So you got a new job. Congratulations! Pop some Champagne, and draft that resignation letter. But once the bubbly buzz wears off, you might want to start thinking about financials you haven’t considered yet. Maybe you have a new higher salary — to which we applaud you. But before you start spending freely, did you know there are a few hidden costs of changing jobs that could actually take your money?
Job hopping is common. If you’re happy in one place now, you’ll probably start feeling antsy in a few years. The Bureau of Labor Statistics lists the average employee tenure at the same company as 4.2 years as of January 2016, declining steadily each year.
Rational judgement is often clouded in the excitement of career transition. The responsible human will consider all options before making a final decision. Let’s delve into 15 unexpected costs of changing jobs that could send your career flying off the rails into a deep financial hole.
1. Reduced benefits
Sometimes your new employer’s benefits package is different from your current employer, which affects your paid time off, retirement, and health care. Casual dress codes and higher salaries don’t hold a candle to other perks, such as health insurance and other key benefits, for most employees, according to a recent Glassdoor survey.
Before you accept a new opportunity, take time to understand the details of your health coverage and how much those minor changes will cost you. Most employers contribute a substantial portion of the premiums. But a new plan could mean higher premiums or annual out-of-pocket costs for you.
Next: The job hunting expenses that are not tax deductible
2. Taking time off to interview
It surely will cost you both time and money to interview with a new company. There’s usually no way around wasting a PTO day for the job search. Certain job hunting expenses are tax deductible — but only when you’re seeking new opportunities in the same profession. Switch to a new career, and the cost of resumes, utilizing a placement agency, phone calls, and traveling to interviews are not deductible.
Next: How long will it be until your next paycheck?
3. Payday delay
Onboarding with a new company is super exciting, especially if you’ve received a pay raise as a result of your transition. But one cost of changing jobs that most people don’t account for is a longer-than-normal gap between pay periods. Although a longer pay period makes for a heftier check, it also means budgeting for a longer lapse in income. You might have received weekly or biweekly paychecks at your previous job, but during the hiring process you often join the team in between pay periods. Some accounting teams will roll over that pay until the end of the next period when this happens.
Depending on timing, it could also be a while before you receive a full paycheck for two weeks’ worth of work. Families should consider these financial anomalies to avoid potential hiccups during the transition.
Next: How’s that new retirement plan?
4. Inferior retirement plans
All retirement plans are not created equal. Depending on your new company’s retirement plan, you could end up losing if you get stuck with a plan that offers fewer investment options than you’re used to. If it doesn’t offer a 401(k) match, you’ll lose out on valuable time to grow your savings nest egg.
Small differences in package plans might seem harmless but could actually make a big difference over the course of a career. A $50,000 annual salary with a 3% employer match equates to $1,500 per year in extra retirement money. Are you willing to give that up in exchange for a new job title?
Next: The dark side of raises
5. Lifestyle inflation
Your initial reaction to accepting a raise with a new job might be to splurge on something big you’ve had your eye on. Before you start increasing your spending habits on things, such as a boat, a newer car, or home renovations, consider other actions more responsible. A higher salary means greater retirement contributions and more ways to pay off any existing debts. Your gut reaction to keep up with the Joneses with this new income could hurt you more than initially intended.
Next: Health insurance caveats
6. Health insurance changes
Your new employer offers health insurance, right? In addition to considering deductibles, you must make sure your current medical provider is covered. Even if your benefits package is suitable, there’s usually a 30- to 60-day grace period for your benefits to kick in, which could force you to spend extra money out of pocket during that time. Or schedule additional appointments before leaving your other job to help account for the impending lapse in coverage.
Next: The difference between working in San Diego and Atlanta is significant.
7. Cost of living
The cost of living differences nationwide can be a huge financial factor many job seekers fail to consider. Some states have a higher cost of living than others. Cities do, too. So it’s entirely possible for the new job to carry additional hidden costs if it means living in an area where food, housing, and taxes are higher than what you’re used to. Before you accept any seemingly enticing offers, crunch the numbers to ensure your new salary can handle the changes in daily living expenses.
