By Alison Green
If you've accepted a new job, you're probably thinking about what you you'll do with your new paycheck. But did you realize that sometimes a new job can cost you money?
Before you mentally account for all that freshly flowing cash, make sure you've factored in these five possible expenses that can come along with new employment:
1. Commuting expenses. If your old job was 10 minutes away, and your new one involves an hour commute, you'll be facing higher costs for gas and maintenance. Public transportation costs can add up too. If you pay $5 each way on public transportation, that's more than $2,500 over the course of a year. Make sure that when you're assessing a job offer, you factor in your transportation costs, which may can be significant.
In fact, a personal finance blogger known as Mr. Money Mustache – who anonymously runs a wildly popular money management website – noted in a May Reuters article: "The IRS allows you to deduct your business driving at about 55 cents per mile, and this is based on a realistic addition of costs ... So if you have a 20-mile commute to work, multiply it out: 40 miles each workday times 50 cents a mile. And there are 2,500 of those workdays in every decade, so that 'not too bad' commute is burning at least $50,000 every ten years."
2. Insurance premiums or deductibles.Before accepting any offer, make sure you fully understand what you'll be paying for health insurance and what those premiums will get you. If you previously had a plan in which your employer covered most or all of the monthly premium costs, you might be in for sticker shock when you see what it costs to shoulder more of those yourself. Depending on your employer's plan and what they pay for, you could end up seeing a significant portion of your salary eaten up in insurance premiums.
You should also look at what the plan covers, what deductibles you might have and what your copays will look like. There can be vast differences from one plan to another, and if you end up having to pay out of pocket more often on a lower-quality plan, that can take a big bite out of your paycheck.
3. COBRA coverage for any uninsured period between when your old insurance stops and when your new coverage begins. Many companies won't start your insurance coverage until you've worked 30 days, which means you can find yourself with a month of lapsed coverage. You can generally keep your old coverage going through COBRA, or the federal Consolidated Omnibus Budget Reconciliation Act health benefit provisions program. But you'll pay the full cost that was previously borne by your employer, which can be expensive. However, keep in mind that you can apply for COBRA retroactively, so one money-saving option is to apply only if you end up needing the coverage during that period.
4. Professional clothes. New wardrobe expectations can be an unanticipated expense for people who are either new to the work world altogether, like recent graduates, or those moving from a job with a casual dress code to one where suits are expected. If you're used to spending your days in jeans, and your new office requires business attire, you might find that you need to buy an entirely new wardrobe for work. Business clothes aren't cheap, but keep in mind that you can often find well-made suits for low prices at consignment shops and secondhand stores.
5. Lunch and other extras. How you handle lunch can determine whether or not that ends up being a cost working for or against you. Eating out every day will quickly add up. Even if you kept to a relatively frugal budget of $5 a day for lunch, you could spend more than $1,000 over the course of a year – just on lunch. There are significant savings to be had just by bringing in food from home most days. Food expenses can pop up at work in other ways, too, so watch out. For example, buying coffee each morning and heading out for regular happy hours with co-workers may be extra expenses.
By Alison Green