The employment landscape is changing rapidly in Australia. Make sure you don’t get financially lost in the shuffle.
Decades ago, it was common to run into people who had been employed by the same company for decades – or even their entire working life. Back then, careers were all about stability, tenure and a steady climb up the salary ladder. Today, the focus has shifted to work/life balance, job satisfaction and higher labour force mobility.
The days of putting 40 loyal years in at one company and receiving a handshake and a gold watch are pretty much over.
60 per cent of the Australian workforce has been at their current job less than five years
Today, an Australian who has been in the same job for more than five years is unusual. Latest surveys show that nearly 60 per cent of the Australian workforce has been at their current job less than five years – and one in five Aussies has been in their present position less than a year.
Women are more likely to swap jobs than men and sales workers are the most mobile employees of all. People in management are the least likely to switch jobs.
In the 2011-2012 financial year, around 200,000 Australians changed jobs every month. The vast majority ‘moved sideways’, switching employers but staying within their chosen field. For example, of 990,000 labourers who changed jobs, over 90 per cent took up new labouring work. And among the 1.4 million managers who left work that year, all but 77,000 moved on to new management positions.
So while many of us have no problem changing employers, we often tend to remain in the same (or very similar) occupations.
The Business Of One
One of the most popular post-millennium career changes is the move into self-employment as a small business owner, and this trend is growing in developed economies at a steady rate.
Independent workers represent 11 per cent of the total civilian workforce
A US study showed independent workers (those who work for themselves but don’t employ others) jumped to 17 million in 2011-12 – an increase of one million in one year.
These independent workers represent 11 per cent of the total civilian workforce in the US (Australia sits at around 10 per cent). And if you add in the number of self-employed employers, Australia comes in at just under 20 per cent of the entire workforce and the US at well over 20 percent.
For many, self-employment is all about having more financial control and increased work satisfaction. The same US survey showed that 86 per cent of self-employed people were satisfied with their current work – a much higher satisfaction rate than traditional employees.
Also interesting is that the gender mix for the solo self-employed is split almost equally between men and women, and only 12 per cent of independent (solo) workers want to hire others and grow their business by becoming an employer.
This suggests that as we move forward, most small business growth will be generated by solo business owners without employees.
Technology is also driving increased opportunities and more flexible work arrangements. Home offices, telecommuting and increased access to global markets all mean that nothing will stay the same when it comes to Australian career paths. As an example of how quickly technology is changing business, just look at the amazing new opportunities that 3-D printing has opened up in the past few years.
Out With The Old And In With The New
The traditional working roles of previous generations have, for the most part, been thrown out the window. Millennials are doing things a bit differently.
One thing never changes: the need to plan for our financial future
Today we have stay-at-home dads, high-flying female breadwinners, tech-savvy teenage entrepreneurs and people in their 80s running part-time businesses from their garages or spare bedrooms. Digital nomads travel the world while running thriving businesses from their laptops, with a Thailand beach or Buenos Aires apartment as a temporary office.
Despite all these new changes in how we work, where we do it and what technology we use, one thing never changes: the need to plan for our financial future.
A Career Change Is A Big Deal At Any Age
A career change affects everything we do and adds an extra edge to life’s most important decisions.
If you’re thinking about buying a house, starting a family, putting the kids into private school, bulking up your savings for retirement, investing in shares or even planning a big holiday, your career change can thoroughly alter the complexion of these choices.
Shifting to a new job (or choosing a totally different career) isn’t always about the money. It may be about spending more time with your children, finding a more positive work environment, taking it a bit easier as you get older or seeking new challenges so you don’t get bored. Sometimes it can take us years to realise we’re not on the career path that best suits us.
Whether you’re at a stage of life where you’re getting married, taking on a mortgage, raising children or preparing for your later years, financial security is always a priority.
If you have a family, how will your career change impact upon them – financially and emotionally? Will your tax bracket change? Does your new career offer greater income stability, or less? How does it affect your insurance coverage, your debt load and your housing situation? These are the sorts of questions you must ask yourself when working out the implications of a career change on day-to-day financial commitments and future wealth creation.
Swapping careers is exciting, nerve-wracking and a big step, but if you’ve thought it through sensibly, you’ll be well set up for a future that aligns with your personal goals and financial expectations.
Why We Change Careers
According to SEEK, the top four reasons for job-hopping/career changes are:
A Desire For Enhanced Career Progression –
For one out of three Aussie employees, this is the main reason for moving on.
