Starting a new job can be both exciting and nerve-wracking. We're here to support you during this change!
Starting a new job is an exciting opportunity, and by considering these financial aspects, you can ensure a smooth transition and set yourself up for long-term financial success.
Below is a comprehensive guide outlining key considerations from a financial perspective.
You can also download our new job checklist here.
Understand Your Compensation Package
- Salary: Ensure you understand your base salary and how it compares to industry standards. Consider the frequency of pay raises and promotions.
- Bonuses and Incentives: Clarify if there are performance bonuses, signing bonuses, or other incentives. Understand the criteria for earning these bonuses.
- Stock Options and Equity: If your compensation includes stock options or equity, understand the vesting schedule and tax implications. Your financial advisor can help with this!
Review Benefits and Perks
- Health Insurance: Evaluate the health insurance options offered by your employer. Compare the premiums, coverage, deductibles, and out-of-pocket costs with your current plan.
- HSA Contributions: If your new job offers a high-deductible health plan (HDHP), you might be eligible for a Health Savings Account (HSA). Contribute to this account to take advantage of its triple tax benefits: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free.
- Retirement Plans: Understand the retirement plan options, such as a 401(k) or pension. Make sure to take advantage of any employer matching contributions and assess the vesting schedule.
- Other Benefits: Look into additional benefits such as life insurance, disability insurance, wellness programs, and education assistance. These can add significant value to your compensation package.
Plan for Taxes
- Tax Withholding: Adjust your tax withholding on your W-4 form to ensure the correct amount is withheld from your paycheck. Use the IRS withholding calculator to help you, or check with your financial advisor for help.
- State and Local Taxes: If your new job is in a different state or city, understand how the change will affect your state and local taxes. Consult with a tax professional if you are unsure!
Budget for New Expenses
- Commute Costs: Factor in any new commuting expenses, whether it’s public transportation, fuel, or parking fees.
- Relocation Costs: If you’re relocating, budget for moving expenses, temporary housing, and any other related costs. Check if your employer offers relocation assistance.
- Work Attire and Equipment: Consider any new costs for professional attire, tools, or equipment needed for your job.
Emergency Fund
- Reevaluate Your Emergency Fund: Ensure you have an emergency fund that covers 3-6 months of living expenses. This provides a safety net in case of job loss or unexpected expenses.
Retirement Savings
- Maximize Contributions: If possible, contribute the maximum amount to your retirement plan, especially if your employer offers a matching contribution. This is essentially free money for your retirement.
- Rollover Previous Accounts: If you have retirement accounts from a previous employer, consider rolling them over into your new employer’s plan or into an IRA to simplify your finances and possibly gain better investment options.
Debt Management
- Review Debt Payments: Evaluate how your new income impacts your ability to manage debt. Consider increasing payments on high-interest debt to reduce it faster.
- Student Loans: If you have student loans, check if your new employer offers repayment assistance. Also, consider how your new salary affects your repayment plan, especially if you’re on an income-driven repayment plan.
Set Financial Goals
- Short-Term Goals: Identify short-term financial goals such as saving for a vacation, creating an emergency fund, or paying off a specific debt.
- Long-Term Goals: Plan for long-term goals like buying a house, funding your children’s education, or saving for retirement. Use your new income to create a strategy for achieving these goals.
Ask for help!
- Financial Advisor: Make sure to reach out to your dedicated financial advisor! They are here to help during these life changes, and will give you personalized advice based on your new financial situation and goals.