Financial Considerations of a Job Change—Beyond Salary

Before millennials entered the workforce, it was customary for people to spend their entire career at one or two jobs. This provided employees with a sense of stability, a clearly defined growth plan within an organization, and in many cases a pension that would help them retire comfortably. This is no longer the norm. In fact, according to the U.S. Bureau of Labor Statistics (BLS), the average person will hold 12 jobs between the ages of 18 and 50. This trend is expected to continue as employees are spending less and less time at each job—a median 4.2 years—and are getting more adept at transitioning between employers.

Why People Change Jobs

In a recent survey, 64% of interviewed professionals stated that they believed it was beneficial to change jobs every few years—and respondents cited a higher salary as the biggest motivator. While a hike in salary might be considered a primary factor for job transitions, there are a number of reasons for why people look to greener pastures when exploring their career opportunities. These include:

• Professional development
• A change in career path
• A more flexible schedule
• Improved benefits
• Enhanced work-life balance
• More interesting work
• Moving to another city or country

Regardless of what your reason may be, it’s important to be aware of the financial implications of changing your job and how you can best prepare for this transition.

Saving for Your Transition

Looking for new employment takes time and effort. If you take into account all the time it takes to research positions, update your resume, fill out applications, write multiple cover letters, and participate in interviews, it can feel like a full-time job in its own right. For some, this can be overwhelming to take on while still fully employed.

If you’re considering taking time off to find a new position, it’s important to be proactive and make sure that you have enough funds put aside to cover you during that period. In the leadup to leaving your current position, set some time aside to review your expenses and decide which ones you can do without for a while. Some decisions will be easy—choose the office coffee instead of the fancy latte from across the street, or bring in leftovers instead of always buying your lunch. Other saving techniques could include cancelling your cable or magazine subscription, shopping in your closet rather than in stores or online, and cutting back on entertainment until your paychecks come in regularly once more.

Whether it’s for a brief period between employment or for any other emergency, it’s always smart to have a rainy-day fund. Set up a high-rate savings account and contribute to it on a regular basis, even if it’s just a small amount each month. Whether you’re in a planned or unexpected stint of unemployment, it can serve as a much needed safety net.