If you were to change jobs tomorrow, would you know what to do?
The typical employee stays at their job for an average of 4 years, which means that most people will have about 10-12 jobs in their lifetime. Since the reality of changing jobs is so frequent, you need to be prepared for when the time comes to take on a new challenge.
Here are a few items you need to check off when you change jobs.
Aside from salary, there are several other factors within a benefits package that affect your financial well-being. Health insurance is a big one and perhaps the most complicated, so don’t hesitate to ask questions. If your new insurance has a higher deductible, for example, you’ll have to prepare for that expense.
Other benefits include paid time off, sick days, gym memberships, cell phone bills, or professional development. If your old company was picking up the tab for your gym membership and cell phone, but the new one isn’t, that needs to be factored into your new salary.
Speaking of cell phone bills and gym memberships, you’ll need to factor those into your new budget. If you’re going to be making more money, you may have more flexibility in your budget. More flexibility doesn’t mean more nights out; it may mean allocating more funds to paying off your student loans, other debt, or investing for your future.
Or maybe you’re embarking on a new passion project and have to take a pay cut. If that’s the case, you’ll need to strategically evaluate your current budget and decide where to scale back.
You’ve been diligent about saving for retirement, so don’t let a job transfer delay you. You have a few different options on what to do with your current 401(k). You can:
Some companies don’t let you contribute to a retirement plan until you’ve worked there for a certain period. If that’s the case, you may be able to open an IRA on your own while you wait. Be aware of tax limitations on this.
An emergency fund should contain roughly 3-6 months of expenses that you can use when you need it the most. An emergency fund covers your rent, utilities, car payments, student loans, and even your Netflix subscription.
So why is it important to build up an emergency fund before a job change?
Sometimes things don’t work out as expected, so if you decide the new job is the wrong fit, your emergency fund will be there while you search for a new one.
Changing jobs is an incredibly exciting time, but there’s a lot to think about. If you have questions about how a new job could affect your financial health, get in touch with our team.
Wood Smith Advisors, a woman-owned Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs, and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.
"Finance Made Simple" blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.