.The day my husband told me he wanted to leave his corporate management job and go back into an hourly position so many things raced through my head. Could we afford this change? What would this do for our marriage? Would we still be able to meet our financial and personal goals? We thought long and hard before finally coming to the conclusion that changing jobs was the right decision for our family.
Our Debt Free Journey: Destroying $83k in Consumer Debt shares how changing jobs was our wake up call to become debt free.
There are so many things you should consider before changing jobs. Your finances should be at the top of the list. Let’s be honest – money has an impact on every aspect of our life. One misstep when changing jobs could be disastrous for your finances.
I am going to share with you what we considered when financial planning for changing jobs. It’s not as scary as it might sound!
5 Financial Implications You Should Consider When Changing Jobs
Your Family Budget
Will this job bring you more money? If so, how will this impact your budget? If it’s a step down in your budget how will changing jobs impact your daily spending, financial obligations, and savings? Finances are one of the biggest reasons people decide to change jobs and you should consider the impact it will have on all areas of your family finances.
You definitely need to have your budget figured out before making any big changes in your career. This will show you the bigger picture of how you’re spending money and how much money you truly need to earn to prosper.
Assess Your Tax Situation
A change is jobs often comes with a change in tax situation. Whether you are increasing your pay or decreasing your pay changing jobs can play a role in how much money you owe to Uncle Sam. You may want to talk to an accountant about the change in your income and what it means for your family and tax situation.
Will you lose tax deductions or credits you’re currently eligible for if your income increases?
Will you qualify for tax deductions and credits that you don’t currently if your income decreases?
Don’t Leave Money On the Table
It can be tempting to change jobs when the next best thing comes along but if you are looking at the bigger picture you could be leaving money on the table.
Are you already contributing to a 401k with your current employer? If so, your company may have a match. Here’s the thing – most employers require you to stay with them a certain period of time before you are fully vested in the company match. Be sure you know their vesting requirements or you could be leaving thousands of dollars on the table in free money.
Also, if you used a tuition reimbursement program or your employer paid a portion of your loans as a bonus you may have requirements to meet. Again, most employers will require you to work for the company for a period of time to take full advantage of these programs. If you leave before this period is over you will be required to pay back a portion or all of the money. It definitely adds up!
If you have a job offer on the table you may want to negotiate with them to cover this lost money. Or if the pay increase is significant enough these things may not matter to you. I just don’t want you to forget about these requirements when looking for a new job because it can cost you thousands in the long run.
Employer Benefits Change when Changing Jobs
Let’s be real. Benefits are often considered a part of your compensation package. These benefits will be different with each company you work for.
Health Insurance is a benefit that a lot of employers offer but each health care plan is different. Do your research on the particular healthcare plan(s) that are being offered.
Life Insurance is a benefit that is often overlooked. Some employers have life insurance policies at little to no cost to the employee. While I fully believe you should have life insurance outside of the workplace these smaller policies will help your family in a time of need.
Employee stock purchase and Profit plans should be considered as well. The employer may offer a discount on a stock purchase if you are employed with them. The employer may even give you free stock as part of their profit plan. These are components of your benefits package and should be considered as well.
We didn’t think much about the benefits when my husband changed positions. He lost his quarterly bonus when the company restructured their compensation packages. Now, he earns less stock in the company profit plan. These two things have an impact on our larger financial picture but wouldn’t necessarily change our decision. The worst part is we didn’t even consider them when talking about changing jobs.
Don’t Forget These Extra Charges
Changing jobs is a big deal. You may not have considered the extra costs that come with a new job.
If you are moving job settings – will you need to purchase a new wardrobe? You may be going from business casual to a more formal setting. This will require new clothes to fit the job requirements.
Will your new job be further away or closer to home? Your commute will change which has an impact on our whole day. Your fuel costs will most likely change and how much time you’re spending in the car will change.
Do you need to purchase new equipment when changing jobs? Maybe your new job requires a computer at home and yours doesn’t fit the bill. Or maybe you’ll be working from home now and will need a home office. Don’t forget about these expenses when looking at the overarching picture.
Changing jobs can be both exhilarating and scary all at the same time.
I get it. We were in that position just a few years ago. While my husband was still going to be with the same company I knew there would be financial implications when changing jobs. Consider the whole picture. Changing jobs will not only impact you today but also years from now. It is all about seeing the bigger picture.
If you have made a job change recently what financial implications did you consider?
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