By Melinda Wilke
Before taking on a new role, evaluate money and lifestyle factors to ensure personal and professional success
The road to landing your dream job can be a long one. It’s likely you’ll have to hold a number of different positions as you climb the ladder. As you work toward your ideal role, it’s important to consider how career changes, whether a promotion or a role at a new company, ultimately affect your larger financial situation.
With many factors beyond just salary to consider, it’s important to understand how a career change can play a role in your short- and long-term financial goals. This handy checklist will help you prepare for the financial and lifestyle impact of a career change before, during and after you start your new job.
Before: Understand all the implications
Whether you’re changing positions within your current company or moving to another organization, your new role will likely bring both salary and lifestyle changes. Meet with a financial planner to evaluate how those changes could affect you financially, and develop a financial plan (or update your current plan) to cover any costs associated with your career switch.
During this step, it’s important to ask yourself the following questions:
Will my tax bracket change?
A salary increase could bump you up to a higher tax bracket. To prepare for a change in taxes, meet with an accountant to develop a plan to offset a tax increase.
Do I have to relocate?
Moving costs can add up quickly. Closely review your offer letter to see how much money your new employer will offer for relocation expenses. If the cost to move exceeds your relocation package, it might be necessary to use funds from your emergency savings to help get yourself started in a new city.
How will my schedule change?
Transitioning from a part-time to full-time job? Spending more time commuting? Traveling more for business? Understand how your new schedule will impact you and your family. You may need to adjust your monthly budget to cover child care or higher fuel costs for your commute.
During: Review your new benefits package
After you’ve started your new position, thoroughly review your benefits package and update or supplement to it as needed.
Contribute to an employer-sponsored retirement plan
As part of your benefits package, your new employer will likely offer a retirement savings plan. Today, 74 percent of full-time workers have access to employer-sponsored retirement plans, according to the U.S. Bureau of Labor Statistics. Take advantage of the opportunity to contribute to an employer-sponsored retirement plan – 401(k) or Roth 401(k) – to save for retirement and, in some cases, earn the company match.
Enroll in employer-sponsored insurance plans
In addition to an employer-sponsored retirement plan, many employers also offer company-sponsored insurance plans for their employees. These can include health, vision, dental, life and disability insurances. It’s critical to take the time to thoroughly review your insurance benefits in detail. Often, your employer will provide a baseline amount of coverage and provide the opportunity to purchase additional coverage for less than it would cost to pay for individual protection.
Supplement your life and disability insurance as needed
You should also identify if there will be a waiting period prior to your life and disability coverage start dates. Often, new employees must wait 90 days before they’re eligible to receive coverage. If this applies to your situation, a financial planner can work with you to supplement your life and disability insurance as needed to protect yourself and your family in the interim.
After: Measure your happiness
Beyond your salary and insurance benefits, happiness is the most important component of your success. When you’ve been in your position for three months, evaluate your experience to ensure the switch to a new role feels right for you. If it is, congratulations! If not, remember you have options. Reach out to your previous employer to inquire about coming back to the company, or apply for a new opportunity.
While making a career change can feel overwhelming, you can feel more confident knowing you have a grasp on your financial situation. With this information, you’ll be equipped to take all factors into consideration when you find a role that is right for you.
Melinda Wilke is a Wealth Management Advisor with Northwestern Mutual in Hales Corners, Wisconsin. She is a member of the National Association of the Insurance and Financial Advisors and earned the CFP®, CLU®, ChFC®, CASL® and CLF® designations. Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM), Milwaukee, WI and its subsidiaries. Financial Representatives do not give legal or tax advice. Taxpayers should seek advice based on their particular circumstances from an independent tax advisor.