First days are exciting starts to a new adventure. It’s kind of like the beginning of a relationship where you have a pretty good idea of the person, but you’re learning more and more as you go along and time goes by. However much like the first date, there are things you can do to prepare yourself for the first day at a new job, or the first day at any job!
Dear Finance Diary,
Today on my mind is all the important stuff that no one tells you about before you start a new job that impact your finances. Yes of course you know your salary, or your hourly rate, but what about all of the other stuff? Here is a guide on how I have prepared for my first day anywhere!
Before You Sign The Contract
Did you know you can (and SHOULD) negotiate your salary? By leveraging your experience (even if it was from internships) and making a solid case and point on why you deserve a certain range of salary, you can get a higher salary offer. Alternatively, sometimes your actualy pay can’t be increased but you can negotiate things like signing bonuses, relocation bonuses, increased vacation time, additional benefits, a better office space, a car allowance, etc.
Understand Your Salary
It would be pretty weird if you started a new job and didn’t know the salary ahead of time. Even though you might know your salary, it’s also important to have a good idea of what goes behind it. Which days and hours of the week are you meant to work? Is overtime work expected of you and is it compensated? If you don’t take your vacation, are you able to get it paid out to you?
I wouldn’t recommend bombarding HR with all of these questions, but have a scan through your contract to see if these elements are covered. It’s important to understand what’s expected of you before you start the job!
Make a Budget
So now that you know your salary and benefits, you are able to build yourself a proper budget. Factor in your
- Total Overall Salary (let’s call this Salary A), and then
- Deduct taxes,
- Deduct contributions (like Employment Insurance, Pension Plan Contributions, etc.),
- Deduct State or Provincial deductions,
- Deduct Insurance costs
This will give you something called your “Net Salary” (Salary B: what you take home as your actual pay). This is the amount that you would actually get. SO what you need to do is forget “Salary A”, because this isn’t the amount of money you have to spend. Only think of your salary as Salary B, because if you think of the Total/Gross amount, you are thinking of money that you don’t have to spend.
Calculate a simple budget by the 50/30/20 rule of thumb to set yourself up in a strong financial position: 50% of Salary B goes to your NEEDS, 30% to your WANTS and 20% to SAVINGS.
NEEDS – Examples: housing, utilities, insurance, transportation, groceries, medication
WANTS – Examples: restaurants, bars, subscriptions (Netflix, Spotify), hobbies, gym, travel
SAVINGS – Examples: Debt Repayment (Student Loans), Emergency Savings, Investing
You can break down those categories however you want, as long as you’re sticking to a plan that enables you to save (I think COVID taught us all the importance of that), invest for your future, and to keep doing the things you love.
Remember that as your salary grows, your budget categories should continue to grow following the same rule of thumb of 50/30/20 (or even more aggressively saving towards paying off student loans or debts if you’re able to!)
Hold Off on Buying a New Wardrobe
It’s so tempting with a new salary, to want to have the new clothes to go with it. Just about everyone I went to university with said that they bought themselves new work clothes (that they spent money they didn’t even have yet!) and they never even wear them!
It’s hard to get a good read of what people wear to the office. Often interviews are conducted in more formal attire, or might be even conducted over the phone or by teleconference. It makes it difficult to know what is expected to be worn in an office on a daily basis (unless you work from home!)
What I suggest you do is to have a day-one outfit. Go out and buy yourself an office-appropriate outfit for your first day. Once you get to the office, take some time to look around and observe what people are wearing (is it super casual, business casual, business attire, formal??) After your first day, you can go and buy yourself more clothes based on the overall office attire vibe.
Also, fun tip, do you know where all those clothes go that someone bought for their first day and never wore? Thrift shops! You can find amazing things in thrift shops, sometimes with their original tags still on! Starting a new job definitely doesn’t mean bankrupting yourself on suits, clothes and shoes!
While You’re At It, Hold Off on Any Big Purchases or Commitments
When you’re starting out your new job, just like starting out a new relationship, it happens that we just don’t end up feeling like it’s the right fit. Of course you need to give your job a fair chance, it can just be the initial stress and pressure of a new role. But if you have been there long enough to adjust and you tried to make it work and it just doesn’t feel right, you’ll want to leave.
If you are being held back from leaving a job that makes you miserable because you just signed an expensive lease on a car or apartment, or you put a downpayment on something you can’t afford without that job, or you made some sort of financial commitment that depends on you having that job, you’re in trouble. You now need to decide between staying in a job that makes you miserable because of the money, or trying to sort something else out financially.
When you start out at a new job, try to look for something temporary (takeover a lease, buy a used card, take public transit, airbnb an apartment or sublet). Give yourself time to see that the job is truly the right fit before you jump into financial commitments that could pull you down.
Overall, making the right financial decisions at the very beginning of our new jobs can help us significantly have an advantage. These are rather small steps to make that will make all the difference for you later.
and by the way, congratulations on the new job!