After countless interviews, patiently waiting, and anxiously negotiating, you finally landed that new job! Many of us get caught up in the emotions of success and satisfactory emotions after the acceptance, but there is one more factor to analyze; how this transition will affect your finances. Thankfully, experts have established what to do with your money when you start your new job:
1. Make sure you understand your new compensation package.
Job seekers tend to focus just on salary, says Cameron Laker, CEO and cofounder of human resources and recruitment firm Mindfield. But before you start your new job, you should sit down and review all the ways in which your finances will be changing.
2. Adjust your budget.
If you’re taking a lower-paying job to join an exciting new startup or follow your passion, you’ll need to carefully consider how you’re going to scale back. If you’re going to be making more money, you’ll have to plan ahead in order to avoid lifestyle creep.
3. Decide what to do with your former workplace’s 401(k).
If your former employer offered a 401(k) plan to save for retirement, you’ll have several options: keeping it as-is, rolling it over (industry jargon for moving it) into your new 401(k), or rolling it into an IRA.
For most people, he says, rolling over retirement accounts into an IRA is “the path of least resistance.” Usually, it will offer lower-cost investments than their new 401(k).
4. Change over your insurance.
In many cases, you won’t be able to start using your new health insurance plan until you’ve worked at the company for thirty days. During the transition period, you’ll want to enroll in COBRA to keep your old coverage going, Oliver says. That can be expensive, since you’ll be taking over the costs that were once covered by your employer, but it’s still worth the peace of mind that comes from knowing that you’re prepared in case of emergency.
Once you’ve given your notice, your company has 14 days to give you the option to receive COBRA coverage. If you say yes, your coverage will begin on the day after your benefits would normally end.
5. Understand how vesting works.
Does your new employer offer vesting that will allow you to earn equity over time? If so, you’ll want to figure out exactly how that works. Generally, companies will grant you options from the start, but they only become yours as they vest over time. Likewise, you may be given stock, but the company will retain the right to repurchase it if you leave, unless it has fully vested.