3 Ways Job-Hopping Might Mean Leaving Money on the Table
By Kirsty Wareing
A big incentive for jumping from one job to the next, in a relatively short space of time, is that it makes it feasible to climb up the income ladder. Every time you are offered a new job, it's an opportunity to brush up your salary negotiation skills and seek out better compensation. That said, there might be some ways that job-hopping can hurt your earning power or net worth.
Here are three pitfalls to avoid:
1. Your 401(k)'s Balance Could Suffer
When considering an offer – and thus leaving a job behind – it's important to look beyond the differences in salary. Other benefits, such as 401(k) options, matches, and vesting policies will have a significant impact on your finances over time. Lots of companies only allow you to start contributing to a 401(k) after a certain duration of employment. This means that if you're hopping from job to job every year or so, you'll struggle to save for retirement for that period of time.
If you're in your 20s, you might not be thinking about retirement just yet, but it really is a good idea to get saving as soon as possible, so that compound interest can work its magic.
2. Consider the Costs of Change
Your new workplace might be in a different area of town than your old employer. It could be in a different town entirely – or even another state! While some companies will offer to pay your relocation costs, particularly if your skills and experience are very competitive, not all will. Moving across the country is an adventure that could be hard to pass up, but just make sure you weigh all the factors before making a final decision.
3. There's Still a Certain Stigma
While job-hopping has become more acceptable over time, it's crucial that you do it tactfully. You'll want your previous employers to think well of you so that your network stays strong and you can get a positive reference when necessary. Stay conscious of how your resume looks, and don't make a habit of chasing a new position every six months. It takes time to settle into a new role, learn what's required, and begin to make your mark. If you move on too quickly, you may risk having little to show for it.