The tight labor market entices many people to consider opportunities to start a new career. If you are among those planning to quit your current role in search of a better option, it is important to consider how it may affect your finances. Here are some things to keep in mind before submitting your two-week notice.
Compare the whole package. Many factors contribute to job satisfaction. Consider these factors when considering whether to stay in your current job or take the plunge into a new opportunity.
Salary – Better pay is often the main motive for changing jobs. However, salary comparisons are not always as clear-cut as they seem, especially when moving from an hour to a paid position or a position that depends on commission. With a salary, you can be expected to work extra hours without the benefit of overtime, but bonuses can potentially increase your earnings.
Benefits – Benefit packages vary from employer to employer. How much paid leave does your employer offer? Do you have quality options for health, dental and life insurance? Will they cost more? Does the company match 401 (k) contributions? There is also value in other perks, such as an on-site gym, dry cleaner or daycare that can save you time and money.
• Culture – Be aware of the culture of your potential workplace. How do you see yourself fitting in? Does the workplace appear to be cooperative or hyper-competitive? Where do you thrive? Is there flexibility to work from home? All of these things can create or break a new job.
Commuter – Is the new job closer or farther from home? If the new job is further away, you will spend more time commuting. You will also incur additional expenses either in bus fares or gas, oil and wear and tear on your car. These costs can offset potential wage increases.
• Opportunity – Think about where a new job can take you. A potential employer should be able to outline your expected career path along with a timeline for advancement. Consider whether you could be heading away from a bright future at your current workplace. Is there a chance that your employer would sweeten your terms to keep you on board?
Pay attention to the culture of your potential workplace. How do you see yourself fitting in? Does the workplace appear to be cooperative or hyper-competitive? Where do you thrive?
If you decide to take the plunge and have a new job offer in hand, this is another thing to consider.
Negotiate while you can. Most potential employers expect some give-and-take during pay and benefit discussions. Think of ways to quantify the value you would bring to the business and be prepared to face if an offer does not live up to your expectations.
Transfer your benefits. Use your paid leave before leaving your current position. Ensure continuity in healthcare coverage by signing up for COBRA until your new benefits start. You want decisions about your 401 (k) savings. You can keep them where they are, transfer them to your new employer’s plan, or deposit savings into your own account. You can also pay out your savings, but this will result in a tax penalty and worsen your pension goals.
Leave on good terms. Ideally, you want to maintain good relationships with previous employers. Give ample notice to help them find a replacement. Ask for a referral letter. Attend an exit interview if offered.
Talk to your financial advisor. Job changes are life events that affect your financial future. Rely on your advisor’s expertise to adjust your financial plan as you transition into your career.
Bronwyn L. Martin is a Financial Advisor and Chartered Financial Consultant with Martins Financial Consulting Group, a financial advisory practice for Ameriprise Financial Services Inc. in Kennett Square and Havre de Grace, Md. She specializes in fee-based financial planning and asset management strategies and has been in practice for more than 21 years. Visit www.ameripriseadvisors.com/bronwyn.x.martin to contact her