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Finance concerns when starting a new career

Change is difficult for many people, and fear of the unknown is often worse than any likely outcomes in your future. However, starting a new career can be rocky territory when it comes to financial security.

Launching your career or pivoting to a different specialisation or sector is inherently risky. The job might not be a good fit for your skills or personality. The employer might not be trustworthy or clear about their expectations. There might be problems with working with existing staff members, or misunderstandings regarding benefits, terms or compensation.

The UK economy is facing higher unemployment and weak growth, raising the stakes for any job changes across the board. You may choose to leave traditional employment due to a lack of opportunity or a different vision for the future, and start up your own company or set off as an independent freelancer.

Self-employment, whether you’re launching a new venture with an eye toward growth, or simply working independently, comes with its own set of risks and rewards. On the one hand, long-term compensation for business owners offers dramatically better earnings than any other employed role in an established company. As owner-founder, you benefit from the gains that your business makes, and your own hard work directly contributes to your success.

On the other hand, working independently means that you carry all the responsibility and risk. You have to consider how you will pay for benefits, insurance, taxes and all other overhead costs. You don’t get paid if you can’t collect from clients; no one guarantees your salary. However, you do have much greater control over the terms, schedule, location and nature of your work. That freedom and flexibility is worth something, and opens up new opportunities such as relocating to less expensive areas and cutting costs.

As an independent freelancer or contractor, working with an umbrella company can help to resolve many of these finance concerns. You still have to go out and win contracts, but you can arrange protection against client non-payment and have professional assistance with paperwork, insurance and legal documentation, taxes and other administrative tasks that are necessary but eat up your time and energy.

The finance concerns of starting a new career can be mitigated by saving up and preparing well before making a change so that you have a financial buffer should things not go well. Researching the change ahead of time, networking with others who have made similar changes, and having a contingency plan can also help. Some professionals have a side gig or balance traditional employment with freelancing in order to give themselves extra security against a downturn or unexpected barrier in either realm.

Don’t let fear hold you back from starting a new career. Strengthen your financial position, research, and use relationships and specialists to help mitigate risk and help you succeed.

Elliot Preece