New Job? 6 Essential Financial Tips

By: Brian Seay, CFA

Congrats on your new role!

Transitioning to a new job is an exciting endeavor that often comes with a whirlwind of changes. Amidst the excitement of new responsibilities and opportunities, it's crucial not to overlook the impact this shift can have on your financial situation. Here are some essential financial tips to help you navigate this transition:

1. Review Your Budget – Pay Yourself First!

Saving is hard, otherwise everyone would do it! After changing jobs, it's essential to reassess your budget to reflect any changes in income and expenses. Challenge yourself to increase your savings. Make sure you contribute enough of your salary to earn the maximum employer match for your 401k contributions. While you are changing your direct deposit info, consider making automatic monthly contributions to another long-term savings account, like an IRA, ROTH-IRA or even a standard taxable investment account.

2. Evaluate Your Entire Benefits Package – Don’t Skip Insurance!

One common mistake we see is not taking advantage of low-cost employer sponsored insurance. Often, employers offer basic life insurance at 1x or 2x your salary for free. That might work if you are young and single. However, as you build your career and start a family, two years salary is probably not enough insurance to cover your family’s long-term needs. The good news is that many employers offer additional term life insurance at a very low cost. We often find that employer sponsored term plans are usually the best deal around for our clients.

Additionally, did you know that you are more likely to become disabled than you are to die early? Consider paying a little extra each month for increased disability insurance. Often you can buy up to 70% or 80% of your salary at a reasonable cost from your employer.

3. Roll Over Retirement Accounts – Don’t Lose Track of Your Savings!

We frequently meet with new clients that have multiple retirement accounts from prior employers. Eventually, those become cumbersome to track and manage. If you had a 401(k) or other employer-sponsored retirement account at your previous job, consider rolling it over into your new employer's plan or an individual retirement account (IRA). Consolidating your retirement accounts can simplify your financial life and may offer investment options and fee structures that better align with your goals. We help “sort out the account mess” all the time!

4. Evaluate Making ROTH Contributions – Even For High Income Earners!

Often high-income earners assume they cannot make ROTH contributions. While there are income limits on ROTH-IRA accounts, your employer likely offers ROTH contributions within their 401k program. If most of your net worth is tied up in a traditional 401k or IRA, you should evaluate making ROTH 401k contributions at your new employer. Every situation is different, so make sure you do the analysis to understand the long-term tax implications of traditional and ROTH 401k contributions.

5. Review and Adjust Your Investments – Very Little Is Accomplished Without A Plan

Investing is about using financial tools to accomplish real-life, long-term goals. Take the time to review your investment strategy considering your new job and financial goals. How much risk are you taking? Will your investments help you achieve your goals over time? How confident are you in your approach?

6. Diversify Prior Employer Stock and Options

Often clients hold restricted stock, options, or other forms of equity in their prior company. Those positions can make up an outsized portion of your net-worth, leaving you exposed to an adverse economic outcome after you depart. We recommend diversifying over time. It’s very important to consider the tax consequences of selling company stock, we often recommend specific strategies to minimize taxes over the long-term.

For more insights on investing wisely, reducing taxes and planning for your future, read our Perspectives blogs, listen to the Capital Stewards Podcast or follow us on Linkedin. If you are ready to have a conversation with a professional,  you can start a conversation with us anytime.