Don’t Make These Financial Mistakes When You Start A New Job
It’s exciting to start a new job or get a great raise! Everyone wants a little time to savor the experience and enjoy their new status. While you are thinking about how great your new position is and how much the new income is going to help you, take a minute to evaluate the choices you are making so you can avoid these common financial mistakes people make when they get a new job or raise.
Immediately making a big purchase
I remember my first big promotion in my job. It came with a huge chunk of change that I never had before. I was so excited and felt so rich in that moment that I went out and leased myself a pretty cool sports car that came with a hefty monthly payment. However, with the new raise, I figured it would be no problem. It was okay at first but then there were repairs, more expensive auto insurance and extra pricey gas (premium only) that I had not accounted for. Before I knew it, any of the extra income that I had gotten from the promotion was going into that one big purchase, leaving me right back in the same tight spot as before.
The moral of the story here is — don’t rush out and immediately make a big purchase like a car or a home. Wait and see what that raise means to your monthly income and research all the costs associated with the purchase beyond just the main ticket item to see if you can actually afford it. And here is a novel idea: why not just save this raise for a while — say, six months?
Turning to credit.
While it would seem that people would turn to credit when they don’t have enough money, the most common behavior is to go get more credit when starting a new job or getting a raise. It must be the feeling that since they have more money, they can spend more money upfront and pay for it later when that new paycheck comes. However, it’s a huge financial mistake to get caught up in the web of credit card companies that offer you rewards, mileage and points just because you think you can now afford to use credit.
This financial strategy should only be used if you can pay off the item within the same period so as to not incur interest charges or carry a running balance. Don’t turn to credit when you get a new job. Instead, know that you most likely can save up for that item faster with that larger paycheck now on its way. – Entrepreneur
More Financial Mistakes To Avoid
Being wise and stepping back to be sure you want to make the choices you are about to make can save you financial headaches and possible heartache for years to come. Here are two more common financial mistakes that you want to avoid the next time you get a great promotion, raise or new job!
Leasing a new car
Buying or leasing a new car is often at the top of a priority list when someone gets a raise or starts earning more money. A nice luxury car makes many people feel that they’ve arrived – and done so in style!
However, consider the pros and cons of taking on any type of auto loan or lease agreement.
Don’t make the impulsive choice to get a new car solely because of a pay increase. There’s no guarantee that you will still have that job a year or two from now. But you likely will still be responsible for paying off that car loan or meeting the auto lease term — regardless of your employment status.
Ignoring your budget altogether
Whether you’re earning more money or getting a pay cut as you start the new position, make sure you’re adjusting your budget to account for the change in your financial status.
Take the time to rework your budget if necessary and factor in additional commuting costs, work-related food expenses, and the cost of a new wardrobe.
For those who’ve relocated for a new job, it can be costly to move from one state to another, so take these expenses into account as well.
Remember: all of these expenses will be part of the “cost” of having your new position. – Ask The Money Coach
When you got your last job did you make some financial decisions you regretted later?