Published in: Banks | July 29, 2019
Switching Jobs Might Cost You in These 4 Ways
By: Maurie Backman
You might make more money by switching jobs -- but there are costs you might incur as well.
There are plenty of good reasons to move from one job to another. Maybe you’re looking at a better salary, or the chance to score a superior workplace benefits package. Switching jobs could be a smart financial move, but before you make that decision official, remember that you might incur some costs in the process. Here are a few to account for.
1. Paying for health insurance during a coverage gap
If you’ve been getting health insurance through your employer but switch jobs, your new plan may not kick in right away. Some companies force employees to wait a certain amount of time before getting coverage, and if that’s the scenario you’re looking at, you may need to pay for private insurance or COBRA (which lets you retain coverage under your former plan, but is very expensive) out of pocket.
Before you switch jobs, figure out whether you’ll have a gap in health coverage, and if you will, make sure you have enough money in savings to pay for some type of insurance. And don’t even think about going without insurance -- all you need is one accident or illness to wind up with a pile of medical debt.
2. Increased commuting costs
If your new job is farther away from your home than your current one, it may cost you more money to drive there. Similarly, if your new job requires you to pay for parking, or requires a more expensive train or bus pass to get there, that’s an expense you’ll need to account for. Make sure to budget for an uptick in commuting expenses if it applies to you.
3. A different wardrobe
Maybe you’re used to showing up to the office in jeans and a T-shirt. If your new office is far more corporate, you may need to pay for a serious wardrobe upgrade. And that could cost you some money. Make sure you have the cash available to cover that expense, since you’ll need to dress the part from day one.
4. Added childcare expenses
If you pay for childcare in order to work, your costs could go up once you get a different job -- especially if your new job involves a longer commute, longer hours, or is less flexible and doesn’t allow you to work from home. The good news is that most companies offer the option to contribute to a Dependent Care Flexible Spending Account. These accounts let you allocate pretax dollars for qualified childcare expenses, and although they do currently max out at $5,000 a year, that could still help soften whatever blow you may suffer.
Sometimes, changing jobs isn’t about the money, but rather about the lifestyle balance or opportunity. But if your primary motivation for switching jobs is to make more money, think about the costs you’ll incur in the course of taking on that new role, and make sure your salary boost is enough to compensate for them. Otherwise, you may end up disappointed by how your finances look at the end of the day.
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