Deciding to change career paths often feels equal parts thrilling and terrifying. While the possibility of new professional challenges is definitely invigorating, hidden expenses may disrupt your plans. So before you take the leap to a new job, factor in this financial advice.
Plan a Career Pivot Carefully
Though the urge to switch gears in your career may be strong, planning helps you pivot with a safety net in place. Aim to secure a new job before leaving your existing role, if possible. Try to establish an emergency fund bank account to cover expenses during any gaps in employment. With funds in the bank, you can breathe easier if it takes time to find a new job.
Do the Math on Total Compensation
A high hourly rate or salary offer might sound appealing, but there’s more to earnings than base pay. An employer-provided total compensation statement should include your pay rate, benefits coverage, paid leave terms, insurance, retirement, and other applicable company benefits.
Consider Remote Work Perks
Flexible work options might be an attractive perk when considering a career change. Hybrid schedules are becoming common, and most companies acknowledge the benefits of remote work for their budgets and workforce. A new, flexible role might help your finances, but it isn’t ideal for every professional. For example, some companies hire remote contractors, versus full-time employees. In that case, you wouldn’t receive overtime pay, benefits, or retirement options.
Explore Location Options
Even full-time employees working remotely may experience pitfalls; companies may offer salaries based on location and local cost of living. Ask plenty of questions before accepting a location-independent role. Relocation may be an option, and a prospective employer might offer to chip in toward the cost. Moving expenses can add up, making relocation another financial drawback, depending on the distance, cost of living, and other factors.
Read the Fine Print on Retirement Packages
Retirement packages are often an appealing selling point in employment offers. Yet not all retirement plans are equal, so reading the fine print is critical. Most retirement accounts have strict requirements for your investment and even your access to it.
For example, while most retirement plans are transferable if you change companies, you might not receive the full balance if your account is not fully vested. Vesting equates to ownership; if an employer contributes to your retirement, you don’t own that contribution until you are vested.
Being fully vested means you own the entire amount, and your employer cannot take it back, confirms the Internal Revenue Service. Vesting requirements, and other retirement plan details, vary by employer, and understanding the parameters is essential for maximizing your investment.
Understand Tax Structures (and Disadvantages)
Taxes are a big part of the financial equation for most professionals. After all, every worker wants as much of their pay as possible. Though a modest salary increase likely won’t change your tax bracket, reflect carefully while accepting a new salary and filling out tax paperwork. Tax brackets can impact your salary if a significant raise is on the table. An income increase that levels you up by one or more tax brackets means more of your income is taxed at a higher percentage, explains Experian.
Withholdings are another factor that influences your take-home pay. When you fill out onboarding paperwork for a new job, you’ll select a withholding rate on tax forms. To avoid surprises on your first paycheck, review your withholding selection carefully before submission.
Set Yourself Up for Success With an Online Degree
Earning a degree can significantly improve your career prospects by increasing your knowledge and skills, enhancing your credibility, and making you a more competitive candidate for job opportunities. For example, earning an MBA degree can enhance your business skills, provide networking opportunities, lead to career advancement, improve entrepreneurial skills, and provide global perspectives. Consider this option if you want the flexibility and affordability of earning your degree online.
Embarking on a new professional path might be just what you need for personal and financial fulfillment. But avoiding unforeseen expenses is a critical piece of the employment puzzle. By taking steps like earning an online degree and considering remote work, you can successfully navigate a career pivot without losing a penny.
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Sharon Wagner
