Career planning is an aspect of life that should be handled right alongside financial planning. However, this does not always end up being the case. For many young Americans, career planning is mostly centered on pursuing college degrees for jobs deemed to be in demand according to statistics compiled by the Bureau of Labor Statistics. While finding work right out of college is certainly important, there are other factors to keep in mind in relation to career growth and financial planning. San Diego, CA, residents should consider the following factors.
Not all career paths will lead to high-income situations. In fact, this expectation is not in line with the economy of the 21st century. Instead of thinking about income levels, individuals should think in terms of how much money they can generate based on certain career moves. For example, a software developer can think about jobs that pay an annual salary between $60,000 and $80,000, but he or she may also think about becoming an entrepreneur if he or she has ideas that can be sold to Silicon Valley investors.
Job Relocation and Cost of Living
Whenever a career move entails relocating to another metropolitan area, the change in cost of living must be considered. In 2018, economic research published by CNN Money indicated that a worker earning $50,000 per year would experience a $15,000 shortage after relocating to Los Angeles. However, the worker would enjoy a nice surplus of about $8,000 if he or she moved to Little Rock. This consideration also applies to professionals who can work remotely and on a freelance basis. By moving to a metropolitan area with a lower cost of living, the earnings and savings potential would increase.
Even though today’s economy offers good opportunities for freelancers, private consultants, and solo practitioners, not having access to employer-sponsored retirement accounts can be a downside for some individuals. An associate attorney who feels stuck conducting document reviews at a mid-sized law firm will likely be tempted to form his or her own boutique law practice based on a higher earnings potential, but he or she may also be giving up a Roth IRA plan sponsored by the current employer. This is a situation that would require financial discipline for self-funding the Roth IRA, thus keeping retirement options open.
Becoming a Shareholder Employee
Becoming a shareholder is a career move that does not get as much consideration as it should. In many cases, employee stock purchase plans and stock options can be even more valuable than wages or salaries. The key is to research the companies that offer these options and determine whether advancement and salary growth are realistic. Being able to purchase shares at a discount can be a great investment advantage.
If you need advice on managing your finances as you advance in your career, schedule an appointment with a trusted financial planner. Jan Gleisner is a seasoned financial services professional who has been working in the industry for over 16 years. Call 858-337-2385 to learn more.