6 Tips To Help You Prepare Financially For Changing Jobs

While changing jobs can be exciting — a new role is an opportunity to advance your skills, be part of a new company and potentially earn more money — as with any other major life change, you’ll want to think about how to prepare for the switch financially.

Below, Select offers some tips to follow if you need to prep your finances for an upcoming job change.

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Make sure you have an emergency fund set up

Marcus by Goldman Sachs High Yield Online Savings

Goldman Sachs Bank USA is a Member FDIC.

  • Annual Percentage Yield (APY)

  • Minimum balance

    None to open; $1 to earn interest

  • Monthly fee

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    Up to 6 free withdrawals or transfers per statement cycle *The 6/statement cycle withdrawal limit is waived during the coronavirus outbreak under Regulation D

  • Excessive transactions fee

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  • Offer checking account?

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Save up for relocation expenses

LightStream Personal Loans

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    3.99% to 19.99%* when you sign up for autopay

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  • Annual Percentage Rate (APR)

  • Loan purpose

    Debt consolidation, home improvement, wedding or vacation

  • Loan amounts

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    36, 48, 60, 72 and 84 months

  • Credit needed

  • Origination fee

  • Early payoff penalty

  • Late fee

See if any of your unused PTO gets paid out

Some companies have an exit policy that compensates full-time employees for any vacation days they didn’t take that year, which could provide a nice windfall of cash to pad your emergency savings fund or cover any relocation costs if you have to move to a different city for your new job.

While snagging some extra money can be exciting, make sure to create a plan for it that meshes with your financial goals. If you aren’t sure if you’ll be paid for any unused PTO time, it never hurts to double-check with your HR department just in case. In some states, such as California and Colorado, this is a requirement.

Be prepared to pay back any extra compensation

If you received a sign-on bonus or relocation bonus when you accepted your current position, double-check the fine print before you hand in your two weeks’ notice, as you may have to pay it back.

According to the popular resource website Ask A Manager, if you received advance compensation from your employer, such as a sign-on bonus, and it had a repayment agreement that mentions a specified timeframe, you essentially agreed to stay at the company for that timeframe — otherwise, you’ll have to pay that money back.

For example, let’s say you accept a job that’s giving you a relocation bonus so you can move to the city where your new employer is based. If the payback agreement states you must work there for at least one year but you try to leave before your year is up, you’ll have to pay back that bonus immediately.

These kinds of perks are usually referred to as “golden handcuffs” because while it’s nice to receive extra compensation, they often come with strings attached to encourage you to stay at your company longer. If you’re not careful, though, you can end up having to dig into your savings to repay a benefit if you choose to leave the company early. That’s not to say that you have no choice but to stay at your current company, but you should at least make sure you have the money on hand to repay what’s necessary if you have to.

Besides a sign-on bonus or relocation bonus, another form of compensation this can apply to is tuition reimbursement or assistance. Also keep in mind that while you may not have received a separate agreement to sign in cases like these, the guidelines may be outlined in your employee handbook.

If you received these types of compensation but aren’t sure if you’re subject to these types of stipulations, double-check with your benefits provider, especially if you can’t find any mention of this in your offer letter or employee handbook.

Save login information for HSA and 401(k) accounts

If you contributed money to any employer-sponsored accounts, such as a 401(k) or Health Savings Account, make sure you update your login information and keep it in a safe place before you leave. That’s because you’ll want to have access to these accounts after you leave the company so you can make rollovers and, eventually, withdrawals.

A 2021 study from Capitalize, a platform that specializes in helping people save for retirement, showed that Americans left behind a total of $1.35 trillion worth of 401(k) accounts they forgot about after they switched jobs.

Even if you accidentally leave your balance behind, you’ll need to find another way to make up for it or simply make other adjustments so you can still reach your desired retirement goals. That could mean staying in the workforce longer than you’d like to, taking on side hustles or downsizing your lifestyle expectations later on in retirement.

Adjust your budget to accommodate your new salary

Mint

Information about Mint has been collected independently by Select and has not been reviewed or provided by Mint prior to publication.

  • Cost

  • Standout features

    Shows income, expenses, savings goals, credit score, investments, net worth

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    Yes, but users can modify

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    Offered in both the App Store (for iOS) and on Google Play (for Android)

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    Verisign scanning, multi-factor authentication and Touch ID mobile access

You Need a Budget (YNAB)

Information about You Need a Budget (YNAB) has been collected independently by CNBC and has not been reviewed or provided by YNAB prior to publication.

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    Instead of using traditional budgeting buckets, users allocate every dollar they earn to something (known as the “zero-based budgeting system” where no dollar is unaccounted for). Every dollar is assigned a “job,” whether it’s to go toward bills, savings, investments, etc.

  • Categorizes your expenses

  • Links to accounts

    Yes, bank and credit cards

  • Availability

    Offered in both the App Store (for iOS) and on Google Play (for Android)

  • Security features

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Bottom line

While switching jobs can be extremely exciting — especially if you’re going through it for the first time — it’s important to do your financial due diligence so you don’t get hit with any surprises.

For starters, it’s prudent to save up for any expenses that may be associated with starting your new job, such as relocating to a new city. You’ll also want to make sure you won’t be on the hook for repaying any advanced compensation you might have received. Most importantly, don’t forget to keep your 401(k) account information safe so you don’t accidentally leave your balance behind.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.