‘Great Resignation’ sounds tempting but you better plan your finances

Go your own way if you wish – just make sure that you’re not simply buying yourself a new job.

In the year ahead we can expect many professionals to go their own way. Picture: iStock

The Covid pandemic has resulted in thousands of Australians re­assessing their careers, a phenomenon tagged as ‘‘the great resignation”. Whether it be due to a decline in business conditions during lockdown, a redundancy event or personal reflection of life’s priorities while working from home, the career plans for many have deviated away from the well trodden path.

A recent member survey from CPA Australia found that a staggering 60 per cent of accountants were either thinking about or have started looking for new job opportunities. Clearly, there is a major change under way in working patterns, but hopefully they will not occur without careful consideration of what such a move means for financial plans.

In the year ahead we can expect many professionals to go their own way. They may move on to higher-paying roles given the skills shortage, but there will also be quite a few who leave their profession altogether for more personally rewarding roles.

Caine Hemsworth, founder and ‘‘chief beer officer’’ at Australian beer subscription service Gettin’ Crafty, is one such example. The former accountant left his career in business insolvency to pursue a lifestyle business in an area he is passionate about.

Hemsworth says: “I was tired, burned out and needed a rest from my accounting career. The idea for Gettin’ Crafty came to me while standing in a large liquor shop. I observed two young people chatting about craft beer but who ended up buying a case of mass-produced international beer. I thought Australia has so many great beers but there seems to be a reluctance to try new beers.”

“So I started Getting’ Crafty with the goal to promote the amazing beer being produced from the 700 Australian-owned breweries that only get 10 per cent of market share as the multinational liquor companies dominate the market.”

Time and money

But starting a new business is not an easy endeavour, even for a seasoned accountant like Hemsworth. If you are thinking about the best way to navigate a Covid career switch, Hemsworth advises: “There is no perfect set of financial conditions to go out and start your own business. Sure, it would be great with no mortgage and an abundance of cash in the bank, but in reality most people are not in that position. So I say give it a go and even though I am burning through personal capital, I believe in the business and am doing all I can to make it succeed.”

As for common mistakes people make when changing careers, financial planner Chris Kourmpatsos says: “Many people underestimate the time they will need to rely on their savings when changing careers and as such fall into financial difficulty as they deplete their cash reserves.

“If you are moving away from the corporate world to undertake further studies, for example, you need to have ample savings to meet your living costs, pay the course fees and all associated costs, provision money for a period before and after your study where there will also be no income and add a buffer for unexpected costs which invariably pop up. Adding up all these things usually ends up with a bigger number than you had originally anticipated.”

Good planning is even more important if you start your own business, accountant Caxton Pang from Linton Advisory Group says. “Be careful not to fall into the trap of buying yourself a job,” he says. “I see this when people leave their job in pursuit of being their own boss only to find that they end up working longer hours in their own business and making less money than what they did previously while being an employee; especially when they work out how much they are making on an hourly basis.”

Expert advice

One area where this issue is a regular problem is in the franchise sector where the most profitable locations and patches have all been taken already. So the old saying that the grass is always greener on the other side can often ring true when it comes to swapping a job for a business.

For those who start from scratch, getting it off the ground is much easier said than done, given that 90 per cent of small businesses fail. It is advisable to seek expert advice on your business plan, growth forecasts, tax structuring and risk protection.

But for others who are more financially established, moving away from the corporate world can bring that long-desired work/life balance. So do not discard your plans to do a Covid career change altogether; just make sure you go into it with your eyes wide open and think about all the things that might go wrong so that you can put contingencies in place.

But for Hemsworth there is no looking back: “People always say to do something that you are passionate about, and I have finally done that. I can leverage off my existing accounting skills and have the opportunity to grow a great business with close mates in an area that I have a personal interest in. What could be better than that?”

James Gerrard is principal and director of Sydney financial planning firm financialadviser.com.au