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You landed a new job?! Way to go! Call your family, text your friends, and get your celebration on. Then, once you’ve had some time to soak it all in, buckle down and take a look at what your new position means for your finances. Give these questions some thought, plan for them in advance, and go get after it!

What’s the effect on my monthly cash flows?

Whether you accept a job with a higher salary, make a lateral move, or take a pay cut, consider how your monthly cash flows will be impacted. You may go a few extra weeks without a paycheck, and need to bridge the gap with your savings. If your new job is in another city, factor moving costs into the equation. Does a longer commute mean you’ll pay more for gas and vehicle maintenance? Does your new employer require a certain dress code you’ll need to shop for? Do you need to purchase a new computer or other equipment?

Be realistic about the additional costs outside of your regular monthly expenses, and plan for them. It will keep you from going into panic mode when your bank account drops lower than you’re used to.

What do I do about my employee retirement plan?

Do you participate in a retirement plan with your current employer? Be aware of the plan’s vesting period, if there is one. If you leave your job before the vesting period is up, you’ll lose out on some or all of your employer’s contributions up to that point. Just keep that in mind, so you’re not shocked if your retirement savings balance drops on your next statement.

One more retirement plan issue to consider: Will you leave your account with the current employer’s custodian, or take it with you when you go? Be sure to check into whether your current custodian will start charging you account maintenance fees after you’re no longer employed with that company. Often times, large companies meet break points for lower fees, or pay the fees on behalf of their employees. You could become responsible for those fees moving forward if you leave the account behind. If you decide to roll the account over into an IRA instead, make sure you transfer the account directly to the new custodian. In other words, don’t take it in cash! If you do, you may be on the hook for taxes and additional penalties for early withdrawals. No Bueno.

I’m getting a pay increase – what do I do with the extra money?

Are you getting a bump in your pay? Put that well-earned money to good use people! Increase your retirement savings. Start socking it away into your savings account if you’re trying to save up for a house down payment, or thinking about starting a family soon. Use it to pay down student loans or other debt loads. However you decide to handle your pay increase, planning to use it wisely will keep you on track to reaching your long term goals. It may be fun to go on a shopping spree first, but buckle down sooner rather than later, and start putting your funds to good use.

Also, keep in mind higher income means higher taxes. Most likely, your transition to your new job will fall somewhere in a middle of the calendar year. You’ll need to take that into account when filing your taxes, which might throw you for a loop when tax time rolls around. It’s best to speak with an accountant to find out how the pay increase will impact you, so you can put aside funds during the year to cover any potential tax bill.

I’m taking a drop in pay – how do I plan for that?

A lot of folks change jobs for reasons other than salary. You may want a better work-life balance, less or more business travel, get a fresh start in another career path, or have some other motivation all together. So long as you’re happy with where you end up landing, more power to you! But you do need to factor in the drop in salary as it relates to your monthly cashflows. Account for the income difference in your financial plan, and make any adjustments as needed. People tend to spend what they have in their bank account, so make sure you continue to put aside in your savings and retirement accounts, even if you have less money to work with. You might have to tighten your monthly budget, downsize your living space, drop some unnecessary bills, etc. Planning ahead before your first new paycheck hits your account will make the transition much easier.


Changing career paths is exciting, but can also make your head spin. Take these questions into consideration in advance, and you’ll stay on the right track with your finances as you shift into your new position. Best of luck with the new job, and give us a shout if you have any other questions!