Changing jobs? Here’s how to prepare financially
Congratulations, you’ve landed a new job! While it’s easy to get caught up in the excitement of securing a role, it’s important that you take a moment to stop and think about what this transition will mean for your finances.
Here are 6 simple tips that will help you to prepare financially for starting a new role.
Find out when you will receive your first pay cheque
Does your new employer pay staff members, weekly, bi-weekly or monthly? Do employees get paid on the same date every month or does it vary? These are the questions you should ask the hiring manager before accepting a job offer. Once you know when you will receive your first pay cheque you can budget accordingly. If you leave your current role in the middle of the month it might be some time before you get a proper wage.
Create a rainy day fund
A savings account might not seem like a very sexy or cool way to prepare for a job change, but it is very practical. Before you take the plunge and quit your job, you need to make sure that you have enough savings to tide you over for a few months (if you’re not starting a new position right away). If you do have another role lined up it’s still important to have some spare cash for unplanned expenses like a new work wardrobe or emergency tax.
Think about everyday extras
When you’re changing roles you need to think about more than your salary increase (or decrease). Will you need to take public transport to get to work? Does your employer have a mandatory pension plan? Do they provide free lunches? All these little costs can add up to be a huge financial burden in the long run. Don’t forget to factor them into your budget.
Re-calculate your budget
If you're taking a lower-paying job to join an exciting new startup or follow your passion, you'll need to carefully reconsider your current budget. Where can you make cut-backs or save cash? If your new job is paying you more money you will need to evaluate how much money you are saving. Consider setting up a standing order to your savings account.
Don’t forget about your annual leave allowance
If you have not used all of your annual leave at work you might be entitled to a payout for the value of those days. Make sure that you talk to your employer about their policy. They should be able to advise you on the process of collecting payments. Don’t miss out!
Take your cash with you
A lot of people forget about their retirement accounts when switching jobs. If you have contributed to a pension plan during your time at the company remember that money belongs to you so don’t forget to take it with you when you leave. If you’ve had retirement plans at two or three employers now is the time to combine them. If you’re unsure about your options an advisor will be able to help you to make the right financial decision (that will protect your money in the long run).