New year, new job. Right? Sure, job searching is at an all-time high in January — with 22 percent more job applications started on Glassdoor in the United States than in a typical month — however, before you make your next career move there’s one person you should speak to first: a financial advisor.
In spite of the hot job market, a career transition could mean a pause in your income or, worse, an unforeseen unemployment gap. To ensure bills are paid and your savings remain intact, it’s imperative to plan out your financial obligations before diving into the job search.
“A financial plan is one way to help you make a smooth transition and ensure you’re on sound financial footing as you start a new job,” says Rob Williams, VP of Financial Planning at Charles Schwab. “Changing jobs can be both exciting and scary. You may be feeling stressed over all the things you need to consider while making sure nothing falls through the cracks, and one of the best ways to help ensure a smooth transition is by engaging a financial advisor.”
Here is Williams’ top advice for why and how to engage a financial advisor before jumpstarting your job search.
1. Identify aspects of your finances that need to be addressed before leaving your current job.
“It’s important to remember that during a career transition, you will potentially face a break or disruption to your regular income,” says Williams. Planning for all eventualities will alleviate stress and ensure a smooth transition.
Consider these aspects:
- Finding out when your insurance coverage ends: Work with your (soon-to-be former) employer to find out when your coverage expires. If it’s before your new coverage will start, you can speak with your employer about using COBRA during that period.
- Calculate pay that’s due to you when you leave: Understand how much unused vacation and sick days, along with stock options and other compensation, that you’ll have before you leave. You can use that income to create a budget for any necessities between roles.
- Decide what you’re going to do with your 401(k): Learn the pros and cons of leaving the money in your current 401(k) plan versus rolling it over into either an IRA or your new company’s 401(k). Think through your plans to decide which will be the best option.
2. Plan your finances before you jump ship.
“As soon as you begin thinking about making a move, you have to consider the financial implications and build out a plan in case you decide to follow through,” says Williams. “As a good rule of thumb, you should begin preparing no less than 2 weeks prior to your departure to give yourself enough leeway for any potential next steps, such as signing up for COBRA or preparing for the 401(k) rollover process.”
When possible, do your research and craft a plan before you notify your boss. “The best practice is to build out as much of a plan as you can before you notify your employer using the information you already know,” advises Williams. “That way, when you notify your employer and get the final information needed, you will be able to quickly finalize and think out your plan.” Read more here…
Source: Glassdoor Blog