Let's Talk Jobs & Money
Today we are talking about jobs and money. It seems like many people don’t know what really goes into working, especially young people who are graduating and getting out into the work force. It can be a bit of a learning curve and a lot to consider.
Let’s start with the hidden costs of working. I know what you’re thinking, it’s going to cost me to work? And the answer is, yes, it can and does.
1. How will you get to and from work? Do you need a bus ticket, train ticket, or a car? All of these cost money. If you are driving, think about the distance of the job and the cost of gas and upkeep on the vehicle. If you have to commute a long distance, this will take up a large part of you budget. If you are looking at entry level jobs where the pay rate is low, you may want to consider something closer to where you live otherwise you may be spending a fair amount of you check on your commute.
We recommend weighing the positives of a position before taking it. Will it advance your career? Then it may be worth that extra cost. Of course, you can also consider living closer to the job, but that’s a big expense on its own though, so really weigh all those costs carefully.
2. How does starting or changing jobs effect your child care needs? Look at how it will be different than your current situation and how the costs will change.
3. Uniform requirements can be another big expense. Some businesses will provide all or part of a uniform, others won’t.
If you don’t have much in the way of a work wardrobe, this could be a bit of an expense up front to start your job. Ask if there are certain clothes you need? What about shoes? If you do have this sudden expense, there are ways to get creative to find what you need. See what you have in closet that you can start with. Maybe you can borrow from someone or even check thrift stores. There are often brand new clothes available for a bargain.
4. Along with that, consider grooming costs as well. Some places require your hair to be a certain length or at least kept neat. If you are coming out of school or a similar situation where it didn’t matter as much, you may need to consider more frequent trips to the barber or salon.
Professional requirements and/or training
1. Some jobs will require you to join a professional organization or a union. Those often come with dues. The employer may pay that for you or it may be an expense you have to cover. Best to ask how that will be handled.
2. If you are working a job that requires any tools or equipment, make sure you know who is responsible for that. Think jobs like construction. Creative jobs, especially if it’s contract or free-lance work may need their own equipment as well. They will probably need their own computer, maybe even specialty software. It really depends on the company and what they need.
3. There are also jobs that will require certain licenses or certifications.
Examples of jobs that require licenses are: teachers, land surveyors, doctors, lawyers, cosmetologists, nurses, building contractors, counselors, therapists, and electricians.
Certification examples would be things like plumbers, Heating/AC installers… and some healthcare jobs. You may find one necessary for things like web developers and certain IT jobs as well.
We recommend doing some research on the type of job or career that interests you before you look for a new job or if you are looking to change careers. Not only can it give you a feel for what the career path would be like, you can discover any requirements you need to meet.
Education and training
There are several options for education or training to consider to get you ready for your next steps.
For years, there was a push for young people to go to college and many did, but this left a gap in workers for other professions that don’t require a college degree.
How you choose to continue your education is not a one size fits all path. You have to look at what’s right for you and consider what kind of training you may need to get you moving toward a job or career you will enjoy.
A 4-year college is where you will earn a Bachelor’s Degree and then you can move onto a Masters Degree, Doctorate or even to specialty school like medical, nursing, pharmacy, etc.
Two year colleges offer a different path, offering an Associates Degree. This can be in fields like technology, engineering, electronics, business and more.
The key is to see what path is right for you.
You can also consider a trade school to learn the skills you need. The advantage of a trade school is the tuition is usually lower and the degree path is shorter. Often, you will have a career diploma, certification or license within 6 weeks to a year with the more focused curriculum of a trade school. This would be for fields like plumbing, electrical, mechanic, welder, IT, culinary, cosmetology, and hair stylist. The list is actually really long and worth a look.
Working as an apprentice can also be an option. This allows you to learn on the job as you get qualified and earn needed certifications. This can happen with plumbers, electricians, and HVAC companies in particular.
Others go a different route and choose the military. This can help you get your school paid for and in many cases you may be able to learn a trade while enlisted.
You may also consider how available your chosen career is in the area where you live. For example, in my town being a full-time paid actor would be difficult to do. If you want to be an oceanographer, you have to go to water. You may need to be prepared to make choices in your career path. There may come a time where you change your career path so you can live where you want or you live where your career can exist and thrive.
Virtual offices and working from home during the pandemic changed the landscape of modern offices and that may make it easier for some people to work no matter where they are, but for others it still isn’t an option. There are also many people choosing to open their own business so they can do what they love and live in a way they want.
Your choices need to reflect what works for you and your life.
Now that we’ve talk about some things to get you ready for work, let’s talk about about the benefits and the paycheck once you get there. You may get a job offer that has compensation packages with it. And you may be thinking, but I want the money in my pocket, not the benefit! I would ask you to reconsider.
Some benefits offered by employer have value AND make your life better.
1. Paid leave is most likely in the form of vacation time or sick time. Some companies will combine it and call it PTO or paid time off. There is most likely a structure for how you earn this time in that as you work a certain number of hours, you earn a certain amount of paid time off. It may be that the longer you are with a company the more PTO you get.
