The world today offers plenty of opportunities to find fulfilling careers. However, you may be doubtful whether to leave your present job or career domain for various reasons, including personal commitments. So you choose to persist in your career that is not taking you along the path of your cherished goals.

 

However, it is not impossible to switch careers midway through a professional journey if you plan the transition in detail and consider all the important facets of the change. There are many aspects of a career switch that you should carefully plan for, including the financial, emotional, and psychological implications of the decision. In this article, we look at proper financial planning that will help you transition to the career of your choice.

 

In order to prepare for a career transition, you must start with drawing up a financial plan that incorporates the following essential elements.

 

1. The effect of the decision on your income
2. The renewed approach to meet your financial obligations
3. The tax implications of the career switch

 

It is advisable to begin investing in a savings plan at an early age, preferably in your twenties, to build a significant corpus that can provide you with the flexibility to switch careers, should you so desire, at a later stage of your life without having to endure severe impact on your finances. If insurance is also a primary consideration for you and you wish to avail life cover and savings in a single plan, you should choose an insurance savings plan.

 

What is a Life Insurance Savings Plan?

 

A savings insurance plan offers the following additional benefits:

 

1. Life insurance cover
2. Financial security for your family
3. Savings through tax* deductions on premium payments
4. Additional protection through add-on policy riders^#
5. Financial planning for contingencies

 

There are many insurance companies that offer savings plans in India with which you can save systematically for planned financial goals. You can check the plans of TATA AIA Life, one of the country’s leading insurance providers. You can purchase a TATA AIA savings plan with life cover and safeguard your financial future in a simple and affordable manner.

 

 

The Importance of Financial Planning when Switching Careers

 

 

Financial planning has several advantages that can help you deal with unexpected circumstances in an effective manner, including the financial uncertainties of a career switch. Commencing your financial planning from an early stage in your life prepares you for your future endeavours and decisions, including pursuing higher education and switching careers.

 

In this context, some of the benefits of financial planning have been discussed below.

 

1. Clarity on your financial goals: If you draw a detailed financial roadmap for your future, you get a clear idea of the professional and personal milestones you aim to achieve within specific timelines. This approach enables you to make suitable plans and focus your efforts in the direction of your financial goals. Even if you fail to achieve a certain career milestone or personal goal within the stipulated timeline, you can try again, particularly if you have accounted for such a scenario in your plan.
    

   Remember that the earlier you start financial planning and put your plans into action, the better placed you will be to invest in a suitable savings plan and create a substantial corpus for your future. Another advantage of beginning your financial planning early is that you can enjoy a higher degree of flexibility in terms of your finances even in the face of unanticipated or adverse events.
   
   

2. Preparation for your educational aspirations: If you need a specific educational degree or should complete a course of study to prepare for a new career in the future, it is advisable to choose the route of financial planning and save from an early age. Amidst the ever-rising cost of education, professional courses in particular, a financially disciplined life is an important prerequisite for the pursuit of your academic and professional aspirations. If you start working from an early age, you must consider saving some proportion of your income and investing it in a savings insurance plan to have sufficient funds for your educational expenses. It is important to note that the amount of money you need to save for your educational goals depends on the course you wish to pursue and the university or institution you wish to study at
   
   
3. A constant stream of income in the absence of a regular job and during a career transition: When you switch careers, there is bound to be a transition period wherein you will have to contend with a wide range of changes. Your new job may not have the same financial benefits as your previous one or include a period wherein your income is low to begin with.

    

   Further still, it is possible that there may be a gap between your previous job and a new one during which time you will have no regular salary to fall back on. In such a scenario, a savings plan can enable you to benefit from a constant stream of income and meet your essential expenses.
   
   

4. Escape from the cycle of debt: One of the most significant benefits of financial planning is that it enhances your degree of preparedness to handle adverse and unexpected situations. Therefore, if there is a sudden career change, including a forced one, an accident, or a family-related emergency that restricts your ability to earn, you need not borrow to bridge the gap between your earnings and your financial obligations. Financial planning, therefore, allows you to escape the cycle of debt.
   
   
5. Tax* benefits: Investment in almost all kinds of savings plans enable you to enjoy certain tax* benefits and a savings insurance plan is no exception. In this context, some of the benefits of a savings plan under the Income Tax* Act, 1961 are as follows.
    
   • Section 80C: Tax* deduction for the policyholder on the amount of premium paid subject to a maximum ceiling of ₹1,50,000
     
   • Section 10 (10D): Tax* exemption for the death benefit received by the policyholder’s nominee under the policy

 

Planning your academic and career paths is important because it provides you with focus, direction, and a goal to move towards. Therefore, it is important to plan your career but it is equally important to leave some room in the said plan for unforeseen circumstances that may delay or change your path.

 

Moreover, certain educational and technical qualifications may be necessary to move into a successful new career. A workable plan will enable you to move smoothly from your current job to the one you dream of.  Thus, financial planning brings results through systematic action.

 

 

Conclusion

The approach of financial planning enables you to plan and prepare for different situations, including a switch to a new career. Therefore, you must invest in a savings plan and enhance your ability to handle the transition in an efficient manner.

L&C/Advt/2022/Jul/1694