Managing Your Finances After Changing Jobs

In your lifetime, youll probably experience the hassle of changing jobs at least once

. The reason for changing jobs isnt important. Perhaps you were let go because your company is downsizing. Perhaps you resigned because of better opportunities elsewhere. Whatever the reason, you must have an appropriate career plan.

Changing jobs opens you to new challenges and opportunities. During the transition, you must remember the importance of managing your finances. Here are some of the financial issues that usually happen whenever you change jobs.

Closely Review Your Benefits

Before you take a new job, make sure you completely understand the benefit package youre going to get. Clarify every detail about your retirement savings plans, health coverage, sales commissions and any additional benefits that you may have. Remember that once youve signed the contract, it would be difficult to negotiate anymore.

Make sure you refuse a job that does not offer health insurance. You never know what will happen in the future, and a major medical emergency could drain all your savings in a matter of days. Even if you are in perfect health now, dont be tempted to get a job that does not have sufficient health coverage.

Find out also when and how youre going to receive your salary. You may have to open an account with another bank in order to take advantage of the direct deposit method.

Slowly Limit Your Expenses

For the first few months, make sure you limit your expenses first. Remember that most jobs require a few months of probation period to make sure that you are the right fit for the position. Sometimes, the problem with people is that when they find out that theyre going to have an increase, they begin to spend more freely. Make sure you avoid this trap and learn to spend your money wisely.

Another thing that you must remember is that you should budget your expenses according to your net pay and not your gross pay. Although this sounds obvious, youll be surprised at how many people spend according to their gross pay without considering the many deductions that would decrease the amount. There are taxes, health insurance payments, retirement fund contributions and many more that can significantly affect the salary.

Actively Manage Your 401K

Make sure you manage the employer-sponsored retirement plan that you accumulated from the last job you have. Its always tempting to use the funds but you should avoid doing so. This is because you will still have to pay income tax on the amount, or an early withdrawal penalty if you arent retired yet.

Talk to your new employer about the retirement plans in the new company. Discuss the 401K and 403B retirement plans that they are offering. You may also consider putting the funds you got from your old employer into the new retirement plan.

Make sure you have a very clear financial goal while doing all of these. Remember, the time between changing jobs is perfect for evaluating your personal financial management skills. Decide how you want to live five years from now and do whatever you need to do today to make it happen. GP

by: Yossarian Smythe

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