We all want to be rewarded for the effort we put in, but some jobs feel like a dead end. There might be little chance to advance within a company or even get a pay rise in our existing role.
It’s fair to expect income to keep pace with the rising costs of living, but this isn’t always the case.
Often, the structure of an organisation may leave little room for new challenges or a level of pay that’s appropriate for our skill set and level of experience. It can be incredibly frustrating to feel that we’re stagnating and ‘can’t go anywhere’ in our jobs. In swapping careers, we also need to factor in the effects that new technologies might have on certain types of jobs in the future.
22 per cent of us switch jobs because we find our current work environment unpleasant
Negative Work Experiences –
22 per cent of us switch jobs because we find our current work environment unpleasant. This could be because of a bad boss, insufficient recognition, excessive criticism or the constant stress of an unrealistic workload. There might be office bullying, sexual harassment, manipulative, incompetent/lazy co-workers or personality clashes that can’t be ignored or resolved.
Sometimes we find we have to ‘carry the load’ for an inefficient supervisor or are expected to do more simply because those around us are incapable.
Life is too short to be miserable in the workplace, so in those circumstances it makes sense to look for a better environment.
It’s also important to recognise the physical and mental toll that workplace stress puts on us: is a job worth the trouble if it results in non-stop anxiety, chronic lack of sleep or a heart attack?
There’s a fine line between being sufficiently challenged at work and being run ragged; good health is always worth more than any career.
External Factors Beyond Our Control –
Sometimes we change jobs because life throws us a curve ball.
We might have a relationship breakup and decide it’s best to move to a different city. We might be made redundant. Perhaps our partner has accepted a job in another state – or even another country. Sometimes sickness, a death in the family, personal disability or other calamity comes out of nowhere, making it necessary to put work on hold or switch to part-time employment while we struggle to cope with the new circumstances.
These situations are where the right life insurance can make a huge difference in enabling us to meet existing financial obligations. External circumstances beyond our control account for 18 per cent of Aussie job changes.
A Desire For Better Working Conditions –
We may be a lot more mobile in the workforce these days, but we still like the idea of job security. No one wants to feel like ‘the axe could fall any day’. For many of us, it’s worth moving jobs just to alleviate the perpetual strain of shaky job security.
13 per cent of Australians change jobs in pursuit of better working conditions.
Work/life balance is another big factor in changing careers. We may feel we’re spending too many hours at work (or too much time in the car commuting). We might want more time to spend with our families, return to study or conduct part of our work from home.
13 per cent of Australians change jobs in pursuit of better working conditions.
It’s not always because the workload is too heavy, either – it can also be due to boredom: 18 per cent of Australian women opt for a career change because they want to be more challenged at work .
Career Changes And Wealth Creation
Switching careers takes you well outside your comfort zone. It’s a major step that alters your lifestyle and your financial situation (hopefully for the better).
When it involves a pay increase, you may consider looking into furthering your education or training.
You’ll ponder the best ways to invest the extra savings. You might even think about starting our own business. Whatever your reasons for moving into a new job or career path, you need to ensure your new work situation fits into your overall money plans.
Just like your choice of insurance, your investment decisions, your retirement goals and your plans for your children’s education, a career change affects your ability not only to meet current financial obligations, but to create wealth and security for the future.
If your career change leads to a better lifestyle, you’ll want to protect that. ‘Having it all’ only works if you protect what’s yours. Is your insurance as up to date as your new career? If it has been awhile since you thought about life insurance, TPD (total and permanent disability) cover, trauma cover or children’s cover, now is the time.
Financial security isn’t just about making more money – it’s also about making sure you’re ready for the unexpected so you and your family are looked after, wherever your career path leads you.
We often hear people say “everything happens for a reason”.
What they don’t say is that the reason is almost always that we’ve (a) made a great decision, (b) made a poor decision or (c) were too afraid to make a decision that needed to be made at a particular time.
The truth is, we all make conscious choices every day that directly influence our present and future financial situation. We make a choice to put away savings, consult a financial planner, expand our income streams, invest in real estate, aggressively attack our credit card debt, create a side business, spend wisely or aim high with our career choices.
“Everything happens for a reason” and that reason has less to do with fate than the choices we make about our financial futures, and the determination with which we pursue our goals.
Another life changing event can be a pay rise. If you do get a pay rise, be sure to read our article that gives advice on what to do ‘Things to do when you get a pay rise at work‘.