Financial Tips to Review Before a Job Change

Thinking about switching jobs? Whether you’re about to quit, just got a new offer or are in the middle of transitioning, it’s a big step! And with big steps come big financial considerations. This guide is here to help you navigate the financial side of a job change smoothly.

Take a Close Look at That Job Offer

So, you’ve got an offer on the table—congrats! But before you celebrate, you’ll want to look at the salary, benefits and perks. You can even make a checklist of these key areas.

• Salary: Is the salary enough to cover your needs and wants? Consider if it’s sufficient for your current expenses and whether it leaves room for future goals, like saving for a house or paying off debt.
• Benefits: How much will healthcare cost you each month? Assess the healthcare plan and paid time off (PTO) offerings, and consider whether they support your work-life balance.
• Perks: Are there any extra perks, like retirement matching, bonuses, fitness programs or other incentives that sweeten the deal?

Get specific. For example, ask HR, "How much will my healthcare premiums be?" or "What’s the policy on unused PTO?" Knowing these details upfront can help you decide if this offer really meets your needs. Know that it’s okay to negotiate if you think it's needed—there’s no shame in asking!

Max Out Your Employee Benefits

Employee benefits are more than just a nice-to-have—they can play a big role in your job satisfaction. Health insurance is often the first benefit you’ll want to explore, so take the time to understand exactly what’s covered and what’s not. Beyond health insurance, many companies offer additional perks like wellness programs or commuter benefits, which can make a big difference. For instance, find out if your unused PTO is paid out when you leave—some states require it, and this payout could provide a valuable financial cushion for moving expenses or bolster your emergency fund.

Rework Your Budget With That New Paycheck

A new job often means a new salary, and that means it’s time to revisit your budget. Got a pay bump? Great—think about where those extra dollars should go. Maybe it’s time to boost your savings, tackle that student loan debt or even invest in a side hustle. On the flip side, if your new job means a pay cut for more work-life balance, you might want to adjust your spending habits to avoid financial stress.

There are several different budgeting methods to choose from, all designed to help you make the most of your finances. For a deeper dive into some of your options, check out our blog on budgeting methods.

Keep Your Retirement Savings on Track

When changing jobs, don’t forget about your retirement savings. It’s surprisingly easy to overlook, but you’ve got options: roll over your 401(k) into your new employer’s plan, transfer it to an IRA or withdraw the funds. Just remember, penalties for early withdrawal can be steep! And don’t miss out on employer-matching contributions at your new job. To determine the best approach, consult with a financial advisor and read our blog on how to plan for retirement.

Double-Check Your Life Insurance Coverage

When checking out life insurance options from your new employer, remember that employer-provided life insurance is a nice perk, but it might not cover all your bases. If that’s the case, it might be worth looking into extra coverage. Think of supplemental life insurance as a safety net that adds an extra layer of protection.

Also, it might be worth checking if your existing policy is portable or offers conversion options to keep coverage intact. And if your new employer doesn't provide life insurance, you can consider buying an individual policy. It’s all about making sure your loved ones are taken care of, no matter what. Plus, that extra peace of mind? Totally worth it.

Build a Financial Safety Net and Tackle Tax Changes

Don’t forget to maintain an emergency fund, especially during a job transition. Having three to six months’ worth of living expenses saved can turn a stressful situation into a manageable one, so you’re prepared if the unexpected happens.

Additionally, be aware of the tax implications of your job change. Consult with a tax professional to understand how your new salary and benefits might affect your tax situation.

Bottom Line When Transitioning Jobs

According to the US Department of Labor, the average American changes jobs 12 times during their career. Whether you’re making your first big move, or you’re a seasoned pro with a long resume, it’s essential to prepare financially. By evaluating your job offer, optimizing benefits, adjusting your budget and considering retirement and life insurance options, you can set yourself up for a smooth transition. Remember, a little planning now can make all the difference when you are changing jobs.