Look financially before you leap jobs

It’s a phenomenon widely being described as “the Great Resignation”.

With many countries now having removed the tight operating restrictions they imposed on businesses during the COVID-19 pandemic, there’s been a quick ramp-up in economic activity.

That ramp-up has spurred a surge in job vacancies around the world, and enticed record numbers of people to resign from their existing job to take up a new one, often with a better salary package.

Australia has lagged the global trend to date. But many employment experts expect the Great Resignation to accelerate here now that all states and territories are effectively fully open for business once again.

Look financially before you leap jobs

Considerations if changing roles

Probably one of the biggest considerations for anyone changing jobs, or contemplating a change, is financial security.

That’s because changing jobs can potentially place you in a financially vulnerable position.

Budget for any income gaps between when you leave your job and start the new one. 

Also, when you switch jobs, consider that in most cases you’ll be on a probationary period with your new employer.

That period can last anywhere from three to six months, depending on the terms of your employment contract.

And, during this time, your new employer will generally have the right to terminate your contract at short notice.

So it’s important to prepare for that possibility and have a financial gameplan in place.

Here’s a few steps you can take: 

  • A good starting point is to take a financial stocktake so you have a clear picture of your net cash flow after ongoing living expenses, including regular commitments such as mortgage or rent payments.

  • If you have some savings set aside, it’s good to retain them for the time being in the unlikely event that your new job doesn’t work out and you find yourself unemployed.

  • Along the same lines, if you receive any form of payout when you leave your job, including accrued annual leave, it makes sense to put that money to one side until your new role is secure.

 Another consideration is that, if you’re planning to borrow money in the near future, most lenders will want to see you have a stable employment history.

If you apply for a loan soon after you’ve switched roles, especially while you’re still completing a probationary period, they’ll most likely determine you’re a higher risk than someone who’s been in their role for longer. 

Lenders will generally want to see that you’ve been in your role for at least 12 months to ensure you’re able to service the loan, although they’ll take other factors into account such as your total assets and liabilities, your salary package, and your longer-term employment history. 

Maintain continuity and plan

Another key step when changing jobs is to ensure any investment strategies you have in place are not inadvertently disrupted by your move.

For example, if you’re already salary sacrificing some of your pay into superannuation, make sure you set that up with your new employer so your personal contributions continue.

There could also be new investment opportunities from changing jobs.

Review your long-term financial goals and the strategies you have for achieving them.

If you’re receiving more income in your new role, you may want to consider starting up an automated regular investment plan.

That will enable you to put money into different investments at set intervals, which can be used for specific savings goals such as saving for a house, your children’s education, or for other purposes.

If you need help with your investment strategy, speak to us on 03 9553 0271.

Source: Vanguard March 2022

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

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Authorised Representative 298494
Interprac Financial Planning Pty Ltd 

Darryl Jopling

Senior Adviser

I have worked in the financial services industry since 1982 and as a Financial Adviser since 1999.

I have worked for large Financial Planning businesses, Membership based organisations and looked after the financial planning needs of clients within an Accounting Practice before starting my own business.

I am married, have 4 older children and a grandson and I am keen golfer with mixed results like many .

I have been through many of the strategies I talk with clients about myself and with my family.

I have been through the journey of seeing my parents move into Aged care and negotiated the difficulties and pitfalls of understanding the system for them and this gives me an excellent insight into what is required to assist families at this difficult time.

In a previous roll I used to run retirement seminars looking at Centrelink and Retirement Incomes and how to make these work for you. I have helped many of my clients with Aged Care advice when their parents needed to move into Nursing Homes. For many clients I assist them with superannuation, building wealth and protecting their loved ones with insurance.

I am supported by his, Licensee, Interprac Financial Planning’s in-house resources and ongoing technical, systems and training.

I am committed to understanding your needs and identifying strategies and products to help you achieve your goals.

My guiding principle as an Adviser is to design plans which help to provide my clients with clarity of purpose and the opportunity to build a solid financial foundation.
I will take the time to listen, explain things clearly and keep you informed throughout the advice process.

My experience is complemented by professional qualifications including:

  • Certified Financial PlannerTM Professional
  • Diploma of Financial Planning

At Choice Financial Advice we work with you along the way on life’s journey.

Whether you are getting married, starting a family, embarking on the trip of a lifetime, planning to enjoy your years after work or assisting elderly parents with Aged Care and Nursing Home placements, we can help.