How Can Job Hopping Impact Your Financial Goals

How Can Job Hopping Impact Your Financial Goals

Job hopping is far more common today than in previous decades, with nearly 60 per cent of the Australian workforce having transferred jobs within five years and 18 per cent holding their current job for less than a year.

There’s a variety of reasons why people transfer jobs, including an involuntary decision, looking for a higher salary or better benefits, and wanting a fresh working environment.

There might not be a golden rule for how long a person should stay in their job but it’s important to note that job hopping can affect your financial goals.

Here are some of the ways that job hopping can impact your financial goals:

It can affect your credit-worthiness

Income, job history, payment history, credit score and debt-to-income ratio are some of the factors lenders look at when you’re applying for a loan.

While transferring to a new job with a higher salary can potentially increase your ability to repay a loan, you still should remember that lenders are more concerned about the stability of your employment than your salary.

It’s important for lenders to know that you will be able to consistently make payments on time due to a steady income.

If you’re job hopping every six months, this can negatively impact your credit score. But note that you’ll be viewed as less risky if you’re staying in the same industry and employed in a similar role.  

Lenders are more willing to lend you money if you’ve been in a job for at least two years.

It can impact your superannuation

Switching careers frequently can affect your personal finances including your superannuation. Many people forget to inform their employers about which super fund they’re with when they change jobs because it can be a stressful time.

This results in them acquiring a new super account when they switch jobs. However, having multiple superannuation accounts can affect your long-term wealth because you need to pay multiple account-keeping fees.

The best way to prevent new job stress is to make a list so you can keep track of things your employer needs to know such as your super fund details, tax number, and bank account details.

Your emergency savings fund will take a hit

Transitioning to a new job is likely to cause a delay between pay checks. For this reason, your emergency fund may take a hit since you will need money to pay for your utilities, rent, and groceries.

Final word

There’s nothing wrong with transferring jobs, as long as you know that your new job will benefit you and your career in the long run. Make sure that you've got your personal finances planned so you can protect yourself from financial disruptions. 

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