How To Determine Expenses Associated With a Job Change
September 10, 2008
So, you’re ready to take the plunge, and change jobs. Some of you will not only change jobs this year, you’ll change careers. But with every change comes an added expense. Changing jobs can change your life, but it can also hurt your wallet at the same time.
Switching Jobs
On a personal level, I am about to make a job change myself. I am going to venture into the world of self-employment for a few months to see how it goes. If I don’t make enough money on my own, I’ll find another job in the financial services industry. This is a very relevant topic for Ben (Money Smart Life founder) and I. We’re both going through job/career transitions, and we’re dedicated to helping you sort through this complicated time. Here are some things to consider when changing jobs.
Training and Development
Changing jobs or careers sometimes requires additional education and training to perform that new job or career. You may need to add a new license, certification, or degree to be qualified for your new job or career. This can be very expensive, but there is a way to get around it. Ask your new employer if they will pay for it, don’t be bashful to ask your employer to pay for a training and development allowance as long as it’s related to your job function. If you’re going into business for yourself, then there’s not much you can do about this expense, just look at it as an investment in yourself.
Wardrobe
Let’s say you were in the construction business before, and now you’re going to sell insurance. Your wardrobe will drastically change. You’ll need to go out and buy a couple of business suits and business casual attire for the office. This could be a big expense. However, you don’t need to go out and buy the finest clothes to look good. I buy a lot of business clothes at Marshall’s, Kohl’s, and JC Penney for a fraction of the cost.
Commuting Costs
You’ll need to evaluate the cost of commuting to your new job. Is your job farther away from your old one or is it closer to your home? If it’s farther away, partner up with someone to car pool back and forth to work. You won’t know anyone at first, but as you get to know your co-workers, find someone who lives near you. Make sure you like that person, because you don’t want to spend the rest of your time at that job gritting your teeth during every trip back and forth from work.
Difference In Benefits
One of the most important things to consider in terms of expenses are the benefits a company offers. Make sure you measure up the benefits of your old job to the benefits of your new job. For example, what is the comparision between the health insurance premiums or dental insurance costs? Do they have good choics for your 401k and offer a similar match?
The benefits package is very important. You typically gain about $10k to $15k extra from a benefits package. If your new job is weaker on benefits, try to negotiate with them certain aspects of their benfits package. If they really want you to be part of their company, they should have no problem conceding on some of their benefits.
Have you recently made a job or career change? Can you think of any extra expenses to share with everyone else? Comment below with your questions and thoughts.
All posts by Erik
I have found that commuting expenses can lead to a VERY big difference between jobs, and there can be other costs that sneak up on you… making sure that you are deciding between apples and apples with insurance and other benefits is also extremely important, depending on your situation.
Jerry
Savings: Take advantage of what your new situation offers:
In my case – there were added benefits due to the nature of the company I work for – recycling and garbage transfer. Free company cell phone unlimted usage, and as we’re into recycling, including autos, some recycled gasoline. I also get free discarded lumber for firewood, decks, landscaping timbers, garden containers, metal hardware.
Time Savings: Better Schedule:
Negotiate for flextime or a different schedule if possible. I can take off with just a phone call if I need to pick up grandkids at school, go on a field trip, or have one of them at work with me for the afternoon when necessary. Once the job was going well, I negotiated a drop in hours – from 5 to 4 days a week 🙂 Time for family!
Another benefit – no union dues! That saved me $42/month.
Time Lag Expense:
My 401K didn’t kick in at the new job for 12 months – so there is that expensive timelag – but they match 6% which the old job didn’t.
There might be a lag in health insurance til it kicks in…. Will you have to make COBRA health insurance payments for 30,60,90 days?
Lunch Out Expense?
Another expense could be lunches out… I am used to brown bagging it, so when I got my office (one girl office) I asked for a used refrigerator and a microwave, which they were happy to provide. Then I brought in a small combination broiler/teapot and I am all set for making breakfasts, lunches, or dinners at work. I keep groceries and silverware/dishes here – that saves a LOT of money.
Additional Savings:
Due to the smaller workforce here, I save money by not having to donate to office pools, gift pools, or co-workers’ kids’ fundraising activities 🙂
Automatic Deductions:
Will you lose money/savings because they do not have an automatic deduction for 401 or pension etc? Will you lose money/savings because the paycheck is not deposited automatically? If so, set up your own autopays with your bank for keeping things on track.
Insurance:
Some companies offer life, disability, cancer insurance, etc…. find out if you will loose those, if you can move them over, or if your new company has them.
My change was 18 months ago – and I’ve never been happier 🙂