5 Financial Mistakes to Avoid When Changing Jobs
July 01, 2020
Many professionals switch their jobs to get a better opportunity, good hike, explore new workplace or others. Changing career comes with a pay cheque. You have to make sure that you don’t commit any financial blunder that will land you in trouble. Read further to know what financial mistakes you should avoid.
Climbing the ladder of professional growth is every working professional’s goal. Gone are those days when people use to stick to one career for the whole life. Today, everyone expects to earn quick money, settle for a good lifestyle, seek better hike, better career prospects, face new challenges, etc.
Being secured and stable in your career also matters the most as you get close to taking up responsibilities like marriage or starting a family. However, one must note that changing job comes at a price. You cannot decide impulsively. You have to think in terms of personal finance as well. Let’s us help you out with personal finance tips.
Below are Some Common Financial Mistakes One Should Avoid While Changing Jobs:
- Applying for Credit: It is fine to borrow credit/loan when you’re in urgent need of cash, but some apply for a loan as soon as they change jobs. Just because you get a good pay hike, it won’t be easier for you to afford and repay the loan amount. There is a financial risk. You should get a loan only when you know you can pay the amount without incurring interest charges.
- Not Spending Wisely: If you have changed jobs and got a pay hike, which is way higher than you expected, then you shouldn’t think about spending beyond a limit. You will be excited about using your Credit Card to buy a pricey or an expensive item, but it will only add up to your financial woes. Hence, transact smartly using your Debit Card only and don’t rush to make a big purchase immediately.
- Not Assessing Tax Bracket: In India, it is mandatory to pay taxes as per the income tax slabs. You should know how much taxes you will be liable to pay when you get a pay hike. It shouldn’t be a surprise for you when the taxes are due in April. Lack of understanding of taxes can stop you from availing of any tax benefits, which otherwise could help to build your savings.
- Not Saving for The Future: When you find a new job, there is a short-term mentality that you will have enough surplus cash to deal with emergencies or save for the future. The fact is, as your monthly income rises,you tend to experience a change in your purchasing power. This ultimately pushes your demand needs and increases your monthly expenses. This is the biggest financial mistake which everyone should avoid. With a change in the job, you should focus on planning for your retirement and save enough to tackle medical emergencies.
- Failing at Budgeting: Every time your income rises, your monthly budget should also change. However, we fail to do so, which leads to mismanagement of money. With a revised income, you should always set a budget target to meet financial commitments properly.
Financial mistakes are prudent when you get a promotion or switch to a new job. You can fix those errors now, so that you’re in the way of creating better wealth for you and your family.
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