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   Thinks to Know Before Changing Jobs

Use This Checklist When Changing Jobs
(ARA)

IHateFinancialPlanning.com offers tips to keep your finances in order when making the switch.

Thanks to a sagging U.S. economy, hundreds of thousands of Americans have landed on the unemployment line in the past year. If you haven't been laid off or know someone who has, you're in the minority.

Yet even during a slow economic recovery, people are finding new jobs, and many are inspired to switch careers as well. If you're in the midst of such a change, you need to do more than manage your new career -- you need to manage a new set of financial decisions as well.

IHateFinancialPlanning.com (www.ihatefinancialplanning.com) was created for the three out of four Americans who admit they hate financial planning. With its irreverent, yet educational tone, IHateFinancialPlanning.com has nearly 40 topics devoted to all sorts of personal finance issues, including changing jobs, dealing with lay-offs and employer-sponsored retirement plans. The site offers the following tips for keeping your financial house in order while navigating a job change.

Sign up for direct deposit. More and more employers are offering this perk, and it can be a time-saver. Direct deposit divides the "I-hope-I-get-to-the-bank-before-the-checks-bounce" hassle factor in half. "This may seem like a no-brainer, but you'd be surprised how many people need to race to the bank on payday," said IHateFinancialPlanning.com spokesperson, Suzanne Hunstad.

Consider the benefits offered by prospective employers whenever you change jobs, no matter what the cause of your job search. About 27 percent of your total compensation is derived from employee benefits, according to the Bureau of Labor Statistics. The U.S. Chamber of Commerce reports that employers spend $16,617 per worker on benefits compensation, based on survey results from a cross-section of companies in 2000. "In addition to benefits such as group health coverage and retirement savings plans," Hunstad joked, "lucky employees can expect long lunch breaks, free photocopies, and even unlimited access to the Internet in some cases."

Track your expenses for a few months. You may be surprised how a new job and/or bigger paycheck can affect your spending. "When people negotiate a raise, they tend to forget that the dollar figure is their gross pay, not their net pay," Hunstad said. "It sounds obvious but people are inclined to start spending their gross pay without considering what their take-home pay will be." The most important thing you can do with a pay raise is to not spend it before you assess how it truly affects your bottom line. Remember that taxes, health coverage, retirement contributions and other benefits will be taken out of your check. Use the interactive spending record worksheet from IHatefinancialPlanning.com to get a handle on your new budget.



Decide what to do with the vested employer-sponsored retirement plan, such as a 401(k), that you may have accumulated in your last job. When changing jobs, it's tempting to cash out your retirement plan, but IHateFinancialPlanning.com does not advise you to do it, despite the perceived windfall of cash. You will pay income taxes and early withdrawal penalties on the money, assuming you aren't yet 59 and 1/2. Also, any benefits of letting that money compound tax-deferred will go away if you start at zero in your new job. Check with your prospective (or new) employer about the 401(k), 403(b) or other plan available there and roll your account into it. If the investment options aren't satisfactory or the plan doesn't meet your needs in other ways, you have 60 days to roll your account into an Individual Retirement Account (IRA) without tax consequences or penalties for early withdrawal.

Consider a range of insurance options when changing jobs: it's essential. Access to health insurance is a virtual must. "Considering how tight the job market is, we're not going to recommend people refuse a job that doesn't include health coverage in its benefits package," Hunstad said, "but we would caution against it. Medical costs can get ugly."

Ask yourself a few additional insurance questions. Besides health insurance, what sort of life and disability income insurance options does the new employer offer? How do they compare with what you already have? Disability income coverage is not a luxury, it's a necessity. Also, group life insurance is a common benefit and should not be overlooked. It's tempting to waive these types of coverages -- or worse, not ask if they are available -- when negotiating a new position.

Review your financial goals. You'll never get ahead in your financial life if you don't have goals. Where do you see yourself in five years? Ten? What money trade-offs might there be? These are questions with no right answers, but ask them anyway.

Finally, no matter what circumstances have caused you to change jobs, you are not alone. The average American changes jobs an average of nine times before the ripe old age of 34, according to the Bureau of Labor Statistics. The good news with that statistic is you won't need to bother dusting off your resume because there won't be time for the dust to settle.
Courtesy of ARA Content

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