New year, new job. Right? But before you make your next career move there’s one person you should speak to first: a financial advisor.
A career transition could mean a pause in your income or an unforeseen unemployment gap. To ensure bills are paid and your savings remain intact. It’s imperative to plan out your financial obligations before diving into the job search.
A financial plan is one way to help you make a smooth transition and ensure you’re on sound footing as you start a new job. Changing jobs can be both exciting and scary. You may be feeling stressed over all the things you need to consider while making sure nothing falls through the cracks. One of the best ways to help ensure a smooth transition is by engaging a financial advisor.
Why and how to engage a financial advisor before jumpstarting your job search.
Identify aspects of your finances that need to be addressed before leaving your current job.
It’s important to remember that during a career transition, you will face disruptions to your regular income. Planning for all eventualities will alleviate stress and ensure a smooth transition.
Consider these aspects:
Finding out when your insurance coverage ends:
Work with your employer to find out when your coverage expires.
Calculate pay that’s due to you when you leave:
Understand how many unused vacation and sick days, along with stock options and other compensation, that you’ll have before you leave. You can use that income to create a budget for any necessities between roles.
Decide what you’re going to do with your pension:
Learn the pros and cons of leaving the money in your current pension plan versus rolling it over into your new company’s pension. Think through your plans to decide which will be the best option.
Plan your finances before you jump ship.
As soon as you begin thinking about making a move, you have to consider the financial implications. Build out a plan in case you decide to follow through. You should begin preparing no less than 2 weeks before your departure to give yourself enough leeway for any potential next steps.
When possible, do your research and craft a plan before you notify your boss. The best practice is to build out as much of a plan as you can before you notify your employer. That way, when you notify your employer and get the final information needed, you will be able to quickly finalize and think out your plan.
Do not leave money on the table.
Before submitting your letter of resignation to your current employer, you should figure out the gaps between your salary and your expenses.
Calculate the pay that’s owed to you when you leave. From unused vacation to stock options, that will provide an extra cushion. And you can add that to your other finances to create a budget for your time between paychecks. Your goal should be to get by with the money you have rather than going into debt to cover essential purchases. Making sure your budget is accurate will help you stay on track for your other financial goals.
Speak with HR to understand your ongoing benefits.
If you think that your healthcare or other resources end when you pack up your desk, then you may be wrong. A simple conversation with HR can tell you a lot about what resources you’ll still have access to after your last day.
Find out what benefits will follow you after you leave. And find out when your insurance coverage ends. Your coverage should have an end date, giving you a set period between insurance plans where you’ll still have protection.
If applicable, speak with your financial advisor about what’s best to make sure that you’re doing what’s right for your retirement goals.
Whatever you choose to do, be sure to understand the benefits and drawbacks of your options.
Already In Between Jobs? Here are a few Top Tips:
While you’re between jobs, you must maintain a solid budget. Work to reevaluate and determine your new budget during your time off. And even when you have a new job and salary, you should incorporate these tips into your regular cadence. This ensures that you stay on budget and avoid debt.
Additionally, if you plan to roll over, make sure you begin the process as soon as possible. Once your former employer cuts you a check, you have 60 days to roll it over without facing significant taxes and penalties.
Once your new job does begin, these are a few more considerations:
Review and sign up for benefits at your new job:
Make sure that you sign up for benefits as soon as you can to get back covered by insurance. And even smaller benefits, like commuter savings, can add up quickly.
Set up your pension:
Make sure to sign up for your pension as soon as possible, so you can get back on track for retirement savings.
Estimate your tax liabilities:
A new income may mean a new tax bracket, so it’s important to review your liabilities. Spend the time to calculate how you use your new resources.
Review your financial plan:
Once everything else is in place, update your financial plan to match your new income so that you can stay on track.
