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Career changes

How your spending may change

Your career choices may impact your finances

If you’re starting a new job, leaving your existing job or making changes to your current working arrangement, there may be some financial impacts. Here are some areas to think about:

  • Make a plan if you’re reducing your hours

You may be considering a reduced working week or going part time. This may come with a reduction in pay, so it’s important that you work out what your new wages will be. This will help you make decisions around timing, how many hours you can reduce and any other changes to your budget.

  • Understand changes to your benefits if you start working or change hours

You may be receiving certain benefits while you’re looking for a job or studying. If you are, things may change when you take on full-time employment. So when you start working, check with the benefit provider if you need to update them.

  • Understand changes to your tax when your income changes

 If you're making more or less money you'll also pay more or less tax.  You can use IRD's calculator to help you understand how much PAYE will be deducted from your new salary. 

  • Make the most of a redundancy

It can be a challenge to be made redundant. It’s important to be aware about what you’re entitled to as part of a redundancy package and to be sure of the timeframes. This will help you plan for any gaps while you’re looking for a new job.

Planning around reduced hours

You may be approaching retirement, have a new baby or simply be reducing your hours to take up other activities. When planning any reduction in hours it’s a good idea to make sure you’ll be comfortable financially. Here are a few things to consider:

  • Does your workplace offer an option for reduced hours?

The possibility to take on reduced hours depends on your workplace. It helps to find out more from a human resources professional about your options and the steps involved to make the change.

  •  What will your salary be with reduced hours?

Whether you’re cutting back to three days a week, taking on seasonal work or going on extended leave, you’ll need to understand the financial impact. 

  • How will your role be different?

With reduced working hours, your job responsibilities may change. Keep your career in mind and consider if you’d have the option to go back to full time in the future, and discuss with your manager on how you can still progress your career within the company with reduced hours.

  • What’s your new budget?

With any change to finances, you’ll need to revisit your budget. It’s not ideal to eat into your savings, so a long hard look at your expenses will help you understand how your life may be different. Areas to look out for particularly are your home loan and other debts, which pose the greatest challenge in case you miss a repayment.

  • When does it make sense to start the transition?

Consider if this should be a permanent change or a temporary one, and talk about your starting date with your manager. If your decision isn’t time sensitive, you may want to bite more into your home loan or earn more savings before you make the change.

Once you can agree on a suitable arrangement with your employer, you can feel confident with your plan as you take on this next chapter in your life and career.

Making the most of a salary increase

If you’re getting a salary increase, there are a couple of things to keep in mind after the celebrations.

  • How will the salary increase change your lifestyle?

We usually talk about our salaries in terms of annual gross salary. So it may not be obvious what an annual salary increase means on a weekly basis. Every cent helps, but it’s important to realise that your pay increase may not change your lifestyle much.

  • Consider the world of investing

If you’re feeling more comfortable about your financial situation, you may like to get into investing. Investing comes in many forms. You may consider getting into property, or you may like to consider managed funds or the share market. Another simple way that may work for you, is to allocate the extra money to your KiwiSaver account by increasing your contributions. Find out more about your investment options

Remember, a salary increase is just a small part of your overall financial position – so it can be a good idea to sit down with a financial Adviser and make sure you have a plan in place. Once you are clear on your goals, it will be clear what to do with the extra money.

It’s always a pleasant feeling to have a salary increase, but don’t forget to plan for the future and consider the impact of changes to your budget.

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The content provided is intended to be used as information only and does not constitute financial advice. Before acting on any of the results provided, we recommend that you seek advice which takes your individual circumstances into account.