Changing careers: What do I need to consider before starting?

Employees who want to change jobs should have some reserves – because who knows how quickly something new will come along. That means: make a mess and clean up properly. What can be set aside for job plans? And where is there potential for savings? “Consumer spending in particular can be easily reduced,” says career and financial coach Susan J. Moldenhauer. “In the restart phase, every additional euro is a good buffer.”

The financial check also includes a look at your investments: three net monthly salaries are common as an emergency fund. However, for career change, significantly more can be invested in investments that are available on a daily basis, such as a daily money account. Medium-term investments such as bonds or fixed-term deposits can also secure a career change. Anyone who wants to make money from long-term investments such as stocks and ETFs must expect a loss of returns if the prices are not good at the moment. Depending on your life situation, financial planning should also include the following topics:

The children are probably still going to school. But if the offspring become mobile, families are faced with new financial challenges that they should be prepared for: whether it’s a year abroad, moving out, doing an apprenticeship or studying – children are rarely able to support themselves alone. At almost 83 percent, the family is the most common source of financing for studies. After all, mothers and fathers continue to receive child benefit for adult offspring in training – from 2025 that will be 255 euros per month. But a studying child who no longer lives at home needs more: according to the Düsseldorf table, 990 euros per month from January. The cost of a six-semester bachelor’s degree quickly adds up to almost 36,000 euros. Not everyone can manage this from current income. Those who have taken precautions in recent years are lucky. Otherwise, you should save a few hundred euros a month from now on at the latest. In any case, parents should not rely on the child receiving student loans. Only students whose parents earn little receive this.

If the fixed interest rate on a real estate loan expires and there is still a remaining debt at the end, follow-up financing is required. The building interest rates, which have risen significantly since the end of 2021 – currently at 3 to 3.5 percent – can pose a risk for some career changers. “When it comes to replacement loans, they will have to expect higher monthly payments in the future or will have to pay them off for longer,” explains expert Moldenhauer. “It has to be financially compatible with the new professional situation.” If the initial contract allows it, an early special repayment can provide relief. This shortens the term of the first loan and reduces the mountain of debt.

Retirement will come at some point, that’s for sure. In order to avoid having to make compromises in old age, most people often make private provisions and put money aside every month. The key here is to stick with it, even when changing careers. “The pension fund announces how much statutory pension insured people can expect once a year in the pension information,” says Moldenhauer.

Restarting your career is a good time to clarify possible insurance gaps, for example due to parental leave. The pension provider helps with this. For example, you can buy additional pension points from the age of 50. One point will be available in 2025 for just under 9,400 euros, which results in a pension increase of around 40 euros per month. The annual pension increase increases the amount even further. A severance payment from your old job can also have advantages: If the former employer pays the amount directly to the pension fund, this increases the pension entitlements – with hefty tax discounts. Or the money from the severance payment goes tax- and social security-free into a company pension scheme that runs through direct insurance. Employees can take the assets saved in such company pensions with them to the new company, but often only under new, sometimes worse conditions. Alternatively, you can save for the contract yourself from your net salary. Third option: suspend the contract. In this case, the capital earns interest.