Four Financial Moves You Shouldn’t Overlook
Starting a new job often brings more than a change in your daily routine. Whether you’re accepting your first professional position, advancing your career, or moving to a different employer, your financial circumstances may change considerably. Along with a new salary and benefits package come important decisions about protecting your income, your family, and your future.
At Skvarna Law Firm, we encourage clients to view career changes as opportunities to review their financial and estate planning arrangements. Although a new position may demand most of your attention, addressing four important financial matters can help establish a stronger foundation for the years ahead.
1. Review Your Budget and Financial Goals
A new salary can change how you manage your finances, particularly if your income increases or your compensation structure changes. Before adjusting your spending habits, however, consider how your new position affects your existing obligations and long-term financial goals. Reviewing these details early can help you make deliberate decisions rather than allowing additional income to disappear into everyday expenses.
Start by comparing your anticipated take-home pay with your current expenses, debts, and savings. Additionally, consider whether changes in commuting, childcare, relocation, or other employment-related costs will affect your budget.
Important considerations include:
- Take-home pay: Calculate your income after taxes, insurance premiums, and retirement contributions.
- Emergency savings: Maintain funds for unexpected expenses or employment interruptions.
- Retirement planning: Evaluate your new employer’s retirement benefits and contribution options.
- Long-term goals: Consider how your income supports homeownership, education, and future financial security.
Because financial priorities change throughout your career, a qualified financial advisor can help you develop a strategy that reflects your current circumstances.
2. Evaluate Your Insurance Coverage
Changing employers frequently means changing insurance benefits, making this an important opportunity to review your existing protection. Although health insurance may receive the most immediate attention, life insurance and disability coverage also deserve careful consideration, especially when family members depend on your income.
For example, your new employer may offer different life insurance benefits than your previous employer, potentially leaving gaps in coverage. Likewise, disability insurance can provide financial support if an illness or injury prevents you from working for an extended period.
As you evaluate your coverage, consider whether:
- Your life insurance adequately protects your dependents.
- Disability benefits would replace sufficient income.
- Changes in housing or commuting require adjustments to other policies.
- Existing coverage remains appropriate for your financial responsibilities.
Additionally, review the beneficiaries named on your life insurance policies. Because marriage, divorce, children, and other life changes can affect your intentions, outdated beneficiary designations may produce results you no longer want. A licensed insurance professional can help evaluate your coverage while an estate planning attorney can help coordinate beneficiary decisions with your broader plan.
3. Revisit Your Income Tax Strategy
A new position can also change your tax obligations, particularly when your salary, bonuses, or employment benefits differ from those at your previous job. Consequently, reviewing your tax situation early may help prevent unexpected liabilities when filing your return.
If your new position comes with higher compensation, your marginal income tax rate could increase. However, moving into a higher tax bracket doesn’t mean your entire income will be taxed at that higher rate. Instead, the higher rate generally applies only to income within that bracket.
You should also review your federal and California withholding elections, particularly when changing jobs during the year or receiving compensation from multiple sources. Furthermore, retirement contributions, available deductions, and potential tax credits may influence your overall financial strategy.
Because tax rules and individual circumstances vary, consulting a qualified tax professional can help you make informed decisions. Coordinating tax planning with your retirement and estate planning goals can also help ensure that today’s financial decisions support your long-term objectives.
4. Review or Establish Your Estate Plan
Although budgeting, insurance, and taxes receive considerable attention during career transitions, estate planning is frequently overlooked. Nevertheless, a new job may introduce retirement accounts, employer-sponsored life insurance, and other financial benefits that should be coordinated with your existing estate planning documents.
If you’ve never established an estate plan, a career change provides an excellent opportunity to begin. Contrary to popular belief, estate planning isn’t reserved for wealthy individuals or those approaching retirement. Instead, it helps protect your wishes, designate trusted decision-makers, and provide direction for your loved ones if you become incapacitated or pass away.
Depending on your circumstances, a California estate plan may include:
- Revocable living trust: Provides instructions for managing and distributing assets and may help properly funded assets avoid probate.
- Pour-over will: Addresses assets remaining outside your trust and can nominate guardians for minor children.
- Durable financial power of attorney: Authorizes someone you trust to handle designated financial matters if you become unable to do so.
- Advance healthcare directive: Documents healthcare preferences and identifies someone authorized to make medical decisions when necessary.
- Beneficiary designations: Coordinates retirement accounts, life insurance proceeds, and other assets with your overall estate planning objectives.
If you already have these documents, reviewing them after significant employment or financial changes can help ensure they still reflect your intentions. Additionally, because certain accounts transfer directly to named beneficiaries rather than through a will or trust, reviewing those designations is an essential part of maintaining a coordinated estate plan.
Make Your Career Transition Part of Your Long-Term Plan
Starting a new job offers an opportunity to strengthen your financial future, but increased earnings and improved benefits represent only part of the picture. By reviewing your budget, insurance coverage, tax strategy, and estate planning documents, you can better protect what you’re working to build.
At Skvarna Law Firm, we help individuals and families throughout Glendora, Upland, and surrounding Southern California communities develop estate plans that reflect their changing circumstances. Whether you’re establishing your first estate plan or updating documents following a career transition, we can help you understand your options and coordinate your planning with other trusted financial professionals.
About Skvarna Law Firm in Glendora and Upland, California
Skvarna Law Firm operates from Glendora and Upland, California, serving clients throughout San Bernardino County, Los Angeles County, Orange County, and Riverside County, including Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, San Dimas, La Verne, Covina, West Covina, and surrounding communities. The firm helps individuals and families with estate planning, trusts, wills, probate, and elder law matters, providing personalized legal guidance designed to protect assets, prepare for the future, and help clients navigate important life transitions.
