Five Tips When Starting a New Job

The summer edition of the Charles Schwab On Investing magazine lists the following five tips when starting a new job:

1. Sign up for your employer's 401k.
2. Make every effort to rebuild your emergency savings (if you drew them down while unemployed.)
3. Reassess your budget.
4. Claim the right number of withholding allowances.
5. Take full advantage of health and life insurance plans.

My thoughts on these:

1. Of course! Never pass up free money (assuming your employer offers a match.) I've been contributing the maximum to my 401k for over 15 years now and it's a major source of our net worth.

2. Your emergency fund is your first line of defense against having to borrow. ALWAYS be sure it is fully funded (and re-funded asap if drawn down.)

3. Hopefully you'll be making more money at your new job. If so, it's a great time to refigure/readjust your budget.

4. This is a moving target for those of us who may or may not receive annual bonuses, but do the best you can to come out even at the end of the year.

5. I'd add disability benefits to the list as well, though fewer and fewer employers are offering this benefit (or at least it seems so to me.)

One BIG thing I'd add here: hit the ground running to make sure you're moving your career forward as quickly as possible. This means laying the groundwork for your next raise NOW, so when time comes for the next promotion or annual bump in pay, you're ready to make a big jump.

Comments

[wanzman]

FMF -

Let me ask a quick opinion on something.

You reposted a comment I left about your employer not caring as much about your career as yourself.

As a follow up, I mentioned that the small bank I work for has been sold to a larger bank. The problem is, the larger bank that is acquiring us also acquired a smaller bank that my mother was working for at the time. At that time (a number of years ago), they treated the employees of the smaller bank quite badly, and consequently I really have no desire to work for the larger bank that is acquiring us.

The problem is, I only took this job 7 months ago, after working for 3 years at a different large, but highly respected bank.

I am 25 years old, and this is my 2nd job out of college. Do you think I should just stick it out here for awhile (maybe another couple years), or pursue other opportunities to work with a company I actually like/respect.

I believe these opportunities exist for me, as I have already received several calls from recruiters since the acquisition was announced. I am just afraid of being seen as a "job hopper".

[FMF]

wanzman --

Here's my opinion -- consider it worth what you're paying for it. ;-)

As long as you:

1. Have a good reason for leaving a job (which you do) and

2. Can explain the reason for leaving in an interview and

3. Don't "job hop" that often

Then I think you'll be ok.

You had your last job for three years, which is long enough, and if you keep the next one for an equal amount of time, having a 7-month stint shouldn't hurt you -- especially when there's a takeover involved.

[wanzman]

FMF -

I'd like to think that my career will be better off if I try to remain true to my principles and values. At least I should be able to sleep better at night knowing I made a conscious decision to represent (or not represent in this case) a certain company.

I agree though, I guess it is all in how you sell it to future employers, and in this case, at least I would have a story that makes sense.

For the record, I have no clue what I am going to do.

[myfinancialobjectives]

I cannot stress the importance of number 1. Not only is it free money in terms of an employer match program, but it's TAX FREE money!!! That means your $50 contribution is really $62.5!! That just reminds me of how much I hate how high our taxes are....

[MasterPo]

The above poster is correct.

That's yet another great financila myth all too much propogated these days: That a 401k is ONLY worth while IF your employer matches too. And then only up to the matching percentage.

Even w/o a match at all a 401k is a great idea. It's the only easy tax reduction/tax shelter the average-Joe has left (so far).

[Foobarista]

If you have decent stuff to invest in, I agree you should max out your 401K. But many companies, particularly small ones, only offer overpriced garbage funds. If this is the case, invest in the money market fund and lobby your boss for a better 401K plan.

This can actually work - it did in a company I worked at a couple years ago. The problem in little companies is their CEOs may not be terribly knowledgeable about finance, and many "cheap" 401K plans are subsidized with fund fees. I helped our CEO research a plan that had some index funds with lower fees and he switched the company to the new plan.

[MasterPo]

Foo - Even money put into a short-term bond fund or a money market fund is worth it IMO because of the up-front tax deduction/shelter.

[Old Limey]

You should always put the maximum in a 401K plan.

There are many advantages:
Company match
Dollar cost averaging
Tax deduction
Compounding over many years

I regard my IRA as the best money I have because I can invest it any way I like and there are never any capital gains to pay. Mine is not a Roth so now that I am over 70 I do have to pay taxes on the mandatory annual transfer I make into my taxable account. There are also some advantages of IRAs when you die, if you leave them to younger relatives they become what is known as a Stretch IRA and the younger person, with a greater life expectancy can stretch the withdrawals over a longer period.

Most 401K plans offer some conservative income funds as well as aggressive growth funds.

[Bad_Brad]

The company I work for today does something unusual with its new hires.

We intentionally have nothing ready for the new hire when he starts work on day one. Nothing. Nada. Zip. Other than an office, desk, and PC. It's the first test of a new employee's initiative and resourcefulness. They either sink or swim. The employee has to take the onus to get things set up. That means talking to people, networking, finding out who does what in the organization, learning things, etc. My employer does not want employees that sit back and wait for someone to hold their hand. Some new employees have no problem with it and some new employees have quit on the first day because of it.