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How to make a budget when starting a new job
Starting a new job can be an exciting time, full of new possibilities.
At the same time, it's completely natural to have a period of adjustment as you ramp up and get used to new responsibilities. There may be an adjustment to how you handle your finances too, especially if your new job comes with a change in salary. As you think about starting your new job, you might also want to rethink your finances.
4 tips to start your new job on the right track
1. Know your salary and bonuses
When you start a new job, a change in salary can have an impact on your personal budget. You'll want to know what your new take-home pay is or, rather, your after-tax income. This can help you understand whether you have room in your budget for something new and for savings. Getting a bonus? If you can, treat it as a potential windfall and leave it out of your plans for your monthly budget. You'll want to avoid spending your bonus before you get it.
2. Understand your insurance benefits
A new job can come with new or different insurance benefits than you're used to. Maybe you now pay more into your benefits, or perhaps there are former expenses you used to have, such as eyeglasses or dental cleanings, that are now fully covered by your new employer. It’s possible your costs have either grown or lessened because of your new job’s insurance coverage. Knowing what those costs are can help you tweak your budget accordingly.
3. Find out if you get a pension plan
If your new job comes with a pension plan, it may offer you a source of income during retirement. Typically there are two main types of pension plans offered in Canada, according to the Government of Canada website. A Defined Benefit Plan is when your employer oversees your pension contribution, while a Defined Contribution Plan has you, the employee, setting aside a portion of your income over time to be matched by the employer. Knowing how much money you may be able to contribute regularly can help you feel more financially secure about the future.
4. Stay on top of your new expenses
As is often the case with a new routine, you may see a change in your day-to-day expenses. Perhaps you’re traveling further to get to work or your new hours require extra childcare. It may even be as simple as having to purchase clothing to meet the expectations of your new role. Learn exactly what your new expenses are and what they cost, so you can adjust your monthly budget as needed.
Starting a new job with confidence
When starting a new job, it's important to pay attention to things that may directly affect your monthly budget like salary, insurance coverage, your pension plan and extra expenses.
Taking the time to learn how your monthly budget may change based on your new situation can help you be more financially prepared.