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How to Budget When You Get a New Job

By on February 19, 2019
How to Budget When You Get a New Job

You landed your dream job, and now you’re looking forward to a new life and increased salary. Taking a step forward in your career is exciting, but it also raises questions. A higher salary is something we all work toward, but you’ve got to remember that wealth management requires you to understand both your income and your expenses. That, friend, is the art of budgeting.

The world of professional sports has shown us that no matter how much money someone is paid, it can all be squandered without a good budget. So when you transition into a new role, you should stop and think about how you can enjoy the fruits of your labor without getting carried away.

Consider Your Compensation Plan

Different jobs will pay you using various financial plans, so it’s important to understand what your new company offers and how it will affect your cash flow. For example, a stock associate at an automotive parts supplier may provide a flat rate every two weeks, whereas a commercial truck driver might only receive payment after completing a job.

If the truck driving job pays more money, it seems like an easy choice. However, you might have a rent payment that could fall behind if you don’t receive predictable, regular cash flow. Many sales-oriented jobs offer commission-based financial plans that give you an incentive to work more. Would you be comfortable in such a role, or do you prefer a job that is more stable but perhaps pays less? You’ll need to work with your employer or consider a different position so you don’t saddle yourself with a complicated financial challenge to correct.

Understand Your Benefits

Your cost of living is largely a product of how much you spend on housing, health care and transportation. While choosing to take a new job is often motivated by the desire to make more money, the benefits you gain or lose could ultimately have more effect on your bottom line than your paycheck.

Request that your human resources team share their benefits policy with you as soon as you know you will be taking a new job. Review the policy and ask questions to determine where you can save money. Employees too often overlook potential savings from perks like flexible spending accounts, reimbursement for public transportation or tuition assistance programs that can constitute serious expenses.

Good companies will encourage their employees to use benefits so people are happier and stay with the company longer.

Track Your Spending

Life can seem less stressful when you just accept there will be money in your account when it’s time to pay your bills. In reality, you’ll feel much better if you’ve got an idea of where you have surpluses and deficits. Tracking your spending to create a model of your monthly expenditures will give you the confidence to spend on personal items without any fear of coming up short on important payments.

Begin by observing your monthly expenses. Identify which ones are regular and which are one-time payments so you can exclude them from your monthly budget. Once you know which expenses are predictable, identify how much money you want to set aside so you can save a predetermined amount over a given period of time. Maybe you’d like to put this money aside for college tuition, a long vacation or the down payment on your new home.

Save for the Future

A good rule when budgeting is to remember to pay yourself first. In other words, treat your monthly savings goal as an expense—you can’t afford not to have that money put away. If you do this, you’ll never skip out on contributing to a savings plan that will guarantee the life you want in the future.

Retirement plans are a good model for this, and you should have one. Take advantage of the 401(k) or IRA plan your employer offers, but consider whether that will truly satisfy your needs. If giving up a few good times now will set you up for a comfortable future, you’re probably better served by saving those extra dollars.

Scott Huntington is a writer from central Pennsylvania. He enjoys working on his home and garden with his wife and 2 kids. Follow him on Twitter @SMHuntington

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