A good career move has the power to change the entire trajectory of your professional journey. There are many reasons why you may choose to switch jobs at different points during your career. A few common reasons could be to attain better work-life balance, higher wages, greater perks, relocation prospects, career advancement, and so on.
According to a study on LinkedIn, 82% of the workforce in India is considering a job change in 2022. It is possible that you may have found the job of your dreams. The company is great, there's immense scope for growth & your job profile is just what you want it to be. Yet, this strategic move could lead to certain financial risks if you are mindful of your expenses.
After you have wrapped up your previous job, there are chances of a gap between pay periods while transitioning into your new job. In the midst of this gap, you could have bills to pay, loan repayments, or other financial liabilities to take care of.
It is important to account for this time gap well in advance so that you can make amends such as checking if you can change the due date on your bills or pay your loan expenses later in the month without incurring a late fee and so on.
Since all employees are required to pay a certain amount of tax from their salary depending on the income tax slab that they cater to, it is imperative to find out about your tax implications before you join a new company.
This is specifically important to consider if there is a considerable hike in your wages as compared to your previous organization. Check if you will get access to any tax benefits such as food vouchers, reimbursements, etc. Instead, if you will only be paying more money in taxes then you may want to negotiate the terms once again.
Let us say that you have made up your mind to quit your current job & have started exploring new opportunities on the work front. But have you thought about how you are going to manage finances between now & your next job? If you have insufficient savings that will not last you for long, you may have to dip into your emergency funds for financial support.
Living out of your emergency funds can be detrimental to your future finances. While using a small portion of this in times of need may not cause much harm, draining your entire emergency fund can cause major financial trouble if not tackled strategically. If you earn a higher income at your next job, be sure to compensate for the funds you used as soon as possible.
While creating a budget, it is easy to miss out on hidden expenses that seem small but can cause trouble if not accounted for. Expenses such as streaming services, cleaning charges, maintenance costs, etc will take up a portion of your monthly expenses. If you are still on the lookout for a new job, highlight these costs and consider if you want to renew these services.
It is also wise to check on the extra fee that banks charge in case of late credit card or loan payments. You do not want to miss out on these dates & incur extra costs on your payments.
If you are already under certain financial liabilities like a home loan or student loan, it is probably not the best time to be taking out another loan in the midst of a job change. You may already have a good offer at hand that assures you a high income but directing this money towards a loan or debt repayments every month rather than saving it can be a huge setback.
Rather, try to clear pending loan amounts, become debt-free & start exploring smart investment tips so that you can put your money in safe investment options which can give you good returns as opposed to high-interest loan repayments.
Switching jobs can be an incredibly exciting & rewarding process especially if you have a structured financial plan in place. However, do not let a promotion or a hike in salary be a reason to commit financial mistakes that could go on to have a negative impact on your future finances.