7 Money Moves to Make When You Get a New Job

Whether you are trying to change positions, find work again after a layoff, or simply start your career, it's easy to jump for joy when you get a job offer and forget all about your wealth for awhile. Yet, this is a great time to think about your finances, because taking the right steps now can really accelerate your asset accumulation. Here are seven items you should think about if you want to take your wealth to a whole new level. (See also: Starting a New Job: 3 Rules to Live By)

1. Negotiate Your Salary

This can be easier said than done, I know, but consider that any amount you can get is going to compound into every future raise, and anything you get now will affect your lifetime earnings significantly. At least negotiate until the employer says something along the lines of "we can't give you what you want, and we won't budge on our previous offer." Any other response likely means that there is some more room to push, and I've yet to see anyone retract their original offer if you respectfully asked for a bit more.

2. Get the Details on Company Benefits

Did you know that some companies will help you pay your mortgage? That's rare, but most companies have adopted government-encouraged plans like 401(k) matches, cafeteria plans, Flexible Spending Plans, and dental and medical coverage, which can save you thousands a year. Yet, most people seldom ask about these benefits when they are comparing potential job prospects. The inclusion of these plans can make a gigantic difference between the effective pay of a job offer, so take these benefits seriously.

3. Remember Your Former 401(k)

If you are moving from another job, remember to roll your 401k into an IRA or at the very least, move your former 401(k) into the 401(k) of your current employer. Don't be tempted to take it out, or else you end up forgoing all the benefits of a tax-deferred account.

4. Avoid Lifestyle Inflation

If you happen to get a raise by accepting a new job, you definitely won't be alone if you increase your spending. But most people haven't saved enough for retirement either, so don't try to keep up with the Jones in that department. By delaying lifestyle inflation even just one year, you can save much more.

5. Pay Yourself First

Schedule transfers to savings to occur when your paycheck hits your account. This way you won't be able to access the extra cash, and you likely won't miss it.

6. Shift Your Paycheck Into a Savings Account

When HR asks you which account you'd like your paycheck deposited into, provide the information for your online savings account and start collecting interest on day one. This used to work better when interest rates were much higher, but it's still better than nothing.

7. Make Sure You Are Withholding Enough

I used to say that you should never give Uncle Sam an interest-free loan by prepaying too much of your taxes, but I have come around. For one thing, you are losing just a tiny bit of interest. But more importantly, most people will take a psychological hit when they discover they have to pay additional income tax when filing their taxes, not to mention that a surprise like this could throw financial plans into disarray. That's why you should look at your W4 and make sure you are withholding enough to cover your taxes, as opposed to filling it out to get the least amount of taxes withheld.

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Meg Favreau's picture

I always withhold extra from my paychecks to cover my freelance work. It makes tax time much more pleasant.

Does anybody have other suggestions of financial things to do (or that you wish you did) when starting a new job?

Guest's picture

Avoiding lifestyle inflation is important. When you get a raise it's tempting to just spend it all on something frivolous, but if you can take whatever salary increase you received from your previous job and invest it you can move a lot closer to your financial goals.

Guest's picture

Great Post David! Great rules to live by! Rule #3 got me one time when I was a lot younger and didn't understand all the penalties. I think a lot of employers fail to explain the the 401K benefit package in a manner that many younger employees understand it.


Guest's picture

I love the perk where they match your RRSP contributions or pension plan. But I agree, if you get a raise, take the difference and just put it in a savings account and you won't have a change in lifestyle but you will be building a nice nest egg for retirement!