Changing jobs in today's economic climate is no small task. Not only did you get the attention of your new employer with your CV, but beat the competition for the position which is now yours.
Fortunately, an upward trend in your career is accentuated. In this case, you may not have too many incentives to make financial changes, except for a wave of vacation spending. However, this new job is precisely the reason why significant monetary changes are needed. Yes, finally, you can afford to start building your fortune and planning for your future. Before continuing, here are some money moves for starting a new job:
Finding a new job is the perfect time to reassess your budget as your income increases. If you've never had a budget before, this is your chance to take care of your finances, which will help you make sure your expenses don't exceed your income.
As your income increases, keep in mind that your expenses may also increase. For example, your new job may require a more extended trip, and you may need to increase your gas or public transit budget. If you have to commute to work, consider moving and renting a new apartment.
You can also maintain your current standard of living and use additional income for other priorities, such as an emergency fund, retirement savings, or paying down debt. Many financial experts promote the 50/30/20 method by dividing their budget into needs (50%), wishes (30%), and savings (20%).
Even if your new job is only the second job you have secured, you are probably familiar with W-4. You usually complete this tax document within the first working day. In short, W-4 tells your employer how much state and federal tax you should withhold on your regular salary. In turn, this determines the amount you will pay or receive as a refund during the tax season each year.
It's easy to charge your W-4 without thinking about it. But this time, try to fill out the form carefully, determining in advance the amount of taxes you want to keep. If you have consumed too much of each salary, you will receive a refund. It also means that you will have less money to live on during the year. If you keep too little, you may end up paying money when the time comes.
Changing jobs can mean it's time to open a new bank account. The emergence of online and mobile banking has simplified daily financial activities. Mobile banking is also cheaper than regular physical visits to banks.
When you are thinking about saving money, you can also make a direct deposit with your new employer. In this way, you can allocate part of your salary to the account you have chosen. For example, automatically depositing a percentage of your earnings into your savings account ensures that your money is saved and not spent. This, in turn, helps you prepare for your financial success at the same time as your professional success.
New employees generally have to go through a 30-90 day trial period before they can start receiving health, recreation, or other social security benefits. In this window, you will have ample time to examine the employer's compensation system and determine the plan that is right for you. For example, you may have to choose between an HMO or an OPP, and it is a good idea to weigh the pros and cons of these different plans carefully. Just like withholding tax, taking the time to resolve this issue will help you select the right coverage and potentially save money on monthly premiums.
Speaking of benefits, a new job may offer a new 401 (k) pension plan. You should take advantage of this type of employer-sponsored retirement plan because your deferred tax contributions generate interest until retirement. The employer can also match contributions from your account to a certain percentage. So if you invest 5% of every 401 (k) salary, employers can match almost the same amount, effectively doubling your investment in many cases! This should not be forgotten since correspondence with the employer is mostly free money.
If the employer does not offer a company-sponsored 401 (k) plan, do not give up. You're on the right track. You can now consider opening your retirement account, such as the Roth IRA, to help you increase your savings and start protecting your financial future. With a Roth IRA, you can make contributions of up to $ 5,500 per year, $ 6,500 if you are over 50. Although deposits are tax-exempt, your earnings may be tax-free when you are 59 and a half.
A new job or no new job is always a good time to improve your credit and increase your credit score. Because a good loan can increase your chances of being approved for future loans and can help you benefit from lower interest rates.
In the meantime, start using more responsible credit to avoid using more than 30% of the credit available on your credit cards. This is sometimes known as low consumption credit. If you do this, in addition to paying the payment every month, the card provider and the credit bureaus will consider you a responsible debtor.
In general, aspiring to a credit score of 700 or higher takes into account the principal debtor. Usually, consumers with a score of 800 or higher qualify for the best products and pricing on the market today.
John Pournaras Agency