5 Money Moves When Starting a New Job
After mass layoffs and millions of resignations, workers across the nation are hunting for jobs, accepting new offers and adjusting to new roles.
That adjustment period should include more than just getting to know your coworkers and getting used to your new responsibilities. A career shift often has an impact on your financial life, and there are several things every new employee should do to ensure that impact is a positive one.
If you’ve recently started — or are about to start — a new job, here are some smart money moves to make.
5 Money Moves When Starting a New Job
1. Roll Over Your Old 401(k)
If your new employer offers a 401(k) plan with a company match, you should definitely be taking advantage of that free money. While you’re enrolling in your new 401(k) plan, however, don’t forget to roll over funds from your previous employer.
With your retirement funds pooled, you won’t have to worry about managing separate retirement accounts or losing track of the money in the older account.
Other options for what to do with your old 401(k) include rolling it into a traditional IRA or Roth IRA. Check out this article on how to roll over your old 401(k) when you leave a job.
2. Evaluate Your New Employer’s Health Insurance Plans
During your onboarding process, you may feel overwhelmed with the multiple options for health insurance, but it’s important to take some time and figure out which plan would be best for you and your family.
There are four important costs to consider when evaluating plans: the monthly premium, copayments/coinsurance, the deductible and the maximum out-of-pocket limits. Generally, plans with lower premiums will have higher copayments or higher deductibles.
This calculator helps you compare the costs of two health insurance plans.
When comparing plans, consider how frequently you tend to go to the doctor, and if you have any anticipated medical costs, like if you’re planning for a baby or you’ll likely need surgery soon.
If you choose to go with a high-deductible health plan, you may be eligible to open a health savings account (or HSA), which has multiple tax-saving benefits. Your HSA may also offer the option to invest your savings for greater potential growth.
3. Consider Other Employee Benefits
Signing up for health insurance and a retirement plan are obvious employer benefits, but you should also be aware of the other perks your employer offers so you don’t wind up leaving money on the table.
Review your new employer’s policy about paid time off. Will unused days roll over or will you lose vacation days if you don’t use them by the end of the year?
Does your employer offer tuition reimbursement, student loan repayment or stipends for continued education? Will your employer cover the cost of your cell phone bill if you use your phone for business purposes? Will they pay for home office equipment if you work remotely?
Some employers offer benefits such as child care vouchers, gym memberships, discounts for public transportation, pet insurance, legal insurance and more.
4. Avoid Lifestyle Inflation
If your new job comes with a bigger salary, it’s tempting to get into the habit of spending more money than you used to. Maybe you can finally afford that luxury car or high-rise apartment now, but that doesn’t necessarily mean you should give into the splurge.
If you can stave off lifestyle inflation, you’ll have more money to go toward your financial goals, like building an emergency fund or paying off debt. To trick yourself into ignoring your salary increase, set up your direct deposit so a portion of your paycheck goes straight into your savings account before you can even think about spending that extra money.
5. Readjust Your Budget
When you start a new job, it’s the perfect time to readjust your budget (or start a budget if you don’t already have one).
A higher salary means you can allocate more money to savings, paying off debt or other important expenses you have been putting off. On the other hand, if you’re now earning less, you may have to clamp down on your spending.
It’s also important to note that your expenses may change with your new job. You’ll need to budget more for gas if you now have a longer commute. Going from a casual to a formal work environment might require you to upgrade your wardrobe.
You might find you can cut costs from your budget after starting a new job. If your company provides free lunches, you can spend less on groceries and takeout. If they offer financial assistance to pay back student loans, you can budget less for paying down debt.
Readjust your budget to account for your changes in income and expenses.
Nicole Dow is a senior writer at Codetic.