People change jobs for a variety of reasons, including a higher salary, better opportunities, family concerns, or a desire to relocate, among others. If you’re contemplating a new job, it’s important to consider whether the situation will also come with new expenses so that you can understand how much money will actually be left in your pocket. The Pennsylvania Institute of Certified Public Accountants (PICPA) highlights some issues to think about when evaluating the dollar value of a new career opportunity.
Will It Cost More to Get There?
You got a job right after college at a company close to your home. Now you’ve been offered a new position at a larger company in a city about an hour away. In making any decision that involves a new location, be sure to factor in the costs of commuting, including gas, tolls, parking and car maintenance, or public transportation fees. Also, be aware that the additional time of the commute may impact other opportunities that could come along for that time.
Will There Be Moving Expenses?
If you’re going to pull up stakes and move to a new location, there are costs to consider here, too. They include moving costs, of course, but also the price of new furniture or appliances and any fees related to renting a new home or taking on a new mortgage. Also consider potential hikes in state and local taxes. If you will have to break a lease or sell your home, take those expenses into account, too. There may be tax deductions available in some cases if you move for a new job but the Tax Cuts and Jobs Act suspended the deduction for moving expenses so ask your CPA for details on what you may qualify for. Finally, will the prices you’re used to paying for everyday expenses be the same? Use online cost-of-living calculators to find out if there will be a difference in day-to-day expenses in your new location.
Will There Be Health Insurance Costs?
Employers currently have a waiting period of no more than 90 days to begin a new worker’s health insurance coverage. If your coverage under your former employer’s plan ends immediately or soon after you leave, that means there could be a gap in your insurance coverage. You may need to buy interim insurance to bridge that gap. Talk to the human resources staff at your current and new employers to find out about the timing details of their policies so that you can plan ahead to make sure you and your family are not left without insurance coverage. If you will have to pay for interim coverage, find out how much it will be so you can factor the cost into your planning. You’ll want to know, too, if the cost of your insurance coverage will rise with a new employer, as well as any other changes in benefits. When doing this evaluation of benefits, make sure you factor in the changes in deductibles and coverage since these can have a big impact on out-of-pocket costs.
Will I Have a Costlier Lifestyle?
If the new job does come with a longer commute or longer hours, that may make it more tempting to pick up coffee, breakfast, or dinner on the run. Splurging a few dollars a day on takeout does not seem like much, but if you spend just $10 a day, five days a week, it will drain $2,600 a year from your checking account. Consider how any small changes
could affect your budget.
Your Local CPA Can Help
If you’re about to take a new job, congratulations! Remember, though, that whenever you experience a change in circumstances, it’s smart to reevaluate your financial situation and determine if any adjustments are needed. Be sure to turn to your local CPA for expert advice on all your financial questions. To find a CPA in your area or for more financial tips, visit www.picpa.org/moneyandlife
Originally published Aug. 21, 2017