Here's What Happens to Your Salary When You Change Careers

There may come a point when you decide you want to embark on a new career. Maybe you're eager to do work that's more creative. Or maybe you'd prefer to work in an industry that's less demanding. 

Often, switching careers will mean taking a pay cut. Even if you're going from a lower-paying industry to a higher-paying industry, when you change careers, you commonly have to start at the bottom. And that commonly means seeing your salary take a dive (although there are, of course, exceptions to this rule). 

That's why it's so important to prepare for a career change rather than making one on a whim. Some key financial moves could set you up to absorb the temporary financial hit a career change might result in.

A strategic approach is key

In 2021, the median U.S. income was $69,717. Your salary may be higher or lower, depending on your industry and specific role. But either way, if you're changing careers, you may have to accept an entry-level position, or a more basic role, given your lack of experience. That could result in a substantial pay cut. 

In some cases, that cut may not be so extreme. Perhaps you have skills that translate well from one industry to another, resulting in a higher-paying job in your new field from the start. But for the most part, it's wise to plan for a pay cut when you're leaving your industry behind and are beginning to explore a new one. 

The first thing to do in that regard is boost your savings account balance. Having extra money in the bank could reduce your financial stress if your new paycheck doesn't suffice in covering all of your bills.

Next, aim to get rid of any high-interest debt you have before changing careers. Shedding a monthly credit card payment could make it much easier to cope with a lower paycheck, because that's one less bill you're on the hook for.

Additionally, comb through your expenses and slash some of them ahead of your career move. Canceling cable TV service and a monthly subscription box might make it easier to absorb the hit of a lower paycheck. Better yet, if you can unload larger bills, do so. If you're at the point where having a car is a luxury, selling it could save you thousands of dollars in the course of your first year in your new career by not having to pay for maintenance and auto insurance. 

The more you prepare, the better

It's often the case that a career change results in a lower salary. But if you prepare for that ahead of time, you can embark on your career switch with a lot less stress.

And remember, the salary hit you take in the course of changing careers might be temporary in nature. So any sacrifices you make to allow that new salary to work might be sacrifices you're only making for a year or two until you get up to speed and work your way up in the ranks.