NEW YORK, November 18, 2021 (Newswire.com) - Transitioning into a new job is an exciting time. And while it comes with new responsibilities and co-workers, it's often a time when you'll want to revisit important money choices. Here are four financial steps to take when starting a new job and how to appropriately prepare for this major life transition.
Assess Insurance Policies
When moving from one employer to another, many people are faced with terminating certain benefits and enrolling in new ones. In addition, various types of insurance need to change, including medical, dental, vision, and life insurance, among others.
It's important to assess employer-sponsored benefits and options if those benefits don't offer sufficient coverage. For example, many employers offer basic life insurance policies that cover one or two times your salary. But, for most people, that won't begin to cover the debt they'd leave behind with their family if something happened. So a job transition is a perfect time to consider new types of insurance policies if existing ones aren't enough.
Re-think the Budget
Many people starting a new job may find they're making more or less than they previously did. That means it's a great time to assess the existing budget in terms of income, savings, and investing. If someone is getting a significant raise, it's natural to want to spend some of the additional earnings on life today. But it's also a great opportunity to set aside additional funds for future goals as well.
Set Up New Retirement Contributions
At many companies, employees need to opt in to contribute to the retirement plan, whether it's a 401(k), 403(b), 457 or otherwise. It's best to decide on an appropriate retirement plan contribution amount based on income and employer perks, like any matching contributions. As a general rule, it's wise to contribute enough to get the match since failure to do so is like throwing away free money.
If contributions were made into a retirement plan at an old company, it's also a good time to figure out where those funds will go. You may have the option to leave your money in the existing plan or you could roll it over into your new employer's plan or into an IRA.
Discuss the Change with a Professional
A job change is a big deal when it comes to long-term financial planning. It's a great time to have a conversation with a financial advisor or start working with one. Re-assessing financial plans through the lens of a different income can help shift any short- and long-term goals accordingly. The change in income may mean meeting them sooner or needing to shift expectations to completing goals later.
The Bottom Line
Starting a new job comes with a host of decisions. When financially preparing for a new position, it's wise to look at the types of insurance available, re-think budgeting, set up new retirement plans, and discuss the change with a financial professional as needed. Doing so will ensure a seamless and less stressful transition.
Source: Northwestern Mutual