Leaving an old job and looking for a new one can be an exciting opportunity, but it is important to make sure your finances are in order before taking that leap. Follow these tips before giving notice at your place of employment to ensure ongoing financial security.
Review your savings: Before giving up a steady paycheck, make sure you have enough savings to tide you over until you find new employment. Ideally, you should have an emergency fund with 3-6 months’ worth of living expenses to help you survive periods of unemployment. If you don’t have this kind of money saved up, consider pushing off your resignation until you can put together a nest egg to help you get by without a paycheck.
Check your benefits: If your job includes employee benefits, like retirement funding, be sure to review them carefully before giving notice. Here are different options to consider for the most common employee benefits:
Health insurance – Work-sponsored health coverage generally ends on an employee’s last day at work, though coverage will sometimes continue until the end of the month. Similarly, some companies start covering new employees on their first day of work, while others have a waiting period that can last from 30 to 90 days. If you will have a gap in coverage, try to negotiate for early coverage when securing your new job. If this is not possible, thanks to COBRA, you can continue your current health coverage at your own expense for 18 months after you leave your job. It’s important to note, though, that this can be an expensive option. You can also purchase a short-term policy through the marketplace.
401(k) – If your current job comes with a 401(k), you will need to decide what to do with the funds. You can keep the account as it is without making any additional contributions, roll over the funds to a new 401(k) program, roll the money over into an Individual Retirement Account (IRA) with SeaComm, or cash it out.
Life insurance – Don’t forget to consider a possible gap in your life insurance coverage when leaving a job. You may be able to continue paying for coverage until you have a new plan through your next place of employment.
Assess your risk tolerance: Before accepting a new job, make sure you can handle a possible blow to your income. Many jobs will present new employees with the possibility of better pay in the future, while initially only offering a starting salary. How comfortable are you taking a risk with a new job that doesn’t guarantee as much financial security?
Adjust your budget for your new salary: If your new job comes with better pay, or you will be bringing home a smaller paycheck for now, you will need to adjust your budget accordingly. You may want to increase the contributions you make toward your investments or find a new place to keep your funds, such as a SeaComm Money Market account or Share Certificate. Click here for more information, or call us at (800) 764-0566 – your financial wellness is our priority!