Getting a New Job? You May Want to Make This One Move

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  • Many people are pursuing new jobs while the labor market is still hot.
  • If you're switching jobs, you may want to buy yourself protection in case things don't work out.
  • Padding your emergency fund is a good move to make. 

It's a savvy one to make.

Although there's talk of a recession hitting in 2023, right now, the labor market happens to be in pretty good shape. As such, a lot of people are taking advantage by jumping into new jobs in the hope of snagging higher pay, better benefits, and more opportunities. 

But if you're getting a new job, there's one key money move you may want to make first. And while it might seem like a strange one, it's a move that could really pay off.

Boost your emergency savings

You need money in savings at all times to protect yourself in the face of unplanned bills, like sudden home or car repairs. You also need a healthy emergency fund in case you wind up out of a job for a period of time. 

Now, if you're getting a new job, you may be wondering why you need to protect yourself against not having one. But the reality is that new jobs don't always work out as well as we think they might.

Let's say you get a new job that ends up being far more demanding than you expected, to the point where you're left with zero work-life balance. If that schedule isn't sustainable, you may have no choice but to quit or otherwise risk your physical and mental health. And in that scenario, you'd need money in savings to tide yourself over until you're employed again.

Similarly, you might start a job you thought you were qualified for only to discover that's not the case and you're in way over your head. In that scenario, your employer may have no choice but to let you go. And once again, you'd need savings to tap to pay the bills.

How much emergency savings should you have?

As a general rule, it's smart to have a minimum of three months' worth of living expenses in the  bank. But a six-month emergency fund will buy you more protection than that. So if you only have enough cash in savings to cover three months of bills, then you may want to aim a little higher. And if you don't have enough cash for three months of bills, definitely do your best to boost your savings. 

Keep in mind, too, that new expenses can arise with a new job. If your work is rewarding but has you traveling more often, you might need to spend more money to outsource home maintenance tasks in the absence of being home. And if you're putting in more hours on the job, you may need to resort to more takeout and food delivery in the absence of having time to cook. 

These are expenses you could tap your savings for if your paycheck can't cover them. And so the more cash reserves you have, the better off you'll be.

Remember, while the job market is solid now, if a recession hits in 2023, that could change. Don't assume that if your new job doesn't work out, you'll have a replacement job within weeks. If the economy takes a turn for the worse, it could take months to find a new job, and it's important to make sure you're covered financially in that situation.

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