If you are starting a new job; you probably have lots of mixed feelings right now. You may be a bit anxious about how well you will be able to do the work, and whether you will fit in with the people that already work there. There will be new daily routines, such as regular work tasks, and logistics such as your commute to work if you are office-based.
And of course there is a lot to look forward to as well. Hopefully the new job will be a good career move for you, with interesting things to do, new people to meet, and opportunities to learn new information and skills.
But for most of us, one of the key motivators for changing jobs is financial. So hopefully your new job will also mean a pay increase and/or additional benefits for you. And if that’s the case, you need to make sure that you make the most of them from Day 1. It can be easy to feel overwhelmed with everything when you start a new job, and fully intend to sort out all the financial stuff later. But if you make the effort to do it straight away, it can reap dividends for months and years to come.
Let’s take a look at five tips to make the most of the financial benefits of your new job.
It’s one of those weird facts of life that you think your finances will be ok if you could only have an extra so much per month. So for example, if your monthly budget always seems to be £100 short, in theory it would be ok if you just had that extra £100 per month, right? But if circumstances change and your income increases by £100, within a couple of months you seem to be in exactly the same situation you were in before.
So if you get a pay increase, our first tip would be to save as much of it as you can. If there is an amount you definitely need for your monthly budget that’s fine. But make sure you put at least some of the increase into a new or existing savings account so that your savings start to build. Otherwise your extra money will just get absorbed into general spending and you won’t feel the benefit.
When you start a new job, you should also automatically be enrolled into your employer’s pension scheme if you earn more than £10,000 per year and are aged between 22 and state pension age. In a typical occupational pension scheme your employer will contribute at least 3% of your salary into your pension.
As well as this, it is worth considering making extra payments into your pension – known as AVCs (Additional Voluntary Contributions). Not only will this increase the value of your pension, but it also means that you will pay less tax as pension contributions are taken out of your salary before tax. So it is an extremely effective way of saving money for the future.
And as well as your employer’s pension scheme, you could also consider taking out a private pension. You can make payments into a private pension either on a regular basis or by occasional lump sum. And just like AVCs into an occupational pension scheme, private pension payments are usually eligible for tax relief.
The advantage of having a private pension as well as your employer’s pension is that you can access it earlier than state pension age (currently at age 55 but this is likely to change to 57 from 2028). When you access a private pension you can withdraw up to 25% of the value tax free which could either fund something like a dream holiday or house renovation – or provide a regular income if you want to retire early.
Make sure you fully understand what benefits your employer offers its staff, and make full use of them. Some examples of typical employer benefits are below. If you are already paying for any of these options personally, now is the time to transfer to your employer’s benefits, cancel your existing payments, and save more money in the process:
If you are office-based, check whether your employer offers anything to help with the cost of this. For example, some employers offer season ticket loans so that you can buy an annual ticket up front and repay them on a monthly basis : this would work out cheaper than buying a monthly ticket yourself.
If you have to travel a lot for work, make sure you understand what expenses you are able to claim back from your employer. They will usually cover transport and accommodation costs, and also spending – for example on food – up to an agreed level.
If you need a car for work, and your employer provides one, you may need to make the decision about whether to take a company car from them or a cash allowance. There are pros and cons both ways to this decision. For example:
So if your new employer offers company cars, think through carefully what would be the best option for you in terms of your personal needs and your financial position.
If your new job is either completely or partially home-based, there are various expenses that your employer should cover. For example:
Make sure that you know what is on offer and that you take full advantage of this. It can sometimes feel a bit uncomfortable to ask, but you need to do so to ensure that you are fully equipped to do the best job you possibly can, and that you are not out of pocket in the process.
We hope that the information in this article helps you to make the most financially of your new job. Good luck! And if you need any additional funds for anything over and above what your employer is providing, remember that Munzee offers personal loans online that may be able to help.
Check back here soon for more financial and lifestyle tips from Munzee Loans.
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