For example, after a year, you get one week vacation. After 3 years, you get 2, after 5 years you get 3 and so on until you get all the company offers. This is determined by the company and their policies. Same with sick time, you usually accrue it as you work.
Maybe it’s not truly money in your pocket in the literal sense, but when you get sick and can take the day off without missing pay, that’s definitely money in your pocket! Same for taking a vacation.
2. Another benefit often offered is insurance, with the most common being medical for things like doctor visits, tests, hospital, etc. Some companies also offer insurance that includes dental and vision insurance.
Insurance can be handled a variety of ways.
a. Employee pays
b. Employers pays 100%
c. Employer/Employee each pay part
Even if you are paying, it will most likely be at a cheaper premium than if you had to find insurance on your own. You will most likely have the option to put your spouse or children on your policy as well.
It’s always a good idea to take a look at what is being offered and decide what works best for you, your coverage and your budget. You can even have multiple policies, for example, one through your job and one through your spouse’s job.
3. Wellness programs are becoming more popular. You are basically given incentives to stay healthy. This can help your companies insurance premiums. It may be something as simple as tracking your steps, joining a gym, or preventative doctors appointments. It depends on the program and company but there can be some great gifts or bonuses if you participate!
4. Another great and important benefit some employers offer is a savings plan. This can be in the form of a 401K, which is for your retirement. They will take the amount you agree on and put it in a 401K account for you. Some employers will even match those funds in some way.
If you ever leave that job, the money you put in can move with you. Some companies will allow you to become “vested” after a certain amount of time of employment. In that instance, you would be entitled to the money they invested as well. You will need to ask your HR department how that works at your company. If you do change jobs, you can roll the 401k over to a 401K wherever you go or you can roll it into an IRA at your credit union or bank.
Young people often don’t think about saving for retirement, but it comes fast and before you know it, it’s here or you are getting older and need to start saving. If you start at 18, you could have over $1 million dollars waiting for you when you reach retirement age. It’s worth it!! Always do it if it’s offered even if the amount is small.
Another savings account type is an HSA or health savings account. This is similar to a 401K in that you can put money in before taxes for medical expenses. Some employers do a match on these accounts as well. Some will offer and FSA or flexible spending account as well. This similar to an HSA with respect to saving for medical expenses. If your employer offers one of these, make sure to ask exactly how it works before signing up.
5. Lastly is training or tuition assistance. Some employers will pay for you to get trained for things important to the company and your job. Others offer tuition assistance while you are in school, specifically when you are working in the field you are studying in school.
6. Bonus… Let’s don’t forget employee discounts! Buying things where you work can be at a nice discount!
Now you’ve gotten the job and chosen your benefits, lets talk about the pay stub! It can cause a bit of sticker shock to a first time worker!
$10 an hour may seem great until you realize you only really take home about $8.50 of that. You will see deductions that you can’t really control, like for federal taxes, state taxes, social security and medicare.
There will also be deductions for anything we just talked about that you are payiny, like insurance or 401 k.
If you have a judgement or child support that can be ruled as a wage garnishment, and it will be taken from a paycheck as well. You should know that amount based on the agreement that was made.
One more thing…
How many of you got stumped the first time you filled out a W-4 when you started a job? How you fill out a w-4 can effect how much tax is taken from your check.
A W-4 will ask you for your personal information that identifies you and indicates whether you plan to file your taxes as a single person, a married person, or a head of household.
If you are single, then you can file as such, if you are married and have concerns about whether enough tax is being taken so that you don’t owe when filing season comes know that if you choose married filing jointly, they will take less taxes out of your check. If you choose married filing separately a higher amount will be deducted and may result in a higher return when you actually file, as you have over paid. But if you are concerned you won’t pay enough you may want to choose that married filing separate option.
You do have the option to ask for extra withholding. Let’s say you have a freelance job or something like that where you know you will owe additional taxes, this could be a good way to make sure you have enough taken out to pay that.
Then you put the number of your children or other dependents.
The last step allows you to indicate other reasons to withhold more or less from your paycheck. Passive income from investments, for example, may increase your annual income and the amount of taxes that you owe. Itemizing deductions may lower the amount of taxes that you owe. These may be reasons to adjust your withholding on the W-4. If you are unsure on how to proceed, you may need to speak with a tax advisor.
If you don’t have a lot things like to consider then I would just keep it standard.
It may seem like a lot to consider but much of it is for good things and things that are helpful to us!
If you have questions about your paystub or benefits at your company, find you HR department or your supervisor and ask questions.
And while your are there! Ask one more question of them. See your company offers direct deposit, then sign up! Your paycheck can directly into an account you choose. That can be checking or savings or both. It’s a great way to save! You will never miss the money if you never see it right?
You can designate a certain amount to go in a savings account every check and watch how fast it adds up! Did you know, the current trend is for financial institutions to deposit direct deposit checks up to 2 days early? It is absolutely worth it.