Let’s face it, the days of spending the majority of your adult life in the same job, working for the same company are behind us.
The sheer array of online jobs boards, social networking sites and employment apps mean we have more access to alternative career opportunities than ever before. So it’s no surprise that many of us turn those opportunities into action. But before you pack up your desk and say your farewells, here are a few tips to help you make your next career change a smooth one.
1. Consolidate your super
A common mistake people make when changing careers is allowing their new employer to pay their super into the employer’s default account. This is how a lot of people end up with as many super accounts as jobs on their resumes. By consolidating your accounts or ensuring you nominate your preferred account when you start a new role, you can cut down on fees and put the power of compound interest to work for your money.
2. Salary sacrifice to super and set yourself up for retirement
Starting a new role is a great time to speak to your employer about putting more money into your super. The beauty of this strategy is you pay less tax because your super contribution is taxed at a maximum rate of 15%. This could be much better than your marginal rate, which may be up to 47%*. You can even use this strategy for any bonuses you receive.
Consider the caps –Before you decide to invest more in super, you need to be aware that caps apply to different contribution types and penalties may be payable if you exceed the relevant cap. You also need to consider that super contributions generally can’t be accessed until you retire. So if you are saving for something else, you’ll need to consider other options.
3. Check your new pay cycle and keep some savings handy
While regularly contributing to a savings account is always a good idea, having a cushion of savings available when you change careers can help you transition from a fortnightly pay cycle to a monthly pay cycle without having to subsist on a diet of instant noodles.
4. Readjust or create a budget and stick to it
A new role often means more money and that can lead to more temptation for frivolous spending. While no one’s suggesting you become a Scrooge, by amending your existing budget, or creating one from scratch, and sticking to it, you can enjoy some discretionary spending while achieving your financial goals.
*Includes a Medicare levy of 2.0% in the current financial year 2014/15.
Source: MLC.
