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5 Key Financial Considerations Before Switching Jobs

If you are leaving your current job and looking for a new one, you should make sure to take these financial considerations. No matter the type of position you are looking for, making a job switch is combined with lots of significant life changes especially in terms of finance. So it is essential to be prepared and ready so that these changes don’t lead you to experience any financial hardship or cause any financial risk.

1. Health Insurance 

 While switching jobs, don’t just put your entire focus only on the salary factor. Also, take health advantages (group insurance) into account of your present employer. It is possible that the employer you are currently working for may have group insurance that covers everything from your dental requirements to critical situations such as stroke and diseases of the heart. If you are starting a new job in a startup-based company by leaving off from a big corporation, it’s quite doubtful that your new employer will have such elaborated group insurance. In such a scenario, you should try to make your own insurance of health in order by seeking advice from an expert financial advisor for a rapid policy review, and declare that you’re losing your group insurance. For some individuals, health insurance can bring significant benefits. For example, having an insurance plan through the employer can lower the amount of premium, but the variations can take place when it comes to how much you will end up paying. Therefore, take a keen look at the premiums, copays, and coverage offered. 

2. Paid Time Off & Sick Leaves

 Take into consideration how your new employer holds up holidays, maternity /paternity leave, and sick leave. Also, if you have any accrued paid time offs or sick leaves that you didn’t use, make sure you get paid by your present employer for the value of those days. Talk to your employer about the policies and procedures of collecting payment for unused paid offs or you could end up losing a significant amount of income you’re owed.  

3. Retirement Plans 

 While switching jobs, understanding a company’s retirement plan is crucial. Find out if your new employer provides you access to an employer-sponsored retirement plan. Know the vesting period, how the accounts are managed, the vesting schedule and other essential details. Hire a professional financial advisor and seek advice on the most suitable financial option for you. You may also want to rollover your retirement fund from the previous job. If any, you may not incur any fees. 

Also Read : All You Need To Know About Trade Finance

4. Salary Negotiation 

 Salary is one of the most common and biggest reasons for individuals to quit their job to find better pay scale options. Research shows that about 45% of all job seekers hope to find jobs that pay more than their current ones. So it might be worth it to check if you can negotiate a higher salary from your present employer. Sometimes it happens that you like your current job but your lower pay scale is holding you back to bear your expenses such as paying bills etc. Asking your current boss for an increment can be a challenging & daunting task but it could help you get an increased salary or other benefits that you can consider as a win-win situation. Don’t hesitate to negotiate salary while offered a new job. There is nothing wrong in asking for more money that the previous employer offered you initially. 

Emergency Fund

Never believe that this won’t take place. There have been cases of employers making a decision against hiring you, even subsequent to the offer letter being sent (they are aware that many people cannot pay for the time and price of trying to take legal action). This can prove calamitous, provided you’ve left your earlier job to join them. To avoid these scenarios, you should adjust your budget accordingly and have proper savings for such incidents. Make sure you have about six months of expenses collected up in an emergency fund (if you still don’t have one now, get started as fast as you can). When you perceive an emergency fund, you can surely switch your job confidently. 

Manage Job Hunting Expenses

Some job searching expenses are eligible for tax deduction. So try to save receipts of everything that you have spent on. For example, resume coaching & preparation, postage and mailing etc. If you work with an employment company, the expenses can be deducted. In addition, there are times where the new prices of a job are quite clear – such as a minimal former pay at the time of training. Although, there are also unrevealed prices to search for. Don’t fail to factor in travel time and the related prices. For example, if you really require to take a cab from time to time, or your children require a babysitter because you’ll get home a little later, these are all prices that must go into the budget. Another understated price to be determined is none other than your apparel. Taking a switch to a more formal job may demand investment in a more upmarket wardrobe, with customized jackets and suits. Some positions also need you to dine out more often, to amuse customers (have a look if there is an amusing budget) or even to hang out with colleagues. Don’t just ignore the financial prices of keeping up appearances, and creating social networks.

Education Benefits 

There are times, it becomes difficult to increase your income without incrementing your talent set. If this is a prime concern (e.g. you require a diploma or degree to get more ahead in your career), then foresee the instant paycheque. Will your new employer issue talents training, or scholarships, to make sure of your long-term achievements? If your current employer gives room for advance education, but your new employer won’t, then it may not be beneficial leaving just for a small pay increment. Apart from looking for grants and scholarships, don’t ignore time. Some employers may be thinking of giving you time off to make your study (e.g. you can acquire an unpaid month off for your finals, and still come back later), on the other hand, the others won’t.

Changing a job can be a little tricky, but if you are organized, and prepared, the process will be easier. Just make sure to check these financial considerations off the list so that you don’t put your future at risk.