Turning a career change into a success: How expert financial advice makes a difference

Shaun Chennells, CFP®

Paraplanner, BDO Wealth, Pretoria

Changing careers in South Africa can be both exciting and challenging. It involves many financial decisions, which can be overwhelming. Here’s how we helped two clients – Sarah and Alex – transform their career changes into successes with smart financial planning.

Sarah and Alex’s financial journeys and navigating their career transitions:

In today’s fast-paced world, career changes are becoming increasingly common, especially for South Africans seeking fulfilment in their professional lives. At BDO Wealth, we believe in being financial guides for your everyday money moments. This philosophy is exemplified in the journeys of Sarah and Alex, two individuals who navigated significant career transitions with expert financial planning.

Sarah’s leap into graphic design

Sarah, a 32-year-old marketing executive from Johannesburg, always harboured a passion for graphic design. After years in a stable yet unfulfilling role, she decided to embrace her dream. With a husband and a young child relying on her income, this transition required meticulous financial planning to ensure her family’s stability.

  1. Budgeting for a new path

To begin, we conducted a thorough review of Sarah’s finances. Despite her wellpaying marketing job, we recognised the importance of a detailed budget to manage her living expenses, healthcare and the costs of graphic design courses. We advised Sarah to build a financial cushion by saving at least six months’ worth of expenses. This safety net allowed her to focus on her new career without the constant worry of financial strain. By creating a tailored budget, we identified areas where she could cut back without sacrificing her family’s quality of life, ensuring that her transition was financially sound.

  1. Freelancing for experience and income

To facilitate her transition, we advised Sarah to take on freelance graphic design projects while still working in marketing. This strategy not only provided her with valuable experience but also supplemented her income. By gradually shifting into her new role, Sarah minimised the stress of an immediate salary cut, allowing her family to adjust smoothly. Consulting with us helped her identify the right freelance opportunities that aligned with her skills and interests, maximising both her income potential and job satisfaction.

  1. Lifestyle adjustments for financial stability

Recognising the need for financial adjustments, Sarah made conscious lifestyle changes. She and her family opted to downsize to a smaller apartment and cut back on discretionary spending. These decisions were crucial in maintaining her family’s financial health during her career transition. By prioritising her family’s needs and making strategic adjustments, Sarah was able to navigate this change with confidence. Our guidance when setting realistic financial goals and tracking her progress provided her with a sense of control and accomplishment, reinforcing her commitment to her new career path.

  1. The power of financial guidance

Throughout Sarah’s journey, the importance of consulting a financial planner became increasingly clear. Together, we not only mapped out her immediate financial needs but also established long-term goals that aligned with her family’s aspirations. This holistic approach allowed Sarah to view her career transition as an opportunity for growth rather than a source of anxiety. By having a dedicated financial guide by her side, she felt empowered to make informed decisions that would positively impact her family’s future.

Alex’s strategic job change and retirement planning

Alex, a 38-year old accountant from Pretoria, faced a unique set of challenges when he switched to a new company. This transition involved not only a new role but also a new provident fund, requiring careful consideration of his long-term financial strategy.

  1. Understanding new benefits

Upon Alex’s acceptance of his new job, we reviewed the details of his new provident fund, the employer contributions and vesting periods, and how these elements fitted into his overall retirement strategy. We optimised his contributions to align with his long-term financial goals, ensuring he was making the most of his new benefits. By clarifying the complexities of his new provident fund, we were able to create a tailored strategy that maximized his retirement savings while accommodating his current financial obligations.

  1. Preserving retirement savings

We advised against Alex cashing out his old provident fund as he did not need the money and there would have been penalties and tax implications with an early withdrawal. Instead, we transferred his savings into a provident preservation fund. This approach allowed Alex to keep his retirement savings tax-deferred while simplifying his financial management. By preserving his capital, we ensured that Alex’s long-term financial health remained intact, providing him with peace of mind as he transitioned into his new role.

  1. Comprehensive expense management

With a new job came new expenses, including commuting costs and professional attire. We assisted Alex in updating his budget to reflect these changes, ensuring he could maintain his lifestyle without compromising his financial goals. We also explored tax deductions for work-related expenses, helping him maximize his savings. We also talked about setting up an emergency fund to cover unforeseen expenses, reinforcing his financial security during this period of change.

  1. The value of expert financial planning

Alex’s experience underscored the value of expert financial planning during significant career transitions. By having a financial advisor, he was able to navigate the complexities of his new job with confidence. Together, we established a thorough financial plan that addressed his immediate needs and laid the groundwork for future success. This proactive approach allowed Alex to focus on excelling in his new role, knowing that his financial future was in capable hands.

Conclusion

Sarah and Alex’s journeys highlight the invaluable role of expert financial advice during career transitions. From budgeting and managing new expenses to understanding retirement benefits, having a financial planner made a significant difference in their lives. Consulting a financial planner during career changes not only alleviates stress but also empowers individuals to make informed decisions that impact their financial futures. With the right planning and guidance, career transitions in South Africa can lead to growth, stability and personal fulfilment.