5 things to know before accepting a first job offer
From salary negotiation to health insurance, it’s important to familiarize yourself with these common terms before accepting an offer.
Getting your first job out of college is something to celebrate. It’s a major accomplishment that sets you on a path to career success and further establishes financial independence. Whether you’re job hunting or just received an offer letter, familiarize yourself with the hiring process so you feel prepared, confident and professional.
Even first-timers should research salary ranges for specific positions in their industry, and be prepared to ask for a little more. It’s likely the company spent hours going through applications, conducting interviews and narrowing down candidates. There’s a reason you were chosen, and that’s a powerful bargaining tool. If you don’t get a higher salary, it still shows your new employer that you’re willing to speak up for yourself. It’s also a skill that will no doubt come in handy throughout your career.
If the salary is competitive, what about the company benefits package, specifically health insurance? Typically, if you obtain health insurance through work, you pay a portion of the premium – the total annual cost of the plan – and your employer pays the rest. In most cases, the higher the premium, the lower the deductible – aka, the amount you’ll have to pay a health care provider out-of-pocket before insurance kicks in.
A company will often offer a selection of plans that vary in cost and coverage. It’s necessary to think about your current health situation and pick a plan that aligns with your needs. Keep in mind, purchasing health insurance from your company isn’t required. If you’re 26 or younger, your parents have the option to keep you on their plan. If you’re married, you may be covered by your spouse’s insurance.
When you are just starting your first job, retirement is probably the last thing on your mind. But it’s crucial to start planning for it now. Many companies offer the option to enroll in a 401(k) or 403(b) plan (for religious groups, nonprofits, school districts or government organizations). Both allow you to set aside pre-tax dollars from your paycheck for the sole purpose of saving for retirement. You can control the amount you contribute every year up to a specific limit set by the Internal Revenue Service.
To maximize your savings, set up an automatic transfer from your paycheck to your retirement account. If your employer offers company matching and contributes money to your account up to a certain percentage – take advantage of it.
Depending on the industry you’re in, you may be asked to sign a non-compete agreement. Basically, it’s a contract between an employee and employer that limits where you work if you decide to quit. Your company may spend a lot of time and money to train you. So, this protects the company from you leaving to work for a competitor and taking your acquired skills and trade secrets with you. It’s ultimately your choice whether or not to sign, but if you refuse, be prepared to have the job offer revoked.
Paid time off
Unlike part-time jobs many students have in college, many companies include paid time off, or PTO, as part of their benefits package. These are off-the-clock hours that can be used for things such as vacations, illnesses and personal days without loss in pay.
Each company has their own rules when it comes to PTO. For example, you may have to be employed for 90 days before using it. Unused days may roll over to the next year, or they may not. In general, the longer you stay with a company, the more days you are likely to accrue.
Have questions on setting up health insurance, retirement planning, auto-pay and other new income management topics? Make an appointment with a banker.