you wanted a $100,000/year salary, you should suggest a range from $100,000 to $120,000 to your boss. In practice, ranges frequently lead to higher salaries since most employers are unlikely to go below the suggested range. The key is to anchor the range with an ambitious, but reasonable number at the bottom, equivalent to the one you would have used as a single dollar offer. Don’t try to shoot the moon – most successful range offerings remained within 20 percent of one another.
If you are on the fence about making a career change, talking with a CFP® professional is a good place to start. They will work with you to outline your goals and the potential impact of a career change on your ability to achieve said goals.
If you liked this article, consider reading 5 Steps to Prepare for a Career Opportunity.