Managing the money side of a new job

From staying in touch with your super to getting the most from a higher wage or salary, take some important steps to get your finances in as great shape as your career.

What to consider when you change your career or job

A new career or job can be one of the best ways to change your life for the better. 

The first step is to work out what you really want. Are you looking for work which may be more fulfilling emotionally and spiritually? Are you looking to reduce your hours – or are you happy to spend more time at work?

Another helpful exercise is to work out what you’re really good at. Your current career or job might not be letting you reach your full potential. You may be desk bound, but your love of people means you’d be better out in the field interacting with customers or colleagues. 

When it comes to careers, it’s not just about what you want, but what employers need: where is the demand and where do the opportunities lie? Then you need to match your strengths with those opportunities.  

Exploring a new career may call for taking on new skills. This could involve anything from undertaking a short course, self-directed study using the internet, or even a post-graduate degree. 

Once you know where you’re headed, it’s time to launch your efforts to land a great new role. This can involve making formal job applications or meeting recruitment firms. Don’t overlook your network of professional contacts and speak with family and friends – plenty of jobs are not advertised at all. 

And once you have landed your dream role, there are a few things to consider on the finance side.

What would happen if you could not work due to injury or illness?

Income protection insurance could help you continue to meet your day-to-day living expenses if you're unable to work due to sickness or injury. The monthly benefits can be used for costs such as rent or mortgage payments, bills and medical expenses, so you can have time to focus on your health and recovery. You may already have existing income protection cover in place, so you may like to consider increasing this if your salary has increased. If you don’t have any income protection insurance, you could take out a standalone policy or take out some cover through your superannuation fund. Read more about why income protection insurance makes sense.

Taking your super with you

Changing jobs is one of the main reasons Australians end up with multiple super accounts and potentially lost super. But starting a new job doesn’t automatically mean changing your super account too.

The majority of Australians can choose which super account they want their employer to pay their super contributions into. However, if you don’t make a choice, your employer will make contributions into a default fund of their choosing.

When you start your new job, you should receive a standard choice form from your employer. Use this form to let the boss know where to pay your super contributions and ensure all your super is where you want it to be.

One super fund throughout your working life

There are a number of advantages to staying in touch with your super and having just one super account right throughout your career: 

  • Avoid duplicate fees

    With only one super account, you could avoid paying multiple sets of admin fees. This potential saving may help to grow your super balance for the future.

  • Streamline your super

    Having just one super account means fewer statements and reports, so you’ll have less administration to deal with, making it easier to track how your super is performing.

  • Easier management

    By transferring all your super into one account, it could be easier to manage your investment mix and ensure your super stays on-track to meet your long-term financial goals.

    Before transferring all your super into the one account, it is a good idea to check with your other funds to see if there are any exit fees for moving your benefit, tax implications, or other loss of benefits such as insurance.

Making the most of your pay rise

A new job may mean a bigger wage or salary. The problem is that it can be easy to spend more when we earn more, but with some simple planning you have a good opportunity to make your additional income work harder.

Invest using dollar cost averaging

Dollar cost averaging is a concept which aims to reduce risk by investing regularly into financial assets with a fixed dollar amount and accumulating assets regularly. This type of investment strategy generally allows the investors to buy more of the chosen investment when prices are low, and less when investment prices are high.

It’s a bit like drip-feeding your cash into a portfolio – you just invest the same amount each month or quarter no matter how markets are performing.

Build up home equity

Consider using some of the extra salary to make extra repayments on your mortgage. Remember that the interest you pay on your home mortgage, isn’t tax deductible. By making extra payments you will save on interest and pay off your home sooner.

Grow your super

Funding a comfortable retirement is an important savings goal for many of us. So think about investing some of your additional salary into your super. Talk to your boss about making contributions via salary sacrifice. This is where part of your pre-tax income is paid into your super fund rather than receiving the money as cash in hand. As these contributions are taxed at a maximum rate of 15%, this rate is generally less than the marginal tax rate.  This could be a more tax-friendly way to grow your super savings.

What to do if you have company shares

There are often limitations on when employees can access shares through their company's share scheme.

There may only be an annual window during which shares can be bought or sold. Employees may also have to get permission from the company before buying or selling the shares.

If you are paying off the cost of the shares over a period of time, you don’t normally have the right to sell the shares until they have been paid for in full.

Even if the shares have been paid for, some companies may insist that employees return their shares when they leave, or sell them at the current market price, even if that price is less than the original purchase price.

Reducing work hours for working parents

A growing family can see one parent take time out of the workforce and your super can easily be overlooked.

Cutting down your work hours or taking a career break can take a significant toll on your ability to save for retirement. But by making extra contributions to your super while you are still at work, you may be able to compensate for a drop in your income while you are out of the workforce.

Returning to the workforce after a career break

Women face unique challenges when it comes to retirement savings. Time out of the workforce to care for children is likely to affect your earnings and as a consequence your ability to accumulate superannuation.

The good news is that by returning to work after having a baby, you will be contributing to your super, giving yourself increased opportunity for economic independence and security in later life. Your spouse or partner can also add to your super while you are out of the workforce. A tax rebate may be available to make this option more enticing.

Next: Starting your first job – what a milestone

Starting a new job is the beginning of an important financial journey. Discover what you need to know, and the steps to take, to set yourself up for the future.
Now that you’re in the workforce it’s likely your employer will be required to make super contributions on your behalf. Here are some things to consider when choosing your super.
Starting a new job is the beginning of an important financial journey. Discover what you need to know, and the steps to take, to set yourself up for the future.
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This information is current as at 15/08/2016 unless specified otherwise.

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs.

This information provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

Before requesting a super transfer, we recommend that you check with your other funds to see if there are any exit fees for moving your benefit or other loss of benefits such as insurance. We also recommend you to check with tax professionals to see if there are any tax implications.

Superannuation is a long-term investment. Generally, contributions to a superannuation fund are preserved. The government has placed restrictions on when you can access your preserved benefits. In general, benefits will not be able to be paid until a member is age 65, or has permanently retired and is above his/ her preservation age (i.e. 55 years up to 60 years depending on when the member was born).

The Government has set caps on the amount of money you can add to superannuation each year on a concessionally taxed basis. Currently the cap is $30,000 per person pa for the 2016/17 financial year. If you are aged 49 or over on 30 June 2016, the annual cap is $35,000.

In addition, the government has set a non-concessional contributions cap. The cap is $180,000 per person pa. Those under age 65 can ‘bring forward’ two years’ worth of personal contributions, allowing them to contribute up to $540,000 per person over a three year period. However, in the Federal Budget announced on 3 May 2016, the government proposed to introduce a lifetime cap of $500,000 on non-concessional contributions, which would include non-concessional made since 1 July 2007. For more detail, speak with a financial adviser or visit the ATO website.

The tax position described is a general statement and for guidance only. It has not been prepared by a registered tax agent. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ and you should seek independent professional tax advice.

This Information may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be accurate at its issue date. It should not be considered a comprehensive statement on any matter nor relied upon as such. While such material is published with necessary permission, no company in the Westpac Group accepts responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to law, we intend by this notice to exclude liability for this material.

There is no charge for accepting any rollovers, however before requesting the rollover, you should consider where your future employer contributions will be paid (if your employer contributions are currently being paid to another fund) and check with your other fund(s) to determine whether there are any exit or withdrawal fees for moving your benefit, or other loss of benefits (e.g. insurance cover), noting that you may not receive the same type or level of benefits after the rollover. You may not be covered for injuries or illnesses that have arisen since you took out previous insurance, and you may lose loyalty benefits.

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