3 must-dos before you start a new job in 2021
New year, new job? Here's what to do before your first day.
The start of a new year can be a popular time to start a new job. As they say, change is as good as a holiday, and starting a new job is an exciting way to get stuck into some new challenges and learn new skills.
Starting a new role is also a perfect opportunity for a fresh start with your finances. Here are three things you should do before your first day to ensure you start your new job with your money working harder for you.
1. Make your new money go further
Starting a new job is a great opportunity to increase your income. You should always negotiate your salary or wages where possible to ensure you're taking a step up in pay.
If you'll be earning more, you should put that extra income to good use instead of frittering it away on day-to-day spending. One option is to contribute the extra money into your super via salary sacrifice (more on this later!) or a few one-off payments. Or perhaps you'd prefer to build on (or kick-start) your savings, invest the extra money in shares or make extra repayments on your mortgage. Whatever your goals might be, it's a good idea to have a plan in place for the extra income and make sure it's working harder for you.
Starting a new job is also a good opportunity to reassess your spending habits and look for ways to cut back in order to keep meeting your savings goals. To do this, take a look at your past few months worth of transactions to see where you might be overspending (the Finder app can help you do this). If you're struggling to find ways to save money, here are 50 ideas to get you started.
2. Make sure your super fund is right for you
Starting a new job can serve as the perfect reminder to take a look at your super and consider if your current fund is right for you. Of course, you can change your super at any time. But when you're starting a new job you'll need to fill out a form with your super fund details anyway, so it's a good opportunity to review your current fund.
Remember, you'll usually be required to give your new employer your super fund details on your first day. So make sure you take the time to compare your current fund against others in the market well before you start. Your employer might even have its own preferred super fund, but you're in no way obliged to go with this one.
When comparing your options, look for a fund with low fees, strong long-term returns and insurance cover that suits your needs. It's also a good idea to look into how each fund invests your super and ensure you're happy with what you find. If you don't want your super to be supporting things like tobacco, gambling, pornography, live animal exports or deforestation, look for a fund that excludes some or all of these from its investment portfolio.
For example, Aware Super is actively divesting from thermal coal mining and has been named a tobacco-free fund by Tobacco Free Portfolios. Instead, the fund is investing in sustainable infrastructure and renewable energy projects while still striving for strong investment returns for members.
3. Consider salary sacrificing part of your pay
If you've ever thought about salary sacrificing some of your pay into your super, starting a new job could be a good time to start. Again, you'll need to fill out a bunch of paperwork with your pay details and bank account information anyway, so why not organise salary sacrificing at the same time.
If you've never previously considered salary sacrificing, here's how it works. You can choose to contribute a portion of your income into your super each time you're paid. Small amounts added to your super over a long period of time can add up to a much larger amount when you retire. According to the government's superannuation calculator you could increase your super balance by $115,000 by salary sacrificing just $200 a month from age 30.
The beauty of this process is that it's taken from your pre-tax income, before it hits your bank account and before your employer withholds any income tax on the money. Contributions paid into your super from your pre-tax income are generally taxed at the concessional superannuation tax rate of 15%. This could be a lot lower than your personal income tax rate.
Because you're sending that money to your super fund instead of your bank account, you'll also be reducing your overall taxable income meaning you could pay less tax come tax time.
Before your first day at your new job, take a look at your budget and see how much money you can comfortably sacrifice into your super while still meeting your other financial goals. Bear in mind that there are also limits on how much you can contribute to your super fund without incurring additional tax.