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10 money tips to note while changing jobs

Last updated on: July 15, 2009 

Image: A girl displays a Rs 1,000 note.
Photographs: Reuters iTrust Financial Advisors

In a high growth economy such as India's, it is common that as employees we could be tempted to look for greener pastures elsewhere.

However, it is worth putting some thought into the reasons for one's move, the timing of the move, as well as the administrative issues at the time of the move.

Let us consider these through the lens of personal finance.

1. Higher salary versus other reasons

We have come across hundreds of people for whom the stimulus to move jobs is a higher salary, with little regard for quality of the work, the employer's brand name, career prospects, the potential for enhancement of skill level and increased responsibility.

Usually chasing a higher salary should not be reason in itself for a job change, unless all the other softer issues we have just referred to are also being addressed.

iTrust Financial Advisors offers expert services in financial planning, income tax returns, home loans and mutual fund investment.

10 money tips to note while changing a job

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Photographs: Jon Jones/Handout/Reuters

2. Give proper thought to timing of your move

Often we hear the response: 'I am just about to get my annual appraisal and my salary is expected to go up by 20 per cent, so if I move to your organisation, it will be for at least a 25 per cent salary hike'. If you are so confident about a salary hike, and are happy at your current job, why move at all.

If you do want to move for other reasons, time your move such that you have your increment in the bag, and have better negotiating power in an interview. No experienced interviewer is going to believe you that you will definitely get a salary hike in your existing job unless they actually see written proof of it.

10 money tips to note while changing a job

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Photographs: Kai Pfaffenbach/Reuters

3. Negotiating your CTC

You can structure your CTC (Cost To Company) in such a manner that your cash in hand can be much higher than what it might have been at the previous job, even if the actual CTC is about the same as your previous job.

For instance, can you get a car lease from your company which is a more tax efficient structure for car ownership?

Understand your take home pay because that is what matters at the end of the day, not the headline of what your CTC figure is going to be.

Negotiating your CTC

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Photographs: Arko Datta/Reuters

4. Pricing yourself out of the market

Today there are several junior employees in organisations with very little experience who have managed to get very high CTCs because of having moved numerous jobs in rapid succession.

They don't realize that the high salaries they are getting are not usually because of their performance, but often because the base level has gone up every time they have changed jobs.

However, if they continue to ask for increments on what are already high levels, without a commensurate increase in their experience or skills levels, there will come a time when they could find themselves at a dead end or priced out of the market.

Employers want staff that can add value to the organisation and not just get paid a high salary because that is the expectation for that industry.

When it comes to a tough economic situation, those who cost more without adding commensurate value are among the first to lose their jobs.

10 money tips to note while changing a job

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Photographs: Stephen Hird/Reuters

5. Performance evaluation criteria

Often we hear of cases where an employee has moved jobs without a full understanding of what is being expected from him or her in their new job regarding their performance targets and their goal. This is not the best way to start a new job and can affect your compensation and incentives at year end.

Do not make job change decisions in a haste. Understand whether what is expected of you is realistic or not. Sure, you should be stretching yourself to develop your skills and gain experience, but don't set yourself up for failure.

10 money tips to note while changing a job

Image: Please respect the notice period. A man signs a document.
Photographs: Osservatore Romano/Reuters

6. Respect the notice period

Please respect the notice period owed to your current employer. It's a small world and Internet networking sites have made it even smaller.

HR managers and industry professionals are highly mobile now. Don't burn bridges, because it can catch up with you. Don't make a short-term decision to abandon your current job without any notice -- it can come back to hurt you if you acquire the reputation in your industry of someone who does not respect common professional courtesies.

10 money tips to note while changing a job

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7. Form 16 and tax issues

This one is an administrative issue for you to keep in mind. When moving jobs, make sure you take a Form 16 from your previous employer at the end of the financial year and share that with your new employer, so that the right amount of tax is being deducted and that you are not getting more deductions than you are entitled to.

Remember to also take a 'no dues' certificate, relieving letter, and salary slips for the duration you have stayed.

10 money tips to note while changing a job

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Photographs: Catherine Benson/Reuters

8. Shifting your PF balance and Superannuation

This can be a big administrative issue for you if you have not moved over your retrial accounts to your new firm. Take care of the necessary paperwork to facilitate a smooth transition of your account to your new employer.

10 money tips to note while changing a job

Image: It's not just the pay, but also the ESOPs that matter.
Photographs: Luke MacGregor/Reuters

9. What about ESOPs?

Was your current employer offering you ESOPs (Employee Stock Option Plans)? Are you familiar with their vesting and if you are eligible to encash these at all?

Don't leave a lot of value on the table if you have worked hard to earn your incentives. Understand what rights you can exercise related to your options.

If you are giving up a lot of value because not all your shares have vested, you might want to ask your new employer to offer you similar upside as an incentive to move to the new opportunity.

10 money tips to note while changing a job

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Photographs: Fabrizio Bensch/Reuters

10. The need for health insurance

If your current employer was offering you and your family life and health insurance coverage, recognise that you might need this from your new employer as well.

Critically, do not remain uninsured during the transition period from one job to another. Accidents and emergencies come unannounced and don't put yourself or your family at risk by not having appropriate insurance coverage.

Additionally, understand what are the insurance benefits you will be eligible for at your new job and whether you will have to serve for a minimum few months before your coverage kicks in.

iTrust Financial Advisors offers expert services in financial planning, income tax returns, home loans and mutual fund investment.

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