A New Job

So you’ve just accepted an offer for a new job, or received a nice promotion. Congratulations!

With extra money coming in, it’s important to know how to take care of it properly. What are your goals? Does this extra income put you in a good spot to check something off your list? Maybe it’s finally moving out of your parents’ house, and getting your own place. Maybe it’s buying a new car, or maybe it’s saving for something special, or maybe, just maybe, you actually want to start putting more into your long term savings plan.

The first course of action is to look at your budget. What do you mean you don’t have a budget? Something that not many people enjoying facing; it’s actually a great tool that is completely unique to your situation. Knowing what you spend, and where you spend it can make or break your independent financial life.

Budget templates can be found just about anywhere online, in a variety of formats. For our own clients, we offer to send a budget spreadsheet to you at home, or we are happy to go through your cash flow face to face in a meeting.

Now that you’ve got a solid budget to follow, you’re probably already feeling pretty good. The next thing to look at is debt. Do you carry a balance on your credit cards or line of credit each month? Have you calculated how much you’re paying in interest over the long term? With extra income coming in, now is the time to get your debt in check. As a rule of thumb, you usually want to start with your highest interest rate debts first. If you can pay them off quickly with your first few larger paycheques, bonus! Once you have a zero balance, you’d be amazed how much easier it is to maintain that lovely $0 balance each month. Plus, the faster you pay off your debt, the more you can start allocating to a regular savings plan. It’s much more fun to have the freedom to use the money in your bank account for taking a yearly trip, rather than paying hundreds (sometimes thousands) each year in interest.

If you are a proud debt-free spirit (yay!), you are one step ahead. With your increased paycheques, a great idea is to start, or increase, your savings plan. Talking to your Financial Advisor and getting the right advice to your particular situation is key. With bank interest rates so low right now, there may be other alternatives for you to grow your money faster, depending on your goals, time horizon, and risk tolerance. Just because it’s your savings account, doesn’t mean it has to make a measly 0.25% at the bank.

Another thing to consider is what type of group benefits your company will offer (or adjust) with your new job or promotion. Do they have employer matching RRSP options? Do they offer profit sharing? What kind of group life insurance, disability insurance, and health benefits do they offer? All of these things are a huge part of your financial plan, so be sure to ask and share this information with your Financial Advisor.

An increase in your take home cash can easily be swept away without proper planning. It’s easy to head out for dinners and drinks with friends more often than before, buy that new iPhone when it comes out, or other miscellaneous spending without thinking twice. Then, all you have for your new salary is more stuff, or a full tummy. All great, but a good plan can let you have all that, and a lot more!