A career change is a big step. You’re making a conscious choice to take a new direction, investing in yourself and setting your career on a fresh course. But as well as preparing in terms of the subject matter, a career change also requires sound financial planning. If you prepare properly, you can focus entirely on learning and developing, without financial worries distracting you.
In this article, we answer the most frequently asked questions about the financial aspects of retraining: from how much money you’ll need to what schemes are available and what mistakes you can avoid. This will help you start your new future well prepared.
What does retraining mean, and why does it cost money?
Reskilling means consciously switching to a different field or role and acquiring new knowledge and skills to do so. This costs money because you are investing in training, courses or coaching, whilst at the same time you may have a reduced income or no income at all during the transition period.
The costs of retraining consist of two parts. The direct costs are the most obvious: tuition fees, study materials, exams and travel expenses. But the indirect costs are just as important. If you work fewer hours to study or take a temporary break from work, your income will fall. This combination makes financial planning essential.
At the same time, retraining is an investment in your long-term employability. The costs you incur now will pay off in the form of a stronger position in the labour market, greater job satisfaction and a career that better reflects who you are and what you want.
How much money do you need for a retraining programme?
How much money you need for retraining depends on the duration of the course, the cost of the programme and how much income you’ll lose. As a rule of thumb, add up three cost categories: course fees, fixed expenses during the study period and a buffer for unexpected expenses.
A short retraining course lasting a few months requires a different approach to preparation than a programme lasting one or two years. Ask yourself the following questions:
- What is the total cost of the course or programme?
- Will I continue to work (part-time) whilst retraining, or will I take a temporary break?
- What are my fixed monthly expenses, such as rent, mortgage and insurance?
- Do I have any dependants, such as a family, for whom I am financially responsible?
By answering these questions in detail, you’ll get a realistic picture of what you need. Always allow for an extra margin of ten to twenty per cent on top of your calculation, so that unexpected costs don’t derail your plan.
What financial support is available for retraining?
There are several financial schemes designed to make retraining more accessible. These include the STAP grant, sectoral training funds (R&D funds), unemployment benefit with permission to undertake training, and, in some cases, a student loan from DUO for vocational (MBO) and higher professional education (HBO) programmes.
STAP budget and other government schemes
The STAP budget (Labour Market Position Incentive) offers financial support to those in work and jobseekers for recognised training courses. Always check whether your chosen course is on the list of recognised courses, as not every programme is eligible. In addition to STAP, there are also local authority schemes and grants from the UWV for people in a transitional phase.
Training funds through your employer or sector
Many sectors have their own training funds to support staff with further training. Ask your employer or HR department what options are available. Sometimes the employer will reimburse (part of) the retraining costs, particularly if the new specialism is relevant to the organisation or sector. This is an opportunity that many employees fail to take advantage of.
How do you build up a financial buffer before retraining?
To build up a financial buffer before retraining, set aside a fixed amount each month in a separate savings account, cut back on unnecessary spending and, where possible, find ways to earn extra income. Start doing this at least six to twelve months before your planned start date.
Practical steps to build up a buffer:
- Keep track of your current income and expenditure with a monthly budget.
- Set a savings target based on your calculated retraining costs.
- Transfer a fixed amount automatically to a separate savings account every month.
- See which subscriptions or expenses you can cut back on for the time being.
- Consider earning extra income through freelance work or overtime, if possible.
A financial buffer gives you peace of mind and freedom of choice. You can focus entirely on the retraining itself, without financial pressures influencing your decisions. That mental space is valuable, because you learn better when your mind is clear.
What are the biggest financial mistakes people make when retraining?
The biggest financial mistakes when retraining are underestimating the total costs, failing to take loss of income into account, and starting without a financial plan. Avoiding these mistakes significantly increases the chances of a successful and stress-free retraining period.
Other common mistakes include:
- Looking only at the tuition fees and don’t forget additional costs, such as books, travel expenses and exam fees.
- Being too optimistic about earning extra money during the course, whilst studying takes up more time than expected.
- Not making use of available schemes because you simply haven’t looked for it.
- Starting to save too late, which means you’ll be under time pressure right from the start of the course.
- Not taking the period following the course into account, because finding a new job takes time too.
A financial plan will prevent you from running into difficulties halfway through your retraining. Take the time to draw up this plan carefully, preferably with the help of someone who can guide you through the process.
When is the right time to start planning your finances?
The best time to start planning financially for a career change is as early as possible, ideally one to two years before your intended start date. The sooner you start, the more time you’ll have to save, look into the options and make an informed decision.
Still, there’s never a wrong time to start. Even if you’re already in the middle of considering a career change, it’s worth taking stock of your finances right away. Understanding your situation is the first step. Once you know where you stand, you’ll also know what else you need to do to achieve your goal.
Financial planning goes hand in hand with career planning. Whilst you’re thinking about the direction you want to take, it’s a good idea to consider at the same time what resources you’ll need to achieve that. These two processes reinforce each other and give you a more complete picture of your options.
How Nieuwkans helps with retraining and career changes
Successfully completing a career change requires more than just financial preparation. It also requires self-awareness: who are you, what are your talents, and which direction really suits you? That is exactly where we at Nieuwkans can support you.
Our programme for sustainable employability for employees helps you to:
- To gain an understanding of your natural talents and cognitive behavioural preferences using scientifically proven methods, such as the BrainsFirst approach.
- To gain a clear picture of your position in the labour market, both now and in the future.
- To make informed choices about the direction of your career, so that retraining really is the right step for you.
- Receive personalised support that is fully tailored to your situation – never a one-size-fits-all package.
We believe that everyone can shape their own future. With the right guidance, you can make that future a reality. Would you like to find out what we can do for you? Contact us and we’ll discuss your options together.