Changing Jobs? Keep Your Finances in Check with This Checklist
Career moves have been plentiful the past year. If a change could be in the cards for you, you need to be ready with the answers to several questions. Scan our checklist to see how prepared you may be.
Have the challenging past two years inspired you to think differently about your life, your work and your finances? You are not alone:
- 50.3% of U.S. adults age 55+ now consider themselves retired. Before the pandemic, up from 48.1% of those adults before the pandemic.
- More than 24 million U.S. workers quit their jobs between April and September 2021.
- For the 11 million open jobs listed in October 2021, only 7.4 million unemployed people were available to fill them.
Whether you have been thinking about a job change for decades or have been motivated by recent events to make a career move, it is imperative that you manage your transition with careful, calculated financial planning.
To start the process, here are five financial pointers (my five “Bs”) for changing jobs:
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
1. Budget
Before you make a career move, you need to be able to answer these questions: How will your career change impact your income, expenses, savings and current investing? How much of your current income are you saving and investing today across taxable (e.g., brokerage), tax-deferred (e.g., traditional IRA) and tax-free (e.g., Roth IRA) accounts? And how is your income projected to change in the immediate term (the first 12 months) and intermediate (12 to 24 months) period of your professional transition?
If a decrease in savings and investing is anticipated, when will you resume saving and investing, and how will you hold yourself accountable to this deadline?
2. Business impact
Will your professional change have tax and/or financial planning implications? Will you move from being an employee of an organization to owning a business? Are you becoming a partner in a firm? Will non-cash equity be part of your compensation?
As you understand the business impact of your career change, chat with your existing financial adviser to ensure you are accounting for the change in your tax and financial plan.
3. Benefits
What perks do you receive today from your current employment, like insurance, deferred compensation and/or equity-based compensation? How will these benefits change with your new opportunity? Are there tax considerations associated with your current benefits that might influence the timing of your professional move?
If benefits you rely on today will not be readily available through your next opportunity, how will you meet the needs that no longer will be covered, such as disability insurance?
4. Buddies
Who are the people — whether they be relatives or friends — that will be affected by your professional decisions? How will a career change impact the time that you have available to spend with these people, as well as the lifestyle you can afford for yourself and them with your total compensation?
As you transition to your new role, will additional time and money be required to facilitate the move, prompting a change in daily life for you and your buddies?
5. Buffer
Typically it’s good to have three to six months of expenses in your emergency savings. If you are moving from a salary-based position to a more commission-based or entrepreneurial role, it may be important to build up a larger cash reserve prior to making the transition.
To complement your emergency savings, what additional sources of cash and liquidity are available to you? Before you make the move, ensure that you have a clear picture of the financial buffers available to you to provide cushion throughout your transition.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Caroline Wetzel CFP®, CDFA®, AWMA®, is a vice president and private wealth adviser at Procyon Private Wealth Partners. She has worked in financial services since 2001 and began specializing in wealth management for affluent multi-generational families in 2015. Caroline earned a B.S. degree in policy analysis and management at Cornell University and an MBA in finance and advanced certification in marketing from the University of Connecticut School of Business.
-
Stock Market Today: Tech Stocks Soar Ahead of CES 2025
This week's annual technology event will give updates on AI, EVs and self-driving cars.
By Karee Venema Published
-
Trump Pushes for ‘One Big, Beautiful Bill’ With Focus on Tax Cuts
Tax Policy Is combining taxes, border security, and energy policy into one piece of legislation to be passed in 100 days a realistic approach?
By Kelley R. Taylor Published
-
10 Ways Retirees Can Manage Income Distribution
The goal of a retirement income plan is to make the most of your money while ensuring that it lasts. These 10 strategies can help secure your financial future.
By John L. Smallwood, CFP® Published
-
Gifting Earlier Rather Than Later Can Reap Big Tax Benefits
Even with Donald Trump's win, the future of the Tax Cuts and Jobs Act remains uncertain, so here's how to make the most of its provisions while you still can.
By Nicole Jackson-Leslie, JD, 21/64 Certified Advisor Published
-
A Frugal Saver's Guide to Spotting Investment Costs
Some of the fees that come with buying or holding stocks, bonds and other investments are obvious. Others can hide in plain sight.
By James Martielli, CFA®, CAIA® Published
-
Are Democrats or Republicans Better for My Insurance Premiums?
Let's compare how these two political parties might affect your insurance premiums now that the 2024 election is over.
By Karl Susman, CPCU, LUTCF, CIC, CSFP, CFS, CPIA, AAI-M, PLCS Published
-
Four Financial Steps That Can Help the Sandwich Generation Cope
People who are caring for kids and aging parents at the same time can take a hit mentally and financially, so make sure you're tapping into all available help.
By Leila Evans, CFP® Published
-
Three Easy But High-Impact Moves for Retirees
Keeping finances in order is a chore, especially in retirement, but these three simple and impactful moves will help you now (and your heirs in the future).
By Evan T. Beach, CFP®, AWMA® Published
-
Buckle Up: Five Risks to Avoid on the Road to Retirement
As retirement approaches, keep an eye out for the last remaining bumps in the road that could put a serious dent in your hard-earned savings.
By Bryan S. Slovon, Investment Adviser Published
-
Ignoring Your Company's Dress Code Can Get You Fired
Employers and prospective employees need to be upfront about expectations on the job regarding appearance, and other policies, before a job offer is accepted.
By H. Dennis Beaver, Esq. Published