Are you ready for the next step in your career? Before you make the switch to a higher-paying job, make sure you’ve crunched the numbers. While a higher salary is usually a better deal, it’s not a guarantee. Here are seven hidden expenses that could make or break your pay bump.
One-Time Expenses
One-time career change expenses won’t bankrupt you, but they could throw a wrench in your budget. Plan for these costs before handing your resignation to the boss.
Payday delays
Payroll schedules vary from company to company. For employees switching jobs, that could mean a long wait before the first paycheck at a new company. Ensure you have enough funds to cover bills in the meantime by buffering your cash cushion before leaving a job.
Relocation
If you have to move for a new job, negotiating a great relocation package is your best option. However, if your new company won’t pay relocation or requires you to file for reimbursement, you’ll need to come up with the cash yourself. Shop around for moving companies and downsize your possessions before the move to shrink moving costs.
Wardrobe updates
If switching from business casual to a business formal office, you’ll need to refresh your wardrobe with new pieces. Quality clothes that fit well aren’t cheap, but you can save money by creating a capsule wardrobe and tailoring your purchases. Instead of looking for the perfect fit off the rack, shop sales and hunt for promo codes to popular retailers like New York and Company, then have pieces tailored to achieve an impeccable fit.
Ongoing Expenses
One-time costs are what come to mind when most people think about changing jobs, but that’s not where the biggest expenses are hidden. Depending on how the location and compensation package compare to your old position, a new job’s higher salary might not be that good.
Commuting
The price of a long commute is more than the cost of filling your gas tank. If your new job requires a longer commute, it could hurt your wallet and your mental health. In addition to increased fuel, vehicle maintenance, and parking costs, there’s also opportunity cost and the stress of a long commute. Carpooling and public transportation help you manage the financial side, but a smaller home closer to work may be the better choice for your mental well-being.
Cost of living
Leaving an $85,000 job in the suburbs for a $110,000 job in the city sounds like a great deal until you consider that the cost-of-living increase is greater than the pay bump. Before you accept an offer, use a cost-of-living calculator to compare how far your dollar goes in each location. If the pay increase isn’t enough to justify the move, negotiate or keep looking.
Health insurance
The quality of health insurance plans vary widely, and your share of the premium payment is only part of the picture. Check how the new company’s health insurance policy compares in terms of deductibles, networks, covered services, and price of dependent coverage. If it’s lackluster compared to your old policy, negotiate for a higher salary.
Retirement plans
After salary, the retirement plan is the most important aspect of your compensation package. A good 401(k) offers a generous employer match, immediate eligibility with a short or nonexistent vesting period, and low or no fees. To assess a company’s 401(k) plan, ask these questions during salary negotiations.
Money isn’t everything, even when it comes to your job. Factors like cultural fit and upward mobility can be just as important, if not more important, than the numbers on your paycheck. However, that doesn’t mean you can afford to ignore the financial side of a career change! By taking these seven expenses into account, you can chase your professional goals and keep your finances on track.
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