#23. When Does Changing Careers Make Sense?
Updated: Jan 22
I was sitting at work yesterday taking a break between two assignments, and I started thinking about why people actively seek out other employment in an attempt to reach financial independence faster. I understand the most basic reasons people want another job (work is unfulfilling, toxic work environment, unbearable boss, no route to advance, and many others), but if your primary reason for the career change is reaching financial freedom faster, should you leave a job that you enjoy that checks every box besides higher pay?
The Grass Is Always Greener Conundrum
Everyone has probably heard this phrase, that the grass is always greener on the other side. But what people do not realize is how prevalent it is in human nature. People are constantly assuming that, "If I just have "X", then I will be happy," or "If I get this new job, life will be so much easier." This kind of thinking is so natural to do that people do not even realize it most of the time.
It is easy to think that life will be better in the future if you achieve a specific task now. It is much harder to realize that if you do not figure out how to be happy with what you have, you may never be able to achieve true happiness.
Back To The Subject At Hand - Is A Career Change Worth It
I wish there was a cookie-cutter approach to answering this question. It would save a lot of headaches. It is hard to quantify things like family dynamic and mental health concerns. Although there may not be a definitive way to calculate whether you should change career paths, there are actual things you can do to make the decision an educated one.
Quantify What You Can (Objective Standard)
This is very important to do. The obvious stuff to calculate is salary and possible bonuses. So, what else can you calculate?
Distance - There are a couple different ways to put a dollar amount on travel distance per year. The first method is easier, but the second method is more precise.
The first method is to look at how many miles your job is away from your home. Once you get that number, multiply it by how many times a day you will make the drive. Normally it will just be two, but some people come home for lunch, so it could be four or more. Next, multiply that number by how many days a week you will typically make the drive. Finally, multiply that by how many weeks you plan on working a year.
For example sake, let us say that your current job is 20 miles from home. Then, you make the drive twice a day, so you drive 40 miles a day. Next, you work five days a week, so you multiple 40 by five and get the total weekly mileage of 200. And since you plan on taking weekly vacations twice a year, you plan on making the drive to work 50 times a year. 200 multiplied by 50 is 10,000 miles driven for work a year.
Once you get your total miles driven for work in a year, the final calculations you make will get you the final dollar amount to subtract from your total salary. All you do is divide the total mileage by your vehicle's average miles per gallon (or "mpg"). Let's say your vehicle gets 30 miles to the gallon in this example. So, I divide 10,000 by 30 and get 333.
Now you know how many gallons of gas you will need to buy for work during a calendar year, so all you need to do is multiply that number by expected gas prices (no one knows how the gas prices will fluctuate, just make sure you use the same number for each job if it is in the same area of the country). Let us assume that gas prices will be around $3.50. 333 (total gallons of gas needed for job) multiplied by $3.50 (expected gas price) equals $1,165.50. So, whatever your total salary is, you need to subtract $1,165.50 from it to account for gas prices.
The second and more precise method for putting a dollar amount on travel distance is simply changing how you get your average miles per gallon number. Most newer vehicles allow you to use the trip setting to reset your mileage for mpg purposes. You would use this setting before driving to work. Then, when you get home, you would document your average miles per gallon driven that day. This would better account for what kind of traveling you will do, such as city driving or mainly interstate travel. You may find that your vehicle typically gets 30 miles per gallon, but due to rush hour and the amount of time you drive on city streets, you may only get 20 miles per gallon when traveling to and from your current job.
Then, you would proceed with the rest of the formula the same way, you would just include the precise miles per gallon number in the equation. To make sure the comparison is fair, if you use this precise method for your current job, you would need to do the same thing for your potential new job (be aware of time of day variations and how traffic could change).
Time - People overlook what their work hours actually are. Let's say you make $100,000 a year. On a typical week, you work 40 hours a week and work 50 weeks a year. So, you know from these numbers, on average you make $50 an hour ([hours worked per week] x [weeks worked in a year] = hours worked in a year, and then divide total yearly salary by hours worked in a year).
This all sounds good, but you need to determine whether you truly make $50 an hour. When figuring out how many hours you work a week, you must include travel time, whether you have to do any work at home, and anything else you have to do to prepare for work.
Again, for example sake, let's say you get paid for 40 hours a week working 9:00 a.m. to 5:00 p.m. five days a week. Let's also say it takes you 60 minutes to commute to and from work (average commute time to and from work in the U.S. is 55 minutes), so you must include that as part of your hours worked per week. Now, you are at 45 hours worked per week (nine hours a day multiplied by five).
