Start the Year off with PA Financial Planning
The beginning of the year is a great time to do some financial planning. Year-end reviews often get pushed to the beginning of the following year because of the business of the holidays. If you have an annual review scheduled in January or February, now is a great time to start preparing for that review and doing research. Annual reviews are a time to receive feedback and re-evaluate your situation and priorities. Is your employer still providing you with what you need? Do you have anything that you feel could improve your work situation? Have you had a life change?
Salary and Benefits
If you’re wondering about an annual raise, this is a great time to review this with your employer. Start by looking at recent PA salary reports to see how your salary compares. These reports can give you a general idea of what other PAs are making, but they do not give you a complete comparison of your situation. Not all employers offer the same benefits, and some might be worth more to you. If you plan on having a baby, twelve weeks of paid time off might be of great value to you compared to someone who is not. Total coverage of health insurance premiums for you and your family might be important to you. If you’re thinking about pursuing a Ph.D. or DMSc, does your employer provide tuition reimbursement?
Start by writing down your current salary and benefits using our negotiation worksheet. From there, number the benefits that are most important to you. Once you know what is essential, look for opportunities that might be negotiable. If your salary is well below the median, you could ask for a higher salary, or is there an opportunity to re-evaluate your bonus structure? The options to renegotiate are often dependent on the size of your organization. The larger the organization, the less room you’ll have to negotiate certain benefits.
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If you’re looking for advice on your specific situation, I’d recommend checking out Certified PA Consulting. As a PA-Cents follower, you can receive a discount on any of their services by using the discount code: pacents.
Student Loans
Students loan interest and payments have been on hold since the Covid pandemic started, but they will begin again in May. Do you have a plan in place for repaying your student loans? When Biden got into office, there was a lot of talk about widespread student loan cancellation. However, as time has gone on, there seems to be less chance of this. If you’ve saved some money, you could choose to pay off your loans. Another option is to sign up for an alternative repayment plan to lower your payments and buy time to cancel any loans. The third option is to refinance your public student loans with a private lender. By refinancing, you would lose out on any benefits that federal loans give you, like loan forgiveness or cancelation, if it were to happen; but you could save a lot by lowering your interest rate.
Besides traditional refinancing, two options to check out are income shared agreements (ISAs) and collective bargaining through an organization like Juno, formerly LeverEdge.
ISAs are a newer way to finance your education. However, you agree to pay a percentage of your income instead of paying interest. ISAs can work out great for students with low income and high student loans, but for students who will have higher income, it might not make as much sense as your payments for an ISA might be more than for traditional loans. If you’re interested, it doesn’t hurt to check out both options, but make sure to find out your final payments before signing up.
Juno offers a different option for student loan borrowers. It is a private lending option, but they use collective bargaining to get lower rates than traditional refinancing. Make sure to compare any cost of refinancing through different lenders and the interest rate you will get.
Retirement
If your employer has a retirement match, the minimum amount you should be contributing to your retirement is the match amount. That is free money that you’re letting go if you do not contribute enough to get your employer match. The beginning of the year is a great time to look at your 401k or other retirement accounts to see if you’d like to make any changes. Most employers have financial advising included as part of the 401k, so make an appointment with your financial advisor if you have questions.
Were you one of the many who was a part of the great resignation? If you were, you might have a 401k with your former employer. There are a couple of options you have with that money:
- You could leave it where it is.
- You could roll it over to your new employer’s plan if they allow that.
- You could roll it over to an IRA.
- You could cash it out; however, this is the last thing you’d probably want to do because of the tax penalty.
Conclusion
The beginning of the year is a great time to review your finances and make any changes for the current year. Depending on when your employer completes annual reviews, it might be an opportunity to renegotiate your contract. There are some unknowns with student loans, but make a tentative plan for what you’re going to do with them now before payments start again. Lastly, review your retirement and investment and make any changes that you might want to change.
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