A new job is an exciting step in anyone’s life, whether it’s a first after school and summer job at the local water park or a move to become the CEO of a Fortune 500 company. Proper financial and estate planning are important in any stage of life and can help protect the future you’re working to create.
Here are a few key areas to consider whenever you go through a life transition.
A Comprehensive Budget
Whether it is your first job or a step up in responsibilities and salary, it is a good time to review your budget. It is easy to look at a paycheck and imagine all the things that money can buy without taking into account expenses and savings goals.
When creating your comprehensive budget, pull out taxes first. Next, consider all of your nonnegotiable expenses. Then, take a look at what you have left. How much can you put away for retirement? Finally, after deducting taxes, expenses, and savings, you are left with your discretionary income.
A financial professional can advise you on how best to invest your money and how much money you need to invest in order to meet your future financial goals. An increase in income opens up new financial possibilities such as early retirement. Decisions you make now can impact your lifestyle both now and in the future.
If your income has decreased, a financial professional can help you maximize the use of your hard-earned money.
Proper Insurance Coverage
A new job may mean that a move is in your future or purchasing a home or condo. You may need to relocate or have a longer commute. Each of these has inherent expenses, such as buying a car or purchasing gas.
Unfortunately, the down payment on the house or car is not the only expense associated with these major purchases. These expensive items need to be insured.
Do you have any dependents that rely on you for financial support? Your loved ones need to be cared for in case something happens to you. In this case, life insurance may be a necessary expense. If your salary has increased, you may need to re-evaluate your current life insurance coverage. You may even need to purchase an additional policy beyond what your employer provides.
You may also need to purchase disability insurance to help support yourself and your loved ones if you become disabled and cannot work. A licensed insurance agent can help you assess your current situation and craft a comprehensive strategy to cover all of your insurance needs.
An Income Tax Strategy
A first job may be the first time you might see withholdings for state and federal income taxes, Medicare, and other similar expenses. It can be a little surprising how much of your income is deducted for these expenses. If you receive a raise or a promotion, you may find yourself in a new tax bracket. An experienced tax advisor can help in either case. They can walk you through the tax process and help you plan your deductions, so you are not surprised with a large end-of-the-year tax bill. They can also discuss any tax credits or deductions you may be eligible for, as well as the advantages of itemizing your deductions.
Basic Estate Planning Deductions
A new job or a change in employment is also an excellent time to review your estate planning documents. A new position can affect your stream of income and purchasing habits. It may offer new employee benefits options such as life insurance, disability insurance, health insurance, or a retirement plan.
All of these changes impact how you plan for and protect your future and the futures of your loved ones. Estate planning is not only for the wealthy. It is an important process for anyone who has people relying on them.
We are here to help you plan for this exciting transition in your life.