Important Financial Considerations for Graduates

This is really geared towards anyone, but since college grads are abundent right now, I thought I'd gift this knowledge to them. As you embark on a lifetime of post graduate work, it is very probable that you will change jobs and/or careers several times. As you go through these changes, there are 2 things I found to be valuable knowledge:

Consider the Cost of Health Insurance
As an individual or as a family, the cost of health insurance can change dramatically when changing jobs. Premiums for larger companies are generally lower than smaller companies, as you are part of a larger group of people causing a "volume discount" for the company. With smaller companies, the risk of someone having a major health issue (if not already) causes premiums to be higher. I have made it a point to ask a potential employer what their premiums are, so that I know how much it'll affect my net pay. By this, I mean if I go out looking for a higher pay job that increases my salary by $5,000/year (or ~$312/month net), it could be a very real possibility that my health premiums could be $300/month higher because it was a smaller company (or a large company with bad health insurance!). If you don't ask the questions during the interview process, you'd be in another disappointing pay job after you got settle in and discovered this information when they handed out the HR paperwork during the new hire orientation, right?

Be Aware of the Pay Cycle
It took me several times to catch this one. When you're on a shoestring budget, knowing how much your take home pay will be matters a lot. Assume you change jobs and the pay unchanges. If you previously got paid twice a month (bimonthly) and switched to a job that pays every two weeks (biweekly), you're net pay each pay period will actually be less. Did you know that? Here's the math:

BiMonthly: 2x/month * 12 months = 24 pay periods
BiWeekly: 52 weeks per year / 2 = 26 pay periods

As you can see, there are 2 extra pay periods when get paid biweekly. That means your employer takes your salary and divides it by the number pay periods to get the amount per pay period. The disadvantage of this is that if you are on a tight budget, you'll need to be prepared to be paid less. The advantage is that since you already budget on a monthly basis, you expect there to be 2 paychecks per month. This creates 2 times per year where you'll have an extra check. Think about it and plan wisely what to do with those checks.

I hope you learned something today!