A new job brings with it both opportunities and challenges, many of which will impact your finances. Here’s some of what you must factor in to make the shift rewarding and easier on your pocket.

Before you decide Take a comprehensive view of the financial implications of your decision. Evaluate your income, expenses, savings, loans, insurance and investments — how they will be impacted by the change and if you can handle it. Is the reward, both monetary and non-monetary, worth the risk of getting out of your comfort zone? If yes, take the plunge.

Some of us may not even mind taking a pay cut to follow our dream job. Power to you! But chasing your dream should not put your financial position in doldrums. Try to make the change with the least possible disruption — showcase your talent and skills and negotiate well.

If you are moving cities for the new job, the relocation can pinch your pocket — accommodation, travel, children’s education et al . Check if your new employer will chip in.

Negotiate well For most of us, better pay is often a key factor in a job change decision. So, ensure you are getting a good deal. Break down the cost-to-company (CTC) components. Ideally, fixed components of the CTC, such as Basic, Dearness Allowance and House Rent Allowance should form a sizeable portion of the total. This will ensure certainty of cash flows.

Some components of the CTC, such as Employee Provident Fund (EPF) and gratuity do not translate into regular cash benefits but will add to your long-term kitty. That’s not a bad thing, but note that you become eligible for gratuity only if you are with the employer for at least five years.

Try to make your compensation package as tax efficient as possible. A higher component of allowances and reimbursements which don’t suffer tax can make a neat difference. Read the fine-print. If you quit in quick time, you could stand to lose out on that joining bonus and relocation expenses provided by the new employer. Get the terms and conditions in writing from the new employer. If there is a mismatch with what was discussed verbally, have it resolved before you sign on the dotted line.

Before you quit Claim your gratuity benefits. Tie up loose ends. Claim your allowances, such as telephone and medical reimbursements, and encash your leave. Collect all your payslips — these may come handy in the future. Also, ensure that you settle all dues with the previous employer.

Some important documentation, such as Form 16, may not be immediately available. Intimate your updated address so that pending paperwork reaches you.

Do not burn your bridges; your past employers will act as references. Also, your full and final financial settlement will be paid only a few weeks after you leave!

A job change could put pressure on your immediate cash flows. Make it a point to have between 8 and 12 months of expenses as cash in a contingent fund. This is especially relevant for those servicing loans.

Don’t rush to close your existing bank account as any pending payment will get credited here. Your existing EMIs may also be linked to it. For continuity, enquire if the new employer too can credit salary to this account.

But yes, keep the account well funded. Else, bank charges, starting from minimum balance to failed debit instructions could come to bite.

Between jobs and after It’s always a good idea to take personal life and health insurance covers for you and your family — even if both the old and the new employers cover your back. Personal covers are essential to shield you when you are in between jobs. Share the income received from the previous employer and investment details with your new employer.

This is to ensure that your past income and investment details are taken into account by the new employer while deducting monthly tax. Transfer the EPF balance to the new employer by intimating the Universal Account Number (UAN).

If EPF is not offered, then withdraw. Note that it’s exempt from tax only if you have been employed for a period of five years or more. EPF accounts that have been inoperative for 36 months don’t earn interest.

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