Lots of people have been getting back to work after being laid off during the pandemic. Whether this is you or you’ve just moved on to a different job, there are some things you should make sure to check off when it comes to financial matters.
Every new job comes with an adjustment period, but that’s not just for meeting your new colleague or getting used to the demands of your position. A new job always impacts your financial life and that’s why it’s important to make sure you take care of these matters as quickly as possible.
If you’ve started on a new job recently, or are going to start one soon, here’s a financial checklist to go through.
Readjust Your Budget
Starting a new job is a major change in your life, and with that comes the need to adjust your budget, especially since your job is likely your main source of income. If you’ve never had a budget before, there’s no time like the present to get started!
New jobs often come with a pay raise, which means you’ll have more money to put into important expenses such as savings, paying off debt, etc. However, that may not always be the case. If your new job pays less than you used to earn, it’s never been more imperative to make changes to your budget. You will need to adjust your expenses and cut down on certain areas of spending to ensure that you can afford to make ends meet with your new income.
A new job may also require several changes in your lifestyle. Maybe you have a longer commute, so you need to budget for more gas or buy a car if you didn’t have one already, or maybe your new company has a formal attire policy so your wardrobe is needing of a complete overhaul. These are expenses that should be factored into your budget.
At the same time, you can also deduct certain expenses from your personal budget if your employer provides perks such as free breakfast/lunch, gym memberships, travel vouchers, etc. Some companies even offer to help out with large expenses such as childcare costs, student loan repayment, free accommodation, etc.
Either way, there will be things that need to be added/deducted/amended to your budget when you start on a new job. The only way to ensure that you’re able to create a reasonable budget and are able to follow it is to ensure that is kept up-to-date regarding your current income and expenses.
Pick the Right Health Insurance Plan
One of the biggest financial decisions you will have to make when starting a new job is picking a health insurance plan. Your new employer may have several options for you to choose from and it’s important to spend some time doing proper research to figure out which plan would best suit the needs of you and your family.
When evaluating your options, there are 4 main aspects of each plan you should consider: monthly premium amounts, copayments/coinsurance, deductibles, and maximum out-of-pocket limits. Low-premium plans will typically have higher copayments and deductibles, and vice versa.
Then you need to think about your own habits; how often do you tend to go to the doctor, and are you expecting any medical costs in the future (a planned surgery, a baby, etc.)? These are important factors that will help you compare and decide whether it’s worth it to go with a high-premium plan or a low-premium one.
If you choose a high-deductible health plan, you might also be eligible to open a health savings account (HSA). HSAs come with a number of tax-saving benefits as well as the option to invest your savings for higher potential growth.
Review Other Employee Benefits
New health insurance and retirement accounts are a given when it comes to starting a new job, but there may be a number of other employee benefits that your company offers. If you don’t know all the perks that are available to you, you’re essentially saying “no” to free money!
The first thing to check in your company’s policy is whether unused vacation days roll over (or are compensated) or if they would expire by the end of the year. What’s the point of leaving free time off unused?
Many companies also provide subscriptions to education platforms or reimbursement/stipends for tuition, including student loan repayments! Some employers even include “personal betterment” courses, such as communication classes, language classes, confidence-boosting courses, etc. under this category.
You should also check with your employer if they would cover the cost of your cell phone bill when used for business purposes or if they reimburse home office costs if the job is a remote one. Beyond this, you may get other benefits such as childcare vouchers, gym memberships, transport vouchers, pet insurance, legal insurance, and much more. Any of these employer-provided benefits will help take a chunk off of your monthly budget, saving you loads of money.
Roll Over Your Old 401(k)
If your new job comes with an employee-matched retirement fund such as a 401(k), that’s definitely good news! However, it’s also important that you rollover funds from your previous employer when signing up for your new 401(k) plan. This way, your retirement funds will be pooled together and you can avoid the hassle of having to manage two separate retirement accounts, which makes it much more likely that the older one gets neglected or even forgotten.
On the other hand, if you prefer to do so, you can rollover your previous 401(k) into a traditional IRA or Roth IRA. Whichever way you choose to go, make sure that money is taken care of as soon as possible!
Avoid Lifestyle Inflation
A new job often comes with a higher salary and it can be tempting to inflate your lifestyle now that you have the money to do so. Maybe you can finally afford that fancy new apartment or some other luxury purchase. However, it’s wise to put off any inflation of expenses as much as possible.
Of course, you should splurge on yourself a bit if you can afford it; you deserve it for landing a new job! But maybe you can take it one step at a time and not take on a massive financial burden all at once. Plus, this will also allow you to put more money towards important financial obligations such as your emergency fund, paying off debts, investments, etc.
One way to help yourself avoid the temptation to spend all that “extra” money is to set up automatic transfers to your savings account so that the money is “gone” before you can access it.
