A job hopper is just like any other employee but for a small difference. He canâ€™t resist percentages. If some employer promises to add say 10% to his salary, he canâ€™t resist the offer and changes the existing job. It doesnâ€™t matter whether the job is his line of expertise or something remotely connected to it, he was always game for a move. In short, he is a head hunterâ€™s dream come true.
And that makes him the nightmare of financial consultants. Thanks to the booming economy more and more people willing to change their job within short periods of time. The career prospects donâ€™t influence the decision anymore. It is the money that dictates their decisions.
Gobble up those savings: That sounds strange, doesnâ€™t it? They are forever climbing the career ladder and they are definitely earning more each jump. Then what puts them into the black books of financial advisors?
The major problem with this group is that tend to take some time off from their work. It could be a few weeks or even a month or two. But the problem is that they tend to take money out of their savings or even liquidate their investment to fund their travel and other expenses during this period, says a financial advisor. Their financial plans also take a back seat during this time. Periodic investment also comes to a halt.
If you are planning to take some time off before taking up a job, create a contingency fund for the purposes. The money should be enough to take care of your expenses for two to three months.
Health Blues: Job hoppers should be careful about their health cover, especially those who bank solely on insurance provided by the employer.
Says an insurance agent, the job hopping employee has to really take some time off to find out how the insurance policy works. Will it continue for sometime even after he quits the job or it ceases immediately.
Usually insurance cover comes into effect six months after you buy the policy. Even if you buy a policy after leaving your current job, it will take another six months to come into effect. If any of your family need hospital treatment during that period, you would have to dip into your savings.
Therefore cover the entire family at least for a modest amount even if you enjoy a free cover from your employer. It may prove useful at the time of leaving the job.
Withdrawing money from EPF:
This is something our friend always does. If he takes times off before he joins a new company, he always takes the money out of his EPF (Employeeâ€™s Provident Fund) account. This, according to financial geeks, is a grave mistake.
The PF account is designed in such a way that once you join a new job, within two months that accrued amount will be transferred to your new account. Technicalities apart, taking that money is not a wise thing to do. It is the last thing you would to touch. The money should be part of your debt portfolio and should be used for long term goals.
Tax planning going haywire:
Another common mistake committed by job hoppers, especially, when two organizations follow different methods to deduct taxes. Some organizations ask employees to furnish their investment declaration at the beginning of the financial year (April) and start deducting tax, while others ask for investment details in January. If job hopper happens to land in such a place in the middle of the cycle, chances are he may decide to let go of his tax planning for that year.
Try to chip in the extra amount (your EPF and insurance would take care of most of it) to meet the shortfall under section 80 C. The amount wouldnâ€™t be large enough to scare you off.