Changing jobs is often an exciting time of life. It can also be a busy time.
Following is a checklist of important items to promptly address to ensure you keep your financial well-being on track.
- If your pay date will change then consider resetting the automatic transfers that support your smart budgeting techniques
- Revisit your budget to accommodate changes in remuneration. If you’re going to be paid more also see the wealth creation tips below.
Use free online calculators, like those from the ATO, to help you work out your new net (after-tax) pay.
All pay rises are terrific opportunities to accelerate your wealth creation. I suggest you put at least half of your pay rise towards a combination of the following:
- Higher loan repayments.
- Increased allocation to long term investment. For example you could boost your salary sacrifice to superannuation, which will soften the tax blow on your pay rise whilst making you wealthier.
Plan in advance and be ready to adjust your automatic transfers as soon as you start your new job.
Employer share plans
Do you have an employer share loan you need to repay upon leaving employment? If so, a common way to repay the loan is to sell some or all of the shares. If you don’t have a broker then read this article to discover how to sell shares without a broker.
- Blindly nominate your previous employer’s fund to receive contributions ‘just to keep things easy’. Your new employer may have a cracking deal on offer.
- Blindly accept the default fund offered by your new employer. It may be a shocker compared to your old fund.
- Blindly roll your old fund into your new employer’s fund. When you rollover you automatically lose your insurance cover. “So what?“, you ask. Well almost all Australians don’t have enough cover, so odds are you probably need to keep what you already have.
- Promptly investigate what happens to your balance and linked insurance when you leave your employer. Do this before your last day in your old job.
- Is the balance automatically rolled to a new ‘holding’ fund within a certain number of days?
- Is some or all of the insurance automatically cancelled? If so, can you apply to have it continued? (If a continuation option is available you usually have around 30 or 45 days to apply.)
- Complete a comparison of your new employer’s fund to your previous fund to ascertain which is better for you. I recommend you also consider some off-the-shelf funds in that comparison.
Employer Funded Insurance
One great thing about employer group insurance policies such as group salary continuance is that you probably didn’t need to disclose anything about your health to get it. So you can potentially be a basket case and still be covered.
The older you get the more likely that is.
Keeping that cover is therefore a golden opportunity.
Group insurance policies often have continuation options that allow you to retain cover under a personally owned policy without medical underwriting. However you have to apply quickly – usually within 30 or 45 days of leaving your employer.
In my experience it helps to contact HR before your last day. They’ll usually refer you to the adviser appointed to the group policy who will then guide you through the process.
Call your adviser
If you have previously worked with a financial planner then a job change is one of those moments you should proactively contact them. Changes in income can trigger tweaking of your strategy. Also job changes sometimes occur as a result of the natural evolution of what you want in life. Your financial well-being strategy needs to evolve with you.
Your financial planner will be able to guide you through all of the above and alert you to anything else you should think of.