The tight labor market is enticing many people to evaluate options to start a new career. If you’re among those who plan to quit your current role in search of a better opportunity, it’s important to consider how doing so could affect your finances. Here are some things to think about before you hand in your two-week notice.
Compare the complete package to evaluate whether to stay in your current job or take the leap into a new opportunity.
- Pay – Better pay is often the main motive for changing jobs. However, consider the difference when moving from an hourly to a salaried position. Salary may require extra hours without the benefit of overtime, but bonuses can potentially boost your earnings.
- Benefits – Benefit packages vary from employer to employer. How much paid time off is your employer offering? Will you have quality options for health, dental and life insurance? Will they cost more? Does the company match 401(k) contributions? Are there other perks like an on-site gym, discounts on dry cleaning or daycare that can save you time and money?
- Culture – Pay attention to the culture of your prospective workplace. How do you see yourself fitting in? Does the workplace seem to be collaborative or hyper-competitive? Where do you thrive? Is there flexibility to work from home? All of these things can make or break a new job.
- Commute – Is the new job closer or further from home? If the new job is further away, you will spend more time commuting. You will also incur extra expenses either in bus fees or gas, oil and wear and tear on your vehicle. These costs may offset potential salary gains.
- Opportunity – Think through where a new job can take you. A prospective employer should be able to outline your expected career path along with a timeline for advancement. Consider whether you could be walking away from a bright future at your current workplace. Is there a chance your employer would sweeten your terms to keep you on board?
If you decide to take the leap and have a new job offer in hand, here’s what else to consider.
Negotiate while you can. Most prospective employers expect some give-and-take during salary and benefit discussions. Think of ways to quantify the value you would bring to the business and be prepared to counter if an offer does not meet your expectations.
Transition your benefits. Use your paid time off before leaving your current position. Ensure continuity of health care coverage by enrolling in COBRA until your new benefits kick in. Decide whether to keep your 401(k) savings, transfer them to your new employer’s plan, or roll savings into your own account. You can also cash out your savings, but this will incur a tax penalty and detract from your retirement goals.
Leave on good terms. Ideally, you want to maintain good relations with former employers. Provide ample notice to help them find a replacement. Ask for a letter of referral. Participate in an exit interview if one is offered.
Talk to your financial advisor. Job changes are life events that impact your financial future. Lean on your advisor’s expertise to adjust your financial plan as you transition in your career.
Teresa L. Turner is a Financial Advisor with Independent Investments Group, a financial advisory practice of Ameriprise Financial Services, LLC. In Florence, Alabama. She specializes in fee-based financial planning and asset management strategies and has been in practice for 24 years. To contact Teresa, call 256.765.3622 or email Teresa.Turner@ampf.com