Next: Drive-time change
8. Longer commute
One of the most common costs of changing jobs is an added commute expense. If you’re one of the lucky few with a short — or nonexistent — commute, then we salute you. The rest of America, however, will deal with a 26-minute ride to work, costing $12 daily, on average. You must decide whether your new commute will cost you more or less than before in both time and money. Luckily, the IRS allows you to deduct standard business mileage each year. The 2017 rate is 53.5 cents per mile.
Next: An unfortunate circumstance most don’t plan for
9. A lapse in employment
Unfortunately, many job seekers don’t begin the hunt thinking they’ll be out of work for such an extended period of time. But suddenly, it’s been months, and you’re no closer to a full-time gig than you were last month.
Budgeting for a lapse in employment, and thus a lapse in pay, is not always the foreseeable course of action. Even if you find an interested employer right away, the interview process can take weeks, meaning you won’t be officially on the payroll for even longer. This is where emergency savings comes in. Being prepared to handle this unexpected cost of changing jobs will help decrease your anxiety throughout such a stressful ordeal.
Next: The risks of losing PTO days
10. Less paid time off
Some companies offer more generous vacation packages than others. If your new job offers less than what your accustomed to, you might get stuck taking a few days off unpaid. Or you might not be eligible for PTO at all — including sick days — until you’ve been with the company for a certain number of months.
So when a nasty bout of the flu kicks in, you might be forced to lose a few hundred dollars for each day you’re out of the office. Consider negotiating this perk during the offer stage if you envision paid time off to be a problem in the future.
Next: What’s covered in relocation?
11. Relocation costs
Some relocation costs might not be covered in your employer negotiations. So this unexpected cost of changing jobs has the potential to set you back substantially.
While employer relocation budgets have been decreasing each year, nearly 59% of employers still offer full reimbursement. Others only offer some form of compensation, such as packing all items and transporting cars, according to Atlas Van Lines. Don’t be afraid to ask (or negotiate) for additional expense coverage, so you’re not stuck funding the cost on your own.
Next: How much that business casual attire will cost
12. Wardrobe expenses
New wardrobe expectations can be another unanticipated cost of changing jobs for many reasons. Those making an industry change — such as remote employees transitioning into office environments — will need to put away the jeans and break out new business casual outfits. A relocation to a different part of the country might require a complete wardrobe overhaul to account for other climates. And recent graduates must build an entirely new professional wardrobe that differs from their casual classroom attire. Unless a standard uniform is required, most employees won’t cover these large expenses, forcing new employees to fund this aspect themselves.
Next: Salary changes
13. Salary changes
Are you going to earn more or less in your new career? Maybe you took a job that provided increased flexibility but offered less pay. The decision to change careers can often stem from reasons beyond salary and benefits. If the money isn’t important, you must still factor the new pay into your monthly expenses. If the numbers seem a bit tight, you might want to reconsider — or find other areas to cut back, which could require big lifestyle changes from the whole family.
Next: After-hours requirements that will cost you big time
14. Social engagements
Another forgotten job-related expense is the money spent on social engagements. Lunch with the team every day? That’s money out of pocket. The happy hours you get guilted into after work? Money. Even the networking or marketing events your company participates in could mean extra dough allocated for your attendance. Some engagements aren’t mandatory, but others are. And depending on your profession, they can be more common than you wish to believe. Make sure you’ve accounted for these extra costs in your new budget.
Next: A common cost for new employees
15. Uncompensated training
Taking additional time to earn new credentials or complete new courses are common in tech, health care, and other fields. New employees are often expected to complete training within a set time frame upon hiring. It’s a welcome ask for those looking to further the knowledge and expertise in their careers — if your employer pays for it. In most cases, it will. But you’ll definitely want to confirm these details, so you’re not duped into footing the bill for training on your own — especially when the training takes place after hours.
Follow Lauren on Twitter @la_hamer.