Are you looking for a new job? You’re not alone. Research suggests that 51% of currently employed adults are looking for new jobs, and 47% believe they have a good chance at finding one.
No matter what kind of position you’re looking for, making a job switch means you make financial changes, too. Between a new salary and figuring out how to manage health insurance between jobs, there are many monetary aspects to consider. Before starting a new job, review the items on this changing jobs checklist to financially prepare for your transition.
One of the biggest reasons people leave their jobs is to find better-paying positions. Research shows that 45% of all new job seekers are driven by the hope of finding jobs that pay more than their current ones.
Once you’ve been offered a job, the salary conversation begins. Consider negotiating your salary. It doesn’t hurt to ask for a little more money than the employer initially offers you. Research to see what competitive salaries are for the position and consider making a counter offer.
Your starting salary sets your financial foundation with the company. Even a small increase of a few thousand dollars is helpful. If the employer says the offer is firm, you have a choice to make. You can accept the offer knowing you tried to increase the pay, or you can stand firm in your offer and remind the employer why you’re an asset.
Health insurance between jobs
Starting a new job is a process, and it’s not always a smooth one. Maybe you don’t start your new job for a month, or maybe the health benefits at your new job don’t kick in for a while. Either way, you might be looking at a lapse in health insurance coverage between jobs.
Figure out when your health insurance ends at your old job and when it starts at your new one. If there’s a lapse in coverage, you have a few options. You can:
- Join your spouse’s healthcare plan
- Buy COBRA insurance from your old employee, which can be expensive
- Buy an individual plan on the health exchange through a special enrollment period
- Buy short-term catastrophic insurance, which typically has lower premiums but higher deductibles if you experience a covered health issue
Navigating health insurance between jobs can be tough. Ask both your previous employer and your new employer for resources to guide you through this phase so you can secure temporary health insurance between jobs.
Health insurance once the job begins
New employees are often offered a health insurance package that helps manage healthcare costs. Your new employer will likely discuss their benefits plan and what it includes, such as healthcare, dental and vision coverage or cost-sharing.
Discuss the cost of each plan so you know what you need to budget. Keep in mind that the costs of healthcare plans can vary greatly; this has the potential to affect the amount of money you take home each week.
If you take a job that pays the same salary or rate as your last one but you have to pay more for health insurance, that may not be a position you want to find yourself in. The cost of health insurance is a very important consideration to think about before accepting a new position.
At any age, understanding your company’s retirement plan is crucial. Know how much you can invest, whether or not the company matches your investments, what the vesting schedule is and how the accounts are managed.
You may also want to rollover any retirement funds from your previous job or invest the money into an IRA when you make the switch. Speak with a financial advisor about what the right financial options are for your situation, if possible.
If you roll the money into a new retirement account, you may not incur many fees. You may have a 401(k) at your old job. If your new company offers 401(k)s, ask someone in human resources or the correct department if the new company’s 401(k) plan accepts transfers and if they can process your transfer. With this method, your contributions remain tax-deferred.
Starting a new job is exciting, but there’s a lot to consider. Have a conversation with a financial professional to make sure your retirement investments are working for you.
Know how to deduct job-hunting expenses
Many job-seeking expenses are eligible for a tax deduction, so pay attention to everything you spend. Save receipts for résumé coaching, résumé preparation, copying, postage and mailing. If you work with a headhunter or employment service, any money you pay may be deductible as well. However, if you are paid back for employment-agency fees, you will have to pay taxes on it.
If you pay attention to mileage, you can deduct your drive time to job interviews both in and out of town. If you have an interview for employment in another part of the country, you can deduct at least a portion of your trip, including room and board expenses. If you land the job and need to relocate, you may be able to deduct those costs as well (at a lower mileage rate).
You can only deduct job-search costs that amount to more than 2 percent of your adjusted gross income for the year. For employed folks just looking around for something new, this is a high threshold to meet. If you are unemployed, however, you may indeed be spending a good portion of income on your job search. Just remember, if you are unemployed after a layoff, include any unemployment income as well as any severance or bonus package when calculating your annual adjusted gross income.
If you are unsure if something can be written off, don’t take a chance figuring it out on your own. Call a certified public accountant and run it by them. Or, you can reach out to these sources for free tax guidance.