You’ve landed a plum new job with a higher salary.
However, before the riches start rolling in, it’s vital that you consider what your next money move will be.
After all, just earning more money doesn’t immediately erase any problems you’ve been having with money.
Additionally, rushing out and spending it all won’t help you prepare for the future. Did you know…
“The average person born in the latter years of the baby boom (1957-1964) held 11.3 from age 18 to 46, according to the U.S. Bureau of Labor and Statistics.”
As you adjust to your new job, whether it’s a promotion in your current company, or a new ob altogether, here are 5 financial moves to make right now:
1. Find Out about Company Benefits
Determine what benefits are offered by the company. From a retirement plan (perhaps with a matching contribution) to health care coverage, to on-site daycare facilities, get a handle on what is available to you. Learn about what requirements you need to meet in order to receive benefits, and ask about perks.
Some companies offer discounted gym memberships, and others have a cafeteria with low-cost, healthy food. You will also want to know what options the company’s retirement plan offers, as well as whether or not you can get a high deductible health plan, paired with an HSA.
Once you know about company benefits, you can make a plan to maximize them and use them to your advantage.
2. Rollover Your Old 401(k)
Don’t forget about your old retirement account. Don’t cash it out, though. If you do, it won’t be treated as a tax-advantaged account, and you’ll have to pay tax on the income, as well as a penalty for early withdrawal. Instead, do a custodian to custodian transfer, and roll your old 401(k) into a Roth IRA, or into your new company’s retirement plan.
3. Double Check Your Tax Withholding
Make sure that you are withholding the right amount. If you have a raise, you’ll want to make sure that your withholding reflects your higher income. You’ll need to fill out a new W-4 to change your withholding.
When you start at a new job, you’ll get the paperwork automatically. However, if you just received a raise or a promotion at your current company, you might need to request a new W-4 from your human resources representative.
4. Boost Your Savings/Debt Pay Down Efforts
Earning more money provides you with the perfect chance to increase your efforts at attaining financial independence without drastically changing your lifestyle. If you are in the process of paying down debt, use the “extra” amount in your paycheck to accelerate your efforts.
If you are trying to improve your savings for the future, you can boost your efforts to build an emergency fund, or you can take the opportunity to move a little closer to maxing out your retirement account contributions.
5. Splurge a Little, But Don’t Inflate Your Lifestyle
Go ahead, reward yourself. However, don’t let a fun, rewarding splurge turn into a regular expense. Try to avoid the lifestyle inflation that often comes with a raise. Instead, keep your lifestyle mainly the same.
Splurge a little for some fun, or increase the amount you put into a lifestyle fund to be used on entertainment, but don’t turn your higher paycheck into an excuse to spend more money on stuff every single month.
Did you make these financial moves after you got a new job? What other moves would you suggest making?