Congratulations on the new role! It's completely normal to feel a mix of excitement and stress when you're uprooting your professional life. We know there are a lot of moving parts right now, but taking a moment to breathe will help you turn this transition into a powerful stepping stone for your financial future.
The psychology of a fresh start
Changing jobs is an exciting time. It also comes with a lot of decisions and often a bit of stress. This is healthy and normal. We encourage you to take a deep breath and give yourself the space to make thoughtful choices.
Studies have shown that when we make more decisions or experience higher levels of emotion, we tend to make poorer choices. This is especially true when it comes to money. Keep this in mind during your first few weeks.
A new job is also a massive opportunity to start fresh. If there are old habits you want to break or new ones you want to build, now is the time. We recommend avoiding a total overhaul all at once. Small and incremental changes are the key to long-term success.
Managing your new income and taxes
A new salary structure can dramatically change how you manage your money and what your tax bill looks like at the end of the year. Taxes can feel daunting. Many people cross their fingers and hope for the best, but we think you should take control to avoid unpleasant surprises.
Budgeting for a new salary
Look at your new compensation. Is your base salary changing relative to your bonus? Are you stepping into a role with a bonus for the first time? The structure of your salary determines how you manage your budget to account for cash flow changes.
If your income is going up, commit to saving for your future first. Then you can spend what is left. This is a great hack to avoid lifestyle creep.
Stock compensation
Some employers offer stock awards. You need to understand what type of stock award you're being offered and the vesting schedule (when you actually receive the shares). This helps you determine how the stock impacts your taxes and when you can plan to sell it.
Tax withholdings
Your taxes are based on how much you are paid and how you are paid. Employers may withhold taxes differently for bonuses, stock options, and base income. When you fill out your W-4 form, you're making educated guesses about your income.
That is perfectly fine. However, tax planning is an ongoing process. We suggest revisiting your estimates every six months or so. This helps you avoid overpaying or underpaying and receiving a major tax bill later.
Navigating your benefits package
If possible, review your benefit choices carefully before your start date. You may only have 30 to 60 days to make elections. Proactive planning can seriously reduce your stress levels.
Health insurance and savings plans
You will likely see an offer for a traditional health plan with a flexible spending account (FSA) or a high deductible plan with a health savings account (HSA).
If you have a family or major medical needs, a traditional plan is probably best. Just remember to fund your FSA. If you're single and healthy, an HSA might work since you may visit the doctor less frequently. If you're married, remember that a new job may be a "qualifying event" that allows you to change your spouse's coverage if needed.
Insurance considerations
Disability insurance replaces your wages if you're sick or injured. It's available for the short or long term. Short-term is great if you're still building an emergency fund. Long-term disability is a must-have safety net for everyone.
Regarding life insurance, it's usually best to find it outside of your workplace. You will likely get more coverage for less money. If you choose your employer's life insurance, there is typically a flat amount offered with an option to pay for more.
Your 401(k)
Find out when you are eligible to contribute to your 401(k). It's not always on day one. You want to enroll and start contributing ASAP. Look into the company match, investment options, and whether they offer a Roth option.
How much you contribute depends on your situation. Maxing out your contributions is a good goal. If you aren't ready for that, always contribute enough to get the full match. Also, don't forget that any contributions you made at your last job this year count towards the maximum amount you can contribute.
Ancillary benefits
Smaller benefits can add up. Be sure you're familiar with everything available. This could range from free legal help to gym memberships or public transit reimbursements. Every little bit helps your bottom line. Don't forget about tuition reimbursement either. Furthering your education is always a great investment.
Handling accounts from your old job
Don't leave a "benefits graveyard" behind you. You need to tie up loose ends. If you have a 401(k) or HSA from your old job, make sure that money comes with you.
Move any retirement savings to an IRA or your new company's 401(k). This is often called a rollover. Likewise, transfer your health savings into another account or consolidate it with one offered by your new employer.
If you have vested stock and unexercised options with your prior firm, you need to take action ASAP. While options typically expire after 10 years, that expiration date accelerates to only a few months upon your departure.
Planning doesn't end once you make these decisions. You need to periodically evaluate your situation. Make adjustments as you reach life milestones like marriage, family, or a new home. When your next open enrollment period rolls around, spend time reviewing your elections. Just because they were right today doesn't make them right tomorrow.
Why the Facet approach works for career changes
Changing jobs is one of the biggest financial events in your life. At Facet, we believe your financial advice should be as dynamic as your career. We don't just look at your investment portfolio. We look at your benefits, your tax withholdings, and your long-term roadmap.
Our flat-fee membership model means we don't charge you based on how much money you have. We're here to help you make the right decisions with your new salary, ensuring every dollar works toward your personal values and goals. It's about giving you the confidence to enjoy your new role without worrying about the numbers.
