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Starting a new job is an exciting time in your life. Not only does it bring fresh opportunities for career growth and personal development, but it also presents a chance to reevaluate and optimize your financial situation. Whether you’re just entering the workforce or transitioning to a new position, it’s essential to be proactive and deliberate about managing your finances. In this blog post, we’ll explore some key financial considerations to keep in mind when embarking on a new job.
Your salary is the foundation of your financial well-being. When starting a new job, carefully review your salary and compensation package, including bonuses, stock options, and other perks. Ensure that it aligns with your financial goals and lifestyle. Negotiating your initial offer can have a significant long-term impact on your earnings. Keep in mind that your compensation package is only one piece of the puzzle when considering a job offer. Be sure to also weigh in various other factors including commute times, team culture, and your overall happiness.
With a change in income, it’s an ideal time to revisit your budget. Reevaluate your monthly expenses and financial goals, making necessary adjustments to accommodate your new salary. Consider building an emergency fund, saving for retirement, and allocating funds for discretionary spending.
Pay close attention to the benefits package offered by your new employer. Health insurance, retirement plans (e.g., 401(k)), and other perks can significantly affect your financial stability. Take time to understand the details of each benefit and how they contribute to your overall financial health. For example, did you previously have access to a Flexible Spending Account and need to use it by the end of the calendar year? Do you have unused PTO days that will not rollover? Do you have dental insurance and need to schedule an appointment? Will you be contributing to two separate 401k plans throughout the year, and are you on track to reach the 402(g) limit in both plans combined? Keep all these important factors in mind to help ensure you fully maximize your old employer’s benefits before leaving.
Different jobs and income levels can lead to changes in your tax liability. Be aware of the tax implications of your new job, especially if you’re moving to a different state or country. Consult with a tax professional to help ensure you’re taking advantage of available deductions and credits while remaining compliant with tax laws.
When starting a new job, it’s a good time to reassess your short-term and long-term financial goals. Determine how your new income can help you achieve these goals, whether they involve saving for a house, paying off debt, or investing for retirement. Set up automated transfers to ensure you’re consistently saving and investing.
Your new job may offer a retirement plan, such as a 401(k) or a pension. Consider maximizing your retirement savings contributions to help secure your financial future. If your employer provides a matching contribution, try to contribute enough to receive the full match, as it’s essentially free money.
Consider how your new income can help you manage existing debts, such as student loans, credit card debt, or a mortgage. Create a plan to pay down debt efficiently while still maintaining your savings and investment goals.
Be cautious of lifestyle inflation when you start earning more. It’s easy to fall into the trap of spending more as your income increases. Instead, aim to maintain or increase your savings rate and avoid unnecessary expenditures.
Review or establish your estate planning documents, including a will, power of attorney, and healthcare directive. A change in employment status is a good time to ensure your financial affairs are in order.
Starting a new job is a significant life event that can have a substantial impact on your financial well-being. By considering these key financial aspects and making informed decisions, you can set yourself on a path to financial success and security. Remember, the key to financial stability is not just about how much you earn but how you manage and grow your money wisely.
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Important Disclosures:
Securities and advisory services offered through EWA LLC dba Equilibrium Wealth Advisors (a SEC Registered Investment Advisor).
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
In 15 minutes we can get to know you – your situation, goals and needs – then connect you with an advisor committed to helping you pursue true wealth.
EWA, LLC dba Equilibrium Wealth Advisors, is an SEC-registered investment advisory firm providing investment advisory and financial planning services to clients.
Investments in securities and insurance products are not insured by any state or federal agency.
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*See reference 1 and reference 2 for more information about the above-mentioned statistic.
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In 15 minutes we can get to know you – your situation, goals and needs – then connect you with an advisor committed to helping you pursue true wealth.