How to plan your career in five steps

Are you well educated and ready for professional life? Then the fundamental question of career planning now arises: How do you take your future into your own hands right from the start? We provide tips — and insight into every phase of life, from career entry to skills development to career goals.

A job determines many things in life: fixed obligations, lots of rules of conduct and even more responsibility. Between employment contracts, salary negotiations and insurance policies, it’s important to take advantage of your opportunities and minimize risks.

It’s therefore helpful to map out your goals at the beginning, ask yourself the most important questions, and later adapt personal plans to new opportunities. This provides security when starting out in the working world — whether in a start-up, a medium-sized company or a large corporation.

What are the requirements for career starters? What can I expect as a starting salary? Which insurances are necessary? What about work-life balance and a lasting sense of purpose in my job? We provide answers.

Step 1: Defining your own career path

What is a career anyway?

Most people understand it to mean a steep career path to a management position with a high income. But a good career can also be a job that is otherwise fulfilling for you.

And career goals change. As a young single person, the fat salary is often the main focus. Later, the focus may shift more to balancing a job and family. Your own career plan must therefore be variable — planning according to a pattern is pure theory. Today’s job market is far too flexible for rigid patterns of behavior.

Ask yourself the following questions at the beginning: What do you want to achieve? What values are important to you in your job? How quickly do you want to be successful? What type of person are you? What are your strengths and what topics excite you? The answers will help you define your own career aspirations without narrowing your focus to just one objective.

Step 2: Orientation phase at age 16-25

What salary do career starters get?

Today, there are various ways to compare common salaries on the Internet. Individual employer and employee factors make for major differences, for example qualifications, industry, company size, corporate culture and type of employment.

On average across all professions, the annual starting salary of university graduates was 44,310 euros gross, according to the Stepstone Salary Report 2018/19.

The individual industries differ significantly in terms of starting salary, and the salary ranges are also wide for apprenticeships. The region also plays a role. In the south and west of Germany, the starting salary is higher on average than in the east. Statistically, the highest salaries can be earned in Baden-Württemberg, Hesse and Bavaria.

Men still earn more than women on average. The difference can be as much as 20 percent in some industries.

How can I save taxes as a young professional?

There are many ways to save taxes as a young professional. File an income tax return. Especially if you didn’t start your job Jan. 1, you can get some back. Here are a few tips:

• You can deduct costs for insurance policies for retirement provisions or for a Riester contract as special expenses.
• Donations to political parties and non-profit associations can also be claimed as special expenses. Ask the party or association to issue you with a donation receipt.
• Deduct income-related expenses from your taxes. For example, you can deduct the costs of your move or the real estate agent. You can also deduct the cost of your job application photo. Provided you have kept all receipts!
• Each kilometer between home and work brings a tax saving of 0.30 euros. You are allowed to deduct the one-way trip once per day as income-related expenses. Regardless of which means of transport you use to get to work!
• For account management fees, you can deduct a flat rate of 16.00 euros from your taxes. You also enter these under income-related expenses.

What insurance do I need as a young professional?

The most important insurances for young professionals are liability and occupational disability insurance. Depending on your situation, accident insurance, legal protection insurance and household insurance may also be helpful for you.

In conversation, we can give you more tips on insurance specifically for your situation. Simply make an appointment.

Can I already get a loan as a young professional?

Yes, you can get a loan as a young professional. Whether the loan is approved depends on what type of loan you apply for. And on how great the risk is that you will not be able to repay the loan.

You can usually use an overdraft facility (eingeräumte Kontoüberziehung) if your salary has been regularly paid into your account for several months. However, overdraft facilities are not a permanent solution. This is because the debit interest rates are often high. A small loan is then often more favorable.

It is best to wait until you have passed your probationary period at work. If you lose your salary, it could be difficult to make the monthly payment.

We can give you more tips on the right loan for your situation.

Which retirement plan makes sense for career starters?

Young professionals have one advantage: their age. If you take out a retirement plan early, you give your money plenty of time to grow before you retire. Over a long period of time, investment funds are well suited for this purpose — especially in the current low-interest phase. However, the higher potential return is offset by a higher risk.

Products in which the state contributes money can be particularly worthwhile. For example, a Riester contract. If you save a certain amount, you receive an annual allowance from the government. And you can deduct your payments from your taxes as special expenses. Up to the age of 25, Riester savings also include a one-off bonus of 200 euros for young professionals.