Next, think very hard whether you do anything for work at home. Do you have to physically prepare documents or tasks for the next day (such as for teachers and other professionals)? Do you have to drive somewhere to pick up and drop off your kids at day-care because of work? Do you have to drive to pick up and drop off dry cleaning for work clothes once a week? Does work cause you to go to counseling sessions once a week? If you want, you can attempt to calculate how much time you lose due to just stress from the job (try to keep this as objective as possible, such as it takes you an hour longer to fall asleep during the week because of dreading to go to work the next day). Do your best here not to leave anything out.
To keep it simple, let's assume you did not have to do anything extra at home, so your new number for hours worked per week is just 45. Using the above calculation, you determine that you actually get paid $44.44 an hour for your time.
You will need to figure out how much you are actually getting paid per hour with both jobs and compare.
Miscellaneous - This is where you have to put on your thinking cap. You have calculated how much you will spend on gas money and how much you will be getting paid per hour, now think of any extra costs you will incur. Some examples include day-care, dry cleaning, cost for counseling, and grooming costs. Also, if you feel compelled to eat a whole pint of ice cream everyday after work because of the amount of stress you are under, add in that cost too! Be creative here to actually figure out how much the job is costing you.
Once you figure out miscellaneous costs, you will subtract that from the salary too. For a quick summary, you should have two numbers at this point for each job (your current job and your potential job). 1) Your actual salary ([Salary] - [travel costs] - [miscellaneous costs] = actual salary) and 2) How much you actually get paid per hour of your time.
Here is a brief example of how this would look:
Gross salary: $80,000
Distance from home: 20 miles (30 minute drive)
Precise mpg for commute: 20 mpg
Hours: 9:00 a.m. to 5:00 p.m. Monday through Friday
2 weeks vacation
Requires one hour of working at home per weeknight
Spend an extra 30 minutes a weekday picking up and dropping off kids at daycare
Daycare costs: $300 per week
Dry-cleaning costs: $50 per week
Gas prices: $3.50 per gallon
Actual gross salary: $60,750 ($80,000 - $1,750 (travel costs) - $17,500 (daycare and dry-cleaning costs) = $60,750)
Actual hourly pay: $23.14 per hour (52.5 (actual hours worked per week) x 50 (weeks worked per year) = 2,625 (hours worked per year) ||| $60,750 (actual gross salary) / 2,625 = $23.14)
Potential new job:
Gross salary: $100,000
Distance from home: 30 miles (30 minute drive)
Precise mpg for commute: 30 mpg
Hours: 7:00 a.m. to 3:00 p.m. Monday through Saturday
4 weeks vacation
No extra work from home
Still spend an extra 30 minutes a weekday picking up and dropping off kids at daycare
Daycare costs: $300 per week
No dry-cleaning costs
Gas prices: $3.50 per gallon
Actual gross salary: $83,920 ($100,000 - $1,680 (travel costs) - $14,400 (daycare costs) = $83,920)
Actual hourly pay: $31.50 (55.5 (actual hours worked per week) x 48 (weeks worked per year) = 2,664 (hours worked per year) ||| $83,920 (actual gross salary) / 2,664 = $31.50)
So what all does this tell you? It tells you a lot, but some things that stand out to me are that you will actually be getting paid more for your time (actual hourly pay) in your new job and you will only be spending three extra hours per week on work (even with working on Saturdays).
What Else Matters To You? (Subjective Standard)
After you go through these formulas trying to quantify the decision-making process as much as you can, you will then have to attempt to put value on what else is important to you.
This is where the original lists of things in the first paragraph comes into play (work is unfulfilling, toxic work environment, unbearable boss, no route to advance, and many others). Some additional things to consider is your current mental health in your current position and how would the decision affect your family.
The biggest problem with this is not knowing enough to properly determine the work environment in your new job. You will have to trust your instincts somewhat at this point. However, if you have already determined that switching jobs makes sense financially by running the above numbers, it should help your stress levels when predicting the unknown.
It is easy to assume life will be better if you get that job you have always wanted, but you must come to the realization that you could be wrong. The new job could suck worst than your last one and the work environment could be even more toxic. The grass may not actually be greener on the other side. Once you acknowledge that this is a possibility, working through the above formulas will help you with the decision to switch employment.
If taking the new job ends up being the wrong choice, you should still sleep better knowing you utilized the information you had at the time to make the best decision for you and your family.
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NOTE: If you think these formulas will help you but I did not explain them well enough, just leave a comment, and I will try to lay them out in a more concise way.