It’s not unusual for people to change jobs 10 to 15 times in their career.
That’s far more than most people move house, and we all know how stressful that can be. Changing jobs is often a natural way to progress throughout your career, but the upheaval it can cause to your personal finances is often overlooked.
Experience tells me that we often spend too much time concentrating on negotiating the new package, and forget to think about the wider implications of the move.
So, here are my top tips for keeping your personal finances on track when you move jobs.
1. Get the package right
Salary, bonus, share options, pension contribution, car, healthcare, I could go on.
You will know your real worth better than almost anyone and yes, getting the package right is hugely important. But, they will want their pound of flesh and you’ll be keen to make a good impression when you start. That means long hours and very little time to think about whether your long-term financial plans are still on track.
2. Secure borrowing before you move
A new job, that perhaps comes with a probationary period, won’t make it any easier to get a mortgage. There will probably be lenders who will accept your application, but your choice might be restricted.
Fewer lenders to pick from may mean you get less favourable terms.
If you’re thinking of moving house, borrowing more money or remortgaging, it’s perhaps best to consider doing so before you move jobs.
3. Pensions: Looking back
Anyone who moves jobs 10 to 15 times over a career will naturally accumulate many different pension pots.
That creates a problem, not least in keeping track of them:
- What will each give in retirement?
- How are they performing?
- What is being charged?
That’s just three questions; there are more, and multiply that by 10 – 15 times and keeping track starts to become mind-bogglingly difficult.
There are a number of ways to address the problem; from being incredibly organised, to (when it’s the right thing to do) combining the pensions.
4. Pensions: Looking forward
You will no doubt be either offered a workplace pension, in to which your employer will contribute, or they will ask you to nominate a scheme where payments should be made.
You will be asked to make decisions about how this money is invested. The level of contributions, the charges deducted and how the investments perform, will, in no small part, affect whether you hit your retirement goals. These are therefore important decisions which need to be considered carefully.
5. Is the ‘what if?’ still covered?
Your previous role probably offered a series of benefits to cover what I call the ‘what if?’:
- ‘What if I die?’
- How much will my family get?
- Will it be enough to secure their financial future?
- ‘What if I’m ill?’
- What will the company sick pay scheme pay me?
- Is private medical insurance available so I can get treated quickly?
You get the picture.
There is a sensible level of protection that we should all have to cover the ‘what if’, especially if we have financial dependants or a mortgage. Each job change will bring with it a new set of ‘what if’ benefits. You should therefore check that those you will have in the new position meet your needs.
If they don’t, do something about it. After all, you probably moved for a better package, you can afford it!
6. Nominate beneficiaries
There’s a fair chance you didn’t do this in your previous position, but if you take one thing away from this blog today, you won’t make the same mistake in the future.
If the worst happens, and you die, there may be lump sums due, from your pension and death in service. You need to decide where these are to be paid; usually your spouse, civil partner, partner or children. If you haven’t nominated a beneficiary the payouts could be delayed and potentially made to someone who wouldn’t have been your first choice.
Nominating your beneficiaries is usually a simple task, often completed online. It’s important, please don’t put it off.
A financial plan is so important
Moving jobs regularly, as many of my clients do, highlights the importance of having a financial plan.
A good plan will have identified your goals and aspirations and then put your finances on track to achieve them. This gives you something to test your new package against.
Your goals probably haven’t changed; so do your new financial circumstances make it more, or less, likely that you will achieve them?
Overlooking how a new job will affect your personal finances is easily done; especially when you’re in the ‘honeymoon period’. Of course, that’s not to say you shouldn’t enjoy it; no doubt you’ve worked hard to land it!
However, if you do take these things into account, you’ll be able to ensure that you don’t undo any of the hard work you’ve invested in your personal finances.
Your home may be repossessed if you do not keep up repayments on your mortgage.