In today’s marketplace and economic climate, people change jobs and careers more frequently than they used to. Changing jobs can help you advance your career, explore a new field, undertake new challenges or acquire new job skills.
On the other hand, a job-change may be forced upon you. Corporate downsizing can lead to sudden unemployment. Upper-level executives may sometimes find their options within an organization have become limited and they must move on to a new company.
No matter which scenario you face, you want your finances to make the transition smoothly.
You may have been contributing to your company's retirement fund and could be paid out your contributions plus some growth. It is tempting to spend this money but, if you do, you will be tossing away a healthy chunk of your retirement provision. Instant gratification always comes at a high price and you will pay that price later on.
You are also likely to forfeit a sizeable amount of your accumulated fund to the Tax Man if you choose not to reinvest your paid-out retirement fund contributions. Rather, consider transferring it into a preservation fund to maintain your investment and also lessen the tax blow. Consult with your Financial Adviser to see what options are available and which is best for you.
Familiarise yourself with your new company's benefits, including medical aid, life insurance and retirement plans, profit sharing, vesting and stock options. Think of retirement contributions as paying yourself first; there may be a Human Resources administrator who can guide you, or you may need to do some research, in consultation with your Financial Adviser, to determine which plan will work best for you.
Make sure your new medical aid plan gives you the cover you and your family require and, if it does not, consider a top-up plan. Take full advantage of the benefits offered by your employer.
Stock options are another benefit some companies now offer to employees. You may have the right to purchase a specific number of the company’s shares as options, at a fixed price, within a certain period of time. Employees can profit later by selling their options at a higher price than when they were granted. If your company offers this benefit make sure you are fully acquainted with the terms and conditions so you can take advantage.
Financial advice and a Financial Plan
Often a job-change means an increase in salary. This can result in a substantial increase in your income tax liability. Now would be a good time to sit down with your financial adviser to devise a strategy and draw up a financial plan to reduce your tax and pay yourself more.
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