Work life, personal life and financial life are interconnected. If there is an issue in any of them, the other two will be negatively affected. We all aspire to have a successful career with salary growth and promotions. This is essential to build our wealth and finances. If our career is stable and smooth, we can plan our finances properly. We can set financial goals and make investments and make our wealth grow. But if our career is not stable or secure, financial planning is adversely affected. An unstable career involves too many changes in roles and jobs or being without a job for long periods frequently. If you are not secure in terms of whether you will be employed or not or have no idea about your career growth, financial planning can go for a toss.
Financial Planning becomes difficult – If you are not sure as to how your career is shaping up, you will not be able to draft your financial plan as you may not be able to estimate many parameters like amount for investment, retirement age, insurance amount etc. which are required for financial planning. If your financial plan is not in place, your finances will be in disorder and you will not know how much wealth you have and how much you need to save and invest.
Retirement Planning cannot be done properly – In a proper career path, you will be able to estimate your income growth and number of years to work. Based on that you will make your retirement goals and estimate the amount you need for retirement. An insecure, unstable career will not allow you to do this.
There will be no Financial Cushion – A stable career allows you to save money and increase your wealth. You will then have financial resources ready in case of emergencies like job loss or illness. If you change your job too often or are unemployed in between, you will not have enough money to have a financial cushion as a safety factor.
You will not be sure of meeting other life goals – Most of us have life goals like getting married by a certain age, having kids or taking up an educational course in a good university. An unstable career that leads to financial distress will not allow you to achieve these goals.
Instability and Insecurity in career affects health – Being employed gives you financial security, purpose in life, income and potential to lead a good lifestyle. But job insecurity or unemployment can lead to mental stress, depression, anxiety and other medical conditions. Apart from affecting health, they can also affect finances.
Career Progression and getting Benefits is difficult – If you change jobs too often, you will not be given important projects or roles as you will be seen as someone who quits the company soon. This will affect promotion and salary raises, bonuses and stock options. Your insurance policy will not be in order. This leads to less income and wealth in your hands which affects finances and financial plan.
Sometimes career instability and insecurity is caused by macroeconomic factors like slump in economic growth or your company not doing well. In such cases, you should not lose heart but keep working on your skills and personal development –
1) Update your skills as per changes in market and the industry that you work in.
2) Look for other potential employers and industries.
3) Update your profile and add it to professional networks. Ensure that you network with the right people in your industry.
4) You should save money so that even if you are without a job, you can manage expenses for some time. If this is taken care of, you will be able to concentrate on building your career properly with less stress.
It is important to have a career that is secure and stable from all perspectives. It will help in planning your finances properly.