James Lim walks through how to calculate your financial runway before making a career change. Figure out your monthly expenses, multiply by 2.5 to 5 depending on comfort level, and aim for a 3 to 6 month buffer before you jump.
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Does fear and anxiety about loss of income and funding your new idea cripple you into inaction? Well, in this video you'll learn how you can get rid of the anxiety about risk and how you can build a solid financial foundation that you'll be confident in trying. So one of the most common concerns is finances. And if you're trying to make a transition in any way, or either job or life, knowing your financial situation will really ease the anxiety. If you know this is what it's going to take to test an idea out. So, first step is to clarify your financial reserves by doing so, this gives you more options. Okay, so the first step is to understand your basic monthly expenditure. Think of it as a kind of bootstrap or living frugally to keep things going. What's the minimum you require for this? So look at your accommodation, your basic food expenses and any other bills that you need to cover. Then the next one is to think about your existing lifestyle. How much does that cost you? Good guides are typically for bootstrapping two and a half times your current rent or mortgage payments and five times for a nice to have stroke dream. If you're trying a new idea, a Runway is a way of thinking about how long you've got to try your idea. Often people will think about it as a three to six month project. If you're doing this alongside your business or your current business and you're going to keep it going, you can, you can extend that. But if you think about cutting your current work position, think about how much you would need to test something for three to six months. You can obviously vary this based on what you're trying to achieve. Crunch the numbers. How much cash have you got? What assets do you have and what's the burn rate of. What's the expected burn rate of the thing that you're going to try? So that's it for this video. And if you're interested in learning other practical methods to help finding your way in life, click on the subscribe button and hit the bell. As I'll be releasing a lot of new content over the next few weeks.
