Whether you are young and still searching for your calling, well-established in your chosen field, or have made a radical mid-life career change, this is a new beginning...a time of opportunity.
Like the first day of school, when you made sure your pencils were sharpened and shoes shined, you have probably taken some time to prepare for your new position.
There is no better time than now to review several important financial matters. For your convenience, we've provided some suggestions.
Review your financial goals
It is all too easy to adjust our lifestyles to a higher income by looking for opportunities to spend it. Some people make the mistake of adjusting their standard of living to their income, often looking for new ways to spend money — buying that new car they don't need; taking that $5,000 cruise they never gave a thought to before; picking out new living room furniture just because...well, why not?
For example, has this ever happened to someone you know? They are living comfortably on, say, $60,000 a year and then change jobs for a $10,000 increase in pay. Within months they wonder how they ever got by on $60,000. The real problem is that it is all too easy to fritter away even a sizable increase in income, ending up with very little to show for it.
Suggestion: If your new position comes with a bigger paycheck, plan how you will allocate — rather than just spend — that new money to provide maximum value for you and your family. For example, let's say your take-home just went up $500 a month. If you do not need the cash, consider putting all of it toward long-term wealth accumulation. If that sounds too radical for you, split the difference, putting $250 aside and the other $250 into immediate lifestyle enhancement.
If you pay that $250 a month ($3,000 a year) into a financial product which earns a 8% return, you will have a total of $148,200 at the end of 20 years. (All numbers are for illustration purposes only. They do not reflect the return of a specific investment or product; nor do they take into account potential taxes.)
Don't let your medical insurance fall through the cracks.
There is generally a waiting period before you are covered under your new employer's plan. In the meantime, be sure to continue your coverage from your previous employer until your new plan is active.
Decide what to do with vested retirement dollars from your previous employer.
If you take it in a lump sum in cash, you could owe income taxes and penalties. Consult with your accountant or benefits manager at your new job.
Review your life insurance coverage.
One of the key uses of life insurance is to replace lost income if a household's breadwinner dies. The actual amount you should own varies depending on your situation and needs.
You may not need a million dollars of coverage. You may need more; you may need less. The point is that, with changes in your income, now is a good time to review your needs. For a complete analysis of your life insurance program, talk to your professionally trained and experienced New York Life agent. There is no cost and obligation.
Once again, congratulations on your new position. We at New York Life wish you the very best, and we hope our suggestions have been of value.
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