Step 3: Success phase at age 25-35

Where is my professional journey heading?

When starting out in professional life, the desired salary is usually the most relevant detail for the career plan. After a few years on the job, other general conditions of the workplace become important — above all the issue of work-life balance, but also desired tasks, further training, possible positions and working environments.

The greatest motivation is one’s own striving for self-realization — both professionally and privately. After all, this is usually the time when important decisions are made about changing jobs and relocating, family planning, building a house or parental leave.

Professionals should therefore always review their original objectives and, if necessary, question them. Do not doggedly hold on to goals once they have been set.

Can I afford a new start in my career?

Do you dream of a job in a new company, a new city, maybe even abroad — but are you afraid of the relocation costs? Check with your new employer: it’s not uncommon for larger companies to have framework agreements with moving companies. In this case, you can save money as an employee.

In addition, career changers receive support from the state via their tax return. If you have to move for a new job, you can deduct income-related expenses from your taxes.

Of course, you can also finance your move with a loan. Provided that the new income covers more than the cost of living. Then the loan is sometimes a helpful investment in your future.

Can I be in a good financial position while on parental leave?

Don’t completely lose sight of the issue of retirement in the midst of your children’s happiness. During parental leave, there is sometimes a gap in your pension provision. Although the pension insurance takes the parental allowance period into account as a child-raising period, it uses the average earnings of all insured persons as the basis for calculation.

The best way to close this gap is with a fund savings plan. This can be set up with regular savings amounts starting at 25 euros. Simply make an appointment with us.

How do I protect my family with my retirement provision?

With endowment insurance, you can make sensible provisions for your future. It is a combination of survivor protection and retirement provision. In this way, you invest money for your retirement and protect your family at the same time. If something should happen to you, your dependents will receive the agreed sum.

Insurance coverage starts with the first premium. With a minimum term of twelve years, you can build up a financial cushion for your retirement even with small premiums. We will be happy to assist you with your retirement planning.

How do I save when building a house?

Detached single-family home, semi-detached house or townhouse: You should rely on financial support from the state for your building project — with housing subsidies, building child allowance, employee savings allowance or public subsidized loans. We will be happy to advise you on whether you can take advantage of subsidies for your own home.

Step 4: Specialization phase at age 35 — 45 years

Do my goals (still) match my career?

If you have set your professional course in good time, you can already look back on some exciting challenges and successes. In your private life, too, the biggest milestones have usually been reached in this phase.

However, if you are brooding now, you may have unnoticed that your career has developed in the wrong direction. Ask yourself what is important to you today. Are you currently fulfilling your personal professional wishes or rather the expectations of others? A change of job or a reorientation within your company may offer you a completely new career path.

How much specialized knowledge do I need?

Do you fulfill all the requirements of your job with flying colors, but routine is getting the better of you? Then specialize. Because there is always far more to know. Don’t underestimate this stage of your professional life — your career will be decided now.

Develop your skills in advanced training courses. Or continue your education privately, for example with a sabbatical as educational leave. This can be taken as unpaid leave — in which case you have to take care of health, pension and unemployment insurance yourself. Or your employer can help finance it. In any case, you should continue your pension insurance on a voluntary basis.

Of course, not everyone can become a CEO right away this way. However, additional qualifications will put you in a better position to compete in your field of work in the long term.

Step 5: Sense phase at age 40+ years

Is that it?

No. You have both feet firmly planted in the job and a large professional network. Now you can realize your full potential. Either by continuing to step on the gas and crowning your career to date, or by doing something meaningful with what you do. Ideally, you’ll combine both in a job with lasting impact.

Lucky are those who have already found this professional fulfillment at their current job. Others have a new start in mind, perhaps thinking of changing jobs or starting a new business.

Keep in mind: Since you are usually a rather expensive labor force in this phase of life, a reorientation can — at first — be associated with a financial setback.

The good news: With the right investment strategy, you can counteract these losses in advance.

The second piece of good news is that it’s not just the salary or the job itself that provide satisfaction, but also the feeling of knowing what you’re doing it for. The general recommendation for career plans is therefore: Always remain open and flexible despite having a plan. Good luck!

In a conversation, we will be happy to give you more tips on your finances at work as well as on the topics of financial investment or retirement planning specifically for your situation. Simply make an appointment.