How to survive a career change -- and a pay cut

How to save $1,000 this year
How to save $1,000 this year

At 35, I plan to leave my job as a teacher ... and go to graduate school (new career field). While I expect to receive an assistantship, I know it will be difficult to go from $50,000 a year to under $20,000. Do you have any advice or suggestions on adjusting to a lower income and stretching those dollars farther? --Jesse C, Hastings, Pennsylvania

Switching careers requires a big leap of faith -- and a change in money management.

Especially if you're expecting to take a big pay cut.

"Knowing where you want to go and defining your goals and having a plan to get there can help you make the decision with confidence," said Marcy Keckler, a certified financial planner and vice president, financial advice strategy at Ameriprise.

Here's how to survive and even thrive on a lower paycheck:

Beef up your cash reserve

Don't expect life's unplanned events -- like a car repair or broken washing machine -- to slow down just because you aren't making as much money.

That's why experts said it's important to have a bulked-up emergency fund that will cover at least six months of expenses.

"Try as hard as you can to build up the savings before the change to make the transition that much easier," said Maggie Germano, a financial coach in Washington, D.C.

Calculate: How far will my salary go?

It's also helpful to pay down as much debt as possible before you start living on the lower paycheck.

"By reducing it by half or even totally getting rid of it -- that will reduce the carry cost and additional money flowing out to pay someone else interest," said Jeff Corliss, certified financial planner and executive director at RDM Financial Group at HighTower.

Create a new budget

You're going to have to adjust your spending habits when you lose more than half your salary.

To start, experts suggested tracking your current spending and income for at least a month to find areas that you can cut back on.

Separate the mandatory spending -- like housing, utilities, food and transportation -- from the discretionary spending -- like meals out and entertainment. Knowing how much you spend on different areas will help pinpoint expenses that can be eliminated.

The next step is to create a new budget based on your new paycheck.

Related: Finding a budget that's the right fit for you

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Small lifestyle changes like skipping a fancy cup of coffee, eating at home more often and taking public transportation over Lyft or Uber can add up to big savings.

For instance, nixing a daily $4 cup of coffee habit can save more than $100 a month.

Big moves, like moving to a more affordable housing situation or taking on roommates, can bring bigger, more immediate savings.

Asking your auto insurer for a higher deductible that will result in a lower premium can also help shore up some cash, Keckler pointed out. Just make sure to have enough cash on hand to cover the deduction if something does happen.

Change your spending mentality

Life on a smaller paycheck likely means you're going to have to think twice before agreeing to a spur-of-the-moment dinner invite or beach vacation.

"It's a really difficult mind shift," said Corliss. "When people lose their regular salary, it takes time to adjust."

Yes, you'll inevitably have to spend less on discretionary expenses, but experts recommended keeping a little wiggle room in the budget for some fun.

"You want to maintain some quality of life," said Keckler. "If you are going to stick to a budget, it has to be something realistic to their lives."

Related: 5 money mistakes to avoid this year

Look for free money.

Before leaving your current employer, make sure you understand any benefits you might be able to take advantage of after your departure. For example, COBRA allows some workers continuation of health insurance coverage.

It can also be financially beneficial to look for any scholarships or grants to help cover the cost of going back to school.

Your new student ID could also come with some budget perks. Some retailers and restaurants offer discounts with a valid student ID, so don't be afraid to ask. Alumni associations and other membership groups, like professional organizations, can also offer deals and discounts that can help stretch your budget.

Taking the time to call some of your service providers to haggle can also pay off.

"Squeeze more value out of your available resources," said Keckler. "Look for things you can either adjust or renegotiate."

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