How a Person Who Recently Transitioned Careers Does Money

Anna (not her real name) is 28 years old and lives in NYC.

ND: So, Anna, tell us a bit about your finances.

Anna: I quit a pretty well-paying job in marketing at the end of April, kind of on a whim. I had about a year’s worth of money saved up when I did that. Probably more than a year’s worth for some people? It was about a year’s worth based on what I was spending at the time.

So did you know that you were saving up that money for a career change? Or did you say “hey, I have these savings, now I know what to do with them!”

I kind of said that was the reason when I started, but I also waited until the job got totally unbearable to actually use it that way.

If you’re going to transition careers, saving up about a year’s worth of income is a good way to do it. How’d you sock away all of those savings? What is your One Weird Trick?

I think my One Weird Trick is just being incredibly frugal, but mainly on day-to-day purchases. Like, I will go on an overseas vacation, but I will also travel to multiple stores to buy the cheapest toiletries. I will convince myself every time I pick up something to buy that I don’t need it, and so every time I buy something I have to really want it. I will also buy the cheapest version of something.

This sounds like a great way of managing finances. Spend on experiences you value, economize on stuff you don’t value, and make sure you really want things before you buy them. Do you know roughly what percentage of your income went into savings every month?

I actually don’t think I ever checked. I just knew I was saving more than I was spending each month. I think the last year I was working, I saved slightly less because I moved into a one-bedroom apartment.

Did you try to spend even less money after you quit your job?

The last year I was working I was making about $70K and I realized I had to stop being so crazy frugal. Also, my job was making me insane so I started doing things like taking cabs constantly, buying myself nice things, etc. I would say I spent about $3,600 a month by the time I quit, and when I quit I told myself I wouldnt worry about saving right away because I know how I can get when I’m being frugal.

I wanted to be happy with my time off, so I kind of blew through a ton of savings right away.

So did you quit your job with the idea that you would take time off before starting a new career? A much-needed vacation?

I did, but I did not plan a single thing about a new career before I started.

You didn’t have an industry in mind?

I had NOTHING in mind! That is kind of how burned out of my previous job I was. Like, crying to my boss daily over totally insignificant things. But I would say in three months I started thinking about pursuing psychology, and I got this opportunity to do some work in that field, except it is unpaid.

Did you take the unpaid gig?

Yes, there didn’t seem to be any other research type positions that pay, unless you already have research experience in the field. You need the research experience to get into school, so it seems like a ton of people trying to get into school are agreeing to do unpaid/volunteer work.

So right now you’re thinking about doing some unpaid work, going back to grad school, and starting a new career. How do you think your finances will hold up over this endeavor? Do you plan to take out loans? Do psychology grad programs offer a lot of financial aid?

I think if I get into school, I’ll definitely have to [take out loans]. At the moment I have a part-time job, which wouldn’t cover all my expenses. I also currently take money from my parents, which was a huge hangup I had to get over, and I will probably accept more money from them for school. I get the sense that the more research focused you are, the more likely you will have a funded Ph.D. If you are going towards the counseling/therapy route, I don’t think you get very much, but I think the idea is you would start making a lot if you go into private practice.

I suspect that psychologists are like other types of professionals in that incomes vary widely. The Bureau of Labor Statistics reports that the 2012 median pay is $69,280 per year.

That’s pretty good, I already know I can live very comfortably on that. I had zero undergrad loans, and I have no idea how having loans might have changed my spending — or will change my spending, because I expect to have loans if I go to grad school.

I’ve found that having debt doesn’t necessarily change how you spend. If you tend towards extravagance, you still spend extravagantly, and if you’re frugal, you’re still frugal. It’s just that you have to pull out $1,000 every month for debt payments before you can start spending.

Oh yeah, I definitely agree. I don’t think I can unlearn being frugal. I only saved as much as I did by being frugal, and I’m not even sure I learned how to save in a “smart” way, just more of a hoarder-y way. But I saw a lot of people at my last job who could barely make it to the next paycheck, and it was a large paycheck in that industry. I would hate to be stuck in a horrible job because I didn’t have the financial flexibility.

Well, it sounds like you have an interesting journey ahead of you! Is there any financial advice you’d like to offer Billfold readers, or any tips you’ve learned that have helped you in your life?

I guess my tips would be: don’t let being frugal take over your life, but if you really want to have financial freedom you have to make little choices every time you take out your wallet. And pack your lunch! That’s how I saved.

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