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Make These 5 Smart Money Moves When Starting a New Job

By Paul Sisolak
April 3, 2017

Switching jobs in the current economic climate is no small feat.

It’s not just that you caught your new employer’s attention with your resume or sealed the deal with aplomb — it’s that you beat out the competition for the very job that is now yours, and yours alone.

Hopefully, an upwardly mobile shift in your career comes with a raise. If so, you may not feel much incentive to make any financial changes, except for a celebratory spending spree. Yet, that higher salary is exactly why you should be making important financial changes. Yup, you finally have the means to start building your wealth and mapping out your future.

Before you get ahead of yourself, here are 5 money moves to start making prior to getting your first paycheck:

1. Fine-tune your budget

Segueing into a new job is the perfect time to reassess your budget as your income is about to increase. If you never had a budget before — or a loose approximation of one — this is your chance to take stock of your finances. By doing so, this will help ensure that your spending doesn’t exceed your earnings.

While your earnings go up, be mindful that your expenses may also rise. For example, your new job may require a longer commute and you may need to increase your budget for gas or public transportation. If moving closer to work is in order, take into account moving expenses and the cost to rent a new apartment.

Perhaps you can even maintain your current standard of living and use the extra income towards other priorities, like saving for retirement, an emergency fund, or paying off your debt. Many financial experts tout the 50/30/20 method, dividing your budget into needs (50 percent), wants (30 percent) and savings (20 percent).

Keep in mind that budgeting while looking for creative ways to cut back on spending frees up more cash and makes your extra income go even further.

2. Figure out your tax withholdings

Even if your new position is only your second job, you’re likely to be familiar with the W-4 form. Typically you’ll fill this tax document out on your first day of work. In a nutshell, your W-4 tells your employer how much federal and state income taxes to withhold from your regular paycheck. This, in turn, determines how much you’ll pay — or receive as a refund — during tax filing season each year.

It’s easy to fill out your W-4 without too much thought. But, this time around, try completing the form mindfully, determining in advance the amount of taxes you’d like withheld. Keep in mind that if you have too much taken out of each paycheck, you’ll get a refund. This also means you’ll have less money to live on during the year. If you withhold too little, you may end up owing money when tax time rolls around. To help you sort this out before setting foot into your new office, check out this IRS tax withholding calculator.

3. Connect with a new bank

Switching jobs may mean it’s also time to open a new bank account. The advent of online and mobile banking makes it easier to go about your daily financial business. Mobile banking is also more convenient than regularly visiting a brick-and-mortar bank.

Many online and mobile banking services don’t pass down unnecessary fees to their customers. Chime, for example, avoids the overhead costs that a physical branch location has, and passes those savings down to you, the consumer. Plus, every time you use your Chime card, that purchase is rounded up and Chime deposits the round-up amount into your savings account. Think of it as another little bonus for your bigger paycheck.

While you’re thinking about saving money, you can also set up direct deposit with your new employer. By doing so, you can arrange to allocate a certain portion of your paycheck into the account of your choice. For instance, depositing a percentage of your income automatically into your savings account guarantees that the money will be saved, not spent. This, in turn, helps set you up for financial success at the same time as your career success. Chime makes this savings technique simple, by allowing Members to automatically save a percentage of every paycheck via their Automatic Savings program.

4. Examine your benefits

New hires often need to go through a probationary period — anywhere from 30 to 90 days — before they can begin collecting company health insurance benefits, paid time off, or other perks. During this window, you’ll have plenty of time to take a good look at your employer’s benefits package and determine which plan is right for you. For example, you may need to choose between an HMO or PPO and it’s a good idea to closely evaluate the pros and cons of these different plans. Like your tax withholding, taking the time to figure this out will help you select the right amount of coverage and possibly save money on your monthly premiums.

Talking about benefits, a new job may offer you a new 401(k) retirement plan. You should definitely take advantage of this type of employer-sponsored retirement plan as your tax-deferred contributions build interest until you retire. Your employer may also match your account contributions up to a certain percentage. So, if you invest 5 percent of each paycheck into your 401(k), employers may match up to or near the same amount, effectively doubling your investment in many cases! This should not be overlooked as an employer match is essentially free money.

If your employer does not offer a company-sponsored 401(k) plan, don’t give up there. You’re on the right path simply by asking if this benefit is available. Now you can look into opening your own personal retirement account, like a Roth IRA, to help you build your nest egg and start securing your financial future. With a Roth IRA, you can make contributions up to $5,500 per year, $6,500 if you’re over age 50. While deposits are not tax-deferred, your earnings can be withdrawn tax-free when you turn 59 ½ years old.

5. Check your credit

New job or no new job, it’s always a good time to improve your credit and raise your credit score. Why? Having good credit can improve your chances of being approved for future loans and help you qualify for lower interest rates.

To start: get a copy of your credit report from, or WalletHub. It’ll list your entire credit history, including any delinquencies or debts that can harm your credit score if left unpaid. Make sure to spot any errors or unfamiliar information that can also lower your score. If you find any mistakes, contact the three major credit bureaus – TransUnion, Experian, and Equifax – to dispute them.

While you’re at it, begin using credit more responsibly by aiming to use no more than 30 percent of the available credit on your credit cards. This is sometimes referred to as low credit utilization. If you do this, as well as pay off your balance each month, your card provider and credit bureaus will consider you a responsible borrower.

In general, aiming for a credit score of 700 and higher gives you consideration as a prime borrower. Consumers with scores of 800 or above typically qualify for the best products and rates on the market today.

This page is for informational purposes only. Chime does not provide financial, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal or accounting advice. You should consult your own financial, legal and accounting advisors before engaging in any transaction.

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