Seven financial things you should be doing when you get a new job

Trazer Farnese
Financial Planning

Starting the year with a new job? It’s a great time to be reviewing your personal finances, says Trazer Farnese of Lovewell Blake Financial Planning.

This is the time of year when many people take the plunge and apply for a new job, because they don’t feel valued in their current role, because they feel that their career progress has stalled, or simply because a new, better opportunity has come knocking. 

Whatever the reason, starting a new job is the ideal opportunity to review your personal finances. Moving employer means there will be some financial decisions to be made anyway, so what better time to take stock?

Here then are seven things that everybody should be doing when they start a new job.

1. Rewrite your personal budget.  Unless your new role is as the result of redundancy, it is likely that your new salary will be higher than what you were earning before.  Assuming your outgoings are still the same, this is the time to consider how you can put that extra income to work, before you get used to a higher pay every month and simply integrate that extra cash into your monthly outgoings. 

2. The first priority should be paying off existing loans, especially unsecured loans such as credit cards.  The interest rates you are paying on these are almost certainly higher than you will be able to earn on extra savings, which is why this is where you should start using any increased salary. 

3. Establish a ‘rainy day’ fund.  The simple truth is that it is easier for an employer to make a member of staff redundant in the first two years of their employment, and any redundancy entitlement you may have accrued in your old role disappeared when you left that job.  It is good practice to have between three and six months’ income in an easy-to-access account before you start investing extra in more long-term savings.  And it’s worth considering insuring your mortgage payments at this stage, too. 

4. Find out what sickness benefit you receive in your new job.  Increasingly, employers are looking to cut back on how much sick pay they offer, and with Statutory Sick Pay currently capped at just £109.40 a week, you may need to consider income protection insurance.  Likewise, if your new employer doesn’t offer private health cover as part of your employment package, this is well worth considering, given the current huge waiting lists in the NHS. 

5. Changing jobs is the perfect time to review your pension arrangements.  Your new employer may enrol you in their own pension scheme (although in last year’s Autumn Statement Chancellor Jeremy Hunt unveiled plans to allow employees to insist that new employers contribute to their existing pension funds), but many people will already have accrued several separate pension pots.  You may need expert advice as to whether you bring these together before you create yet another pension fund with your new employer. 

6. If your new salary is appreciably larger than the one you left behind, it will be relatively painless to increase the amount you are putting aside in longer-term savings (or indeed, to start if you are not already doing so).  As we approach the end of the tax year, using up your ISA allowance is a great way of doing this; you can’t carry these allowances forward, so if you don’t use them by 5th April, you lose them. 

7. When you join is the time to ask about any flexible benefits which your new employer might offer.  This could include holiday buy-back and sell-back schemes, bike to work schemes, buy a car schemes or other salary sacrifice opportunities.

Do you need assistance with any of the above?

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