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10 Financial tips to consider during a job change

Have you considered moving jobs recently? Did you think of how it might affect your personal finances? Changing jobs is not just about getting a higher salary, but rather about many things that can affect your financial situation in the long run. When considering changing jobs, avoid short-term gains, and remember to keep the following tips in mind regarding your personal finances.

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1. Higher salary shouldn't be the only reason
2. Timing
3. Negotiating your Cost to Company (CTC)
4. Pricing yourself out of the market
5. Performance evaluation criteria
6. Notice period
7. Form 16 and tax issues
8. Shifting your PF balance and Superannuation
9. ESOPs
10. Insurance

1. Higher salary shouldn't be the only reason: Often the stimulus to move jobs is a higher salary, with little regard for quality of the work, the employer's brand name, career prospects, the potential for enhancement of skill level and opportunity to assume more responsibility. Don't totally ignore these soft issues just because you are getting a higher salary offer.
2. Timing: Candidates often argue that "I am just about to get my annual appraisal and my salary is expected to go up by 20%, so if I move to your organization, it will be for at least a 25% salary hike." If you are so confident about a salary hike, and are happy at your current job, why move at all. If you do want to move for other reasons, time your move such that you have your increment in the bag, and have a better negotiating ability in an interview.
3. Negotiating your Cost to Company (CTC): Even if the actual CTC is the same as your previous job, structure your CTC so that your cash in hand can be higher than what it might have been at the previous job. This might be particularly important given the new rules announced in the Budget in July 2009 under which fringe benefits offered to you are now going to be taxable in your hands as perquisites. Understand how you can maximize your take home pay, because that is what matters at the end of the day.
4. Pricing yourself out of the market: Today there are several junior employees in organizations with very little experience but with high CTCs because of having moved numerous jobs in rapid succession. They don't realize that the high salaries they are getting are not usually because of their performance, but often because the base level has gone up every time they have changed jobs. But without a commensurate increase in their experience or skill level, there will come a time when they could find themselves at a dead end or priced out of the market. Employers want staff that can add value to the organization, and not just get paid a high salary because that is the expectation for that industry.
5. Performance evaluation criteria: Understand the basis of your performance evaluation in your new job, and preferably have the key performance targets given to you in writing so that there is no ambiguity at the year-end review at the time of your bonus payment. Don't make job change decisions in haste without understanding whether what is expected of you is realistic or not. Stretch yourself in the new job to develop skills and gain experience, but don't set yourself up for failure.
6. Notice period: Respect the notice period owed to your current employer. Don't make a short-term decision to abandon your current job without any notice - it can come back to hurt you if you acquire the reputation in your industry of someone who does not respect common professional courtesies. See if you can buy out your notice period from your employer.
7. Form 16 and tax issues: At the end of the financial year take your Form 16 from your previous employer and share that with your new employer, so that the right amount of tax is being deducted and that you are not getting more deductions than you are entitled to. Remember to also take a no dues certificate, relieving letter, salary slips for the duration you have stayed.
8. Shifting your PF balance and Superannuation: This can be a big administrative issue for you if you have not moved over your retiral accounts to your new firm. Take care of the necessary paperwork to facilitate a smooth transition of your account to your new employer.
9. ESOPs: Don't leave a lot of value on the table if you have worked hard to earn incentives. If your current employer gave you ESOPs, understand if you are eligible to encash these at all. If you are giving up a lot of value because not all your shares have vested, you might want to ask your new employer to offer you similar upside as an incentive to move to the new job.
10. Insurance: If your current employer was offering you and your family life and health insurance coverage, recognize that you might need this from your new employer as well. Do not remain uninsured during the transition period from one job to another. Accidents and emergencies come unannounced and don't put yourself or your family at risk by not having appropriate insurance coverage. Additionally, understand what are the insurance benefits you will be eligible for at your new job and whether you will have to serve for a minimum few months before your coverage kicks in.

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