Switching jobs is a big milestone, whether you’re taking on a new career or just ready for a fresh start in a familiar industry. It’s a busy time, but it’s also a time when revisiting your financial goals and implementing a clear plan is essential.
This is exactly what an independent financial advisor is here to do – to turn questions into definitive statements, and what can be an unsettling time into a transformative one – not just for right now, but for the future, too.
Here are a few key reasons to pay more attention to your finances as you change jobs.
Any Change in Income is Always Worth a Fresh Look at Your Finances
Whether you’re going to be bringing in more each month or less, any change in income should prompt you to ‘go back to the drawing board’ and create a clear breakdown of your incomings and outgoings.
Money worries are often brought about by uncertainty. When we don’t feel as though we have a clear perspective or full control over the incomings and outgoings, the temptation to bury our heads in the sand is very strong. But taking a fresh, open-minded look at the bank statements and direct debits is the best way to make positive changes – and, in the process, regain that sense of control.
From identifying payments that are no longer necessary to ensuring that your money isn’t idling unnecessarily in a current or savings account by building your investments, take advantage of this opportunity to hit ‘reset’ on your financial literacy.
There’s No Better Time to Start Working Toward Your Long-Term Goals
In an ideal world, we would all have a very clear and actionable plan for meeting our long-term financial goals, but the ongoing push-and-pull of life can mean that we focus all of our attention on the immediate goals – paying the mortgage, gas and electricity, the food bills…
But, with the right plan in place, you’ll be able to get on with life without fretting over your immediate or long-term needs and goals. A strong financial plan will prove manageable on a day-to-day basis, while gradually – and, most importantly, sustainably – contributing to the future.
This is a lot better than forgetting about those future goals for weeks or months at a time, then making sporadic deposits into your savings in apology to your future self.
It’s always a good time to start working with a financial advisor to implement a plan of this scale, but a change in your financial situation is arguably the best possible time to start afresh with new goals and new strategies.
You’ll Want to Keep On Top of Your Pension(s)
Whenever you switch jobs, you’re automatically enrolled in a new company pension (provided you meet the conditions). Any company pensions set up on your behalf previously will still belong to you, but you’ll need to get proactive about consolidating them – or risk losing track of where your money is invested, and how much you’ve got tied into dormant schemes.
In the UK, the average worker changes jobs more than 17 times in their working life. While some of these changes will likely take place before you’re eligible for a workplace pension – for instance, if you had a part-time job as a teenager – there’s still plenty of scope for forgotten pensions.
It’s no good deferring a look at your pension(s) until some indeterminate point in the future. Planning for retirement should begin relatively early on in your working life, or you may not be able to meet your goals and standard of living when the time does eventually come for you to retire.
If You’ve Been Out of Work for a While, This is a Good Opportunity to Shore Up Your Rainy-Day Fund
The national average for securing a new job is between 6 and 7 months, although not everyone will be ‘out of work’ in that time. Plenty of people will remain in employment right up until they change jobs, although 2023 is still being colloquially referred to by some as “the year of redundancies”.
This is, of course, what rainy-day funds/savings are for. While it’s true that much of our accrued wealth is better served through investments rather than being left to gather the often nominal interest offered by high street banks, it’s always a good idea to have a certain amount set aside for mitigating situations like temporary unemployment.
What that does mean, of course, is that new employment necessitates a little more time, attention and, most importantly, money being invested into getting your rainy-day fund back to good health.
This doesn’t need to be a huge burden, and you can’t hope to get it back up to its original level with your first paycheque. In fact, it can (and should) be factored into your new financial plan – a sustainable investment, along with other investments that look further into the future, and offer the potential for long term capital growth.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.