Your new job financial checklist

Changing jobs? Follow these steps to keep your finances healthy.

In 2021, almost 48 million Americans told their bosses (to quote the classic Johnny Paycheck tune) you can take this job and shove it. This was the so-called Great Resignation, as pandemic-weary workers reevaluated their goals and priorities.

But what followed is now being called the Great Regret: a collective reckoning in which many of those workers realized the new boss was (to quote the classic Who song) the same as the old boss.

However, the Great Regret is more than unhappiness with the new work environment or the new boss. Our recent Wealth and Wellness Index survey shows that more than one-quarter (27%) of people who feel financially “very unhealthy” changed jobs in the last year.¹

Don’t let your financial health take a hit during a job change. Here are some steps you can take to keep your finances on track — and even move them into the fast lane.

Nail down the basics

1. Set up direct deposit of your paycheck. Your employer’s payroll department should provide an authorization form, and then all you’ll need is your bank account and routing numbers, or a void check.
    
2. Enroll in your new employer’s 401(k) plan. Many companies offer matching contributions. Typically, they’ll match 50% or 100% of your contributions up to a certain percentage of your salary. These contributions are often referred to as “free money” because you don’t have to do anything to earn them other than set money aside for your retirement. To make the most of this benefit, aim to contribute enough to your 401(k) to get the full employer match. The money comes straight out of your paycheck, so you may not even notice it.
    
3. Make a new budget. The beginning of a new job is a good time to revisit your budget. If you’re making more money than you were before, go ahead and celebrate with a night out or a special purchase — but then focus on using your new income to make sure your financial house is in order, possibly by paying off debt and building an emergency fund.

Don’t forget about your old retirement account

You have a few choices for what to do with your 401(k), or other retirement account, once you've left an employer.

1. Leave the money in your former employer’s plan. You have the legal right to do so as long as the account balance is at least $5,000. Make sure you evaluate your investment and distribution options as well as any maintenance fees.
    
2. Roll it over into your new 401(k). This is easy to do and consolidates your retirement savings into one account. However, if you don’t like the investment options offered by your new employer, you might want to consider the next option.
    
3. Roll it over into an individual retirement account (IRA). An IRA can give you more control over investment options and might impose lower investment fees.
    
4. Cash it out. This should typically be a last resort. Unless you’ve met certain requirements, you’ll likely incur taxes and get hit with early withdrawal penalties.
    

Consider your options for managing healthcare costs
 

1. Enroll in health insurance benefits. After salary, nothing else will affect your finances more. You may be offered a choice of plans and deductible levels. Choosing your plan and deductible level largely depends on how healthy you and your dependents are (and how often you think you’ll visit the doctor).
    
2. Consider opening a health savings account (HSA) if your company offers it. A major benefit of a HSA is that it allows you to set aside money to pay for qualified medical expenses while reaping attractive tax benefits. Some employers will also contribute to your HSA.
    
3. Alternatively, your company might offer a flexible spending account (FSA), which is similar to an HSA but does not require a high-deductible insurance plan. It’s important to spend some time budgeting for what healthcare expenses you anticipate having, because if you don’t spend all the money you contribute by March 15 of the following year, you’ll lose it.

Look into other insurance options

• Not everyone needs life insurance, but if your company offers it and you have dependents, you should consider enrolling. The group rates are generally a good deal. That said, you may need to supplement the policy with additional individual coverage.
   
• Many employers offer disability insurance, both short-term and long-term, and they may even pay the premium. Such policies provide income if you can’t work due to illness or injury, but they’re not designed to replace all of your salary; a typical policy might cover 60 percent of your pay. What’s more, benefits from insurance provided by an employer are taxable. For more coverage, look into buying individual policies.

A new job can be stressful, even overwhelming — but it should improve your financial picture, not worsen it. Plan carefully to ensure your finances don’t miss a beat, and then put your energy toward excelling in your new position.

For more advice, download this new job financial checklist.