Changing jobs or career focus

Case Study: Changing jobs or career focus

Laura and Trent came to visit us when Laura was considering a new career move. The couple had two small children and Laura was the primary breadwinner while Trent worked from home as a freelancer.

Laura works in advertising but was hoping to move into editing and proof-reading. She was having trouble finding full-time work in editing and thought she would start freelancing to build an editing portfolio, make some contacts in the industry and, hopefully, help her secure a full-time, in-house role.

Managing your cash flow when changing your career

Although Laura was lucky enough to secure her first job as a freelancer while still working full-time, the couple would likely need to manage on a much-reduced income for at least six months while Laura built her business. We talked about the possibility of hiring a nanny or au pair to help free up more of the couple’s time to work.

Laura and Trent are lucky to have bought their home before Laura went freelance as lenders typically require at least two years of financial statements and tax assessments to secure a mortgage when borrowers are self-employed. We advised them to talk with their bank about taking a mortgage hiatus to increase cash flow at this time.

Laura’s new working arrangements means there are many more expenses she can claim against her tax liabilities, supported by the necessary receipts and invoices. As Laura views her freelancing career as a short-term step towards full-time employment, we advised her to keep her business expenses to a minimum. As cash flow will be tight, it’s important that Laura’s freelancing clients pay within her 28-day terms so we talked about the possibility of offering her clients a small discount for doing so.

What to do about superannuation

Being self-employed meant Laura was responsible for making her own superannuation contributions. While this wasn’t mandatory, we advised her that she should aim to contribute ten per cent of her income as a freelancer into her super fund.

Protecting your assets

We advised Laura and Trent to update their insurances to incorporate Laura’s change in occupation to avoid any negative repercussions. We also spoke about the possibility of mortgage protection insurance in the case where they were unable to meet their mortgage repayments.

With all possibilities discussed and steps taken to minimise any fallout from the couple’s reduced income, Laura is keen to start her career as an editor and proof-reader. The couple views Laura’s freelancing as a short-term move towards her long-term career.

Call StrategyOne today to arrange your obligation-free meeting: 02 9419 5233.

StrategyOne Advice Network is an authorised representative of Fitpatricks Private Wealth Pty Ltd, AFSL No. 247429, ABN 33 093 667 595 (“Fitzpatricks”).

The information in the above Case Study is of a general nature only and is not intended as a personal advice. It does not take into account your particular investment objectives, financial situation and needs. Before making a financial decision you should assess whether the advice is appropriate to your individual financial situation, needs and objectives. We recommend you consult a professional financial planner who will assist you.

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