After mass layoffs and millions of layoffs, workers across the country are searching for jobs, accepting new offers, and adapting to new roles.
This familiarization phase should involve more than just getting to know your colleagues and getting used to your new tasks. Changing careers often has an impact on your financial life, and there are several things any new hire should do to make sure the effects are positive.
If you’ve recently started – or are about to start – a new job, here are some smart steps you can take.
5 money movements when starting a new job
1. Roll over your old 401 (k)
If your new employer is offering a 401 (k) plan with a company match, be sure to take advantage of that free cash. However, as you sign up for your new 401 (k) plan, don’t forget to transfer funds from your previous employer.
With your retirement funds pooled, you don’t have to worry about maintaining separate retirement accounts or losing track of the money in the older account.
Other options for what you can do with your old 401 (k) include rolling into a traditional IRA or Roth IRA. This article will walk you through how to put your old 401 (k) on after you leave work.
2. Evaluate your new employer’s health insurance plans
During your onboarding process, you may feel overwhelmed with the wide range of health insurance options, but it is important to take some time and figure out which plan is best for you and your family.
When evaluating plans, there are four important costs to consider: the monthly contribution, the co-payments / co-insurance, the deductible and the maximum out-of-pocket expenses. In general, plans with lower premiums have higher co-payments or higher deductibles.
With this calculator you can compare the costs of two health insurance companies.
When comparing plans, consider how often you see a doctor and whether you are likely to have medical expenses, such as medical expenses. B. If you are planning a baby or are likely to have an operation soon.
If you choose a high deductible health insurance plan, you may be able to open a health savings (or HSA) account that offers several tax savings. Your HSA may also offer an opportunity to invest your savings for greater potential for growth.
3. Consider other employee benefits
Getting health insurance and a retirement plan are obvious employer perks, but you should also be aware of your employer’s other perks so you don’t end up leaving money on the table.
Check your new employer’s policy on paid time off. Do idle days keep running or do you lose vacation days if you don’t use them by the end of the year?
Does your employer offer tuition fee reimbursement, student loan repayment or scholarships for further education? Does your employer pay for your cell phone bill if you use your phone for business purposes? Will they pay for home office equipment when you work remotely?
Some employers offer perks like childcare vouchers, gym memberships, discounts on public transportation, pet insurance, legal protection insurance, and more.
4. Avoid lifestyle inflation
If your new job involves higher salaries, it is tempting to get into the habit of spending more money than you used to. Maybe you can finally afford the luxury car or high-rise apartment now, but that doesn’t necessarily mean you should give yourself the money.
If you can stave off lifestyle inflation, you will have more money to use to meet your financial goals, such as: B. build up an emergency fund or pay off debts. To get yourself to ignore your raise, set up your direct deposit so that part of your paycheck goes straight to your savings account before you can even think about spending that extra cash.
5. Readjust your budget
When starting a new job, this is the perfect time to readjust your budget (or start a budget if you don’t already have one).
A higher salary means you can spend more money on savings, debt payments, or other important expenses that you’ve been putting off. On the other hand, if you are earning less now, you may need to cut back on your spending.
Also, be aware that your expenses may change with your new job. You need to budget more for gas if you have a longer commute to work now. As you move from a casual to a formal work environment, you may need to upgrade your wardrobe.
You may find that once you start a new job, you can cut costs out of your budget. If your business offers free lunches, you can spend less on groceries and take-away. If they offer financial assistance to repay student loans, you can devote less budget to paying off debt.
Adjust your budget to reflect your changes in income and Costs.
Nicole Dow is a senior writer at The Penny Hoarder.