There are lots of reasons why people change jobs multiple times, from moving to career pivots to seeking advancement. While not all job hopping is a bad idea, too much of it can start to hurt your finances, depending on how you go about it.
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While some people may have the benefit of a partner’s income, consulting income or solid savings, be sure you know the consequences of changing jobs before you do it too frequently.
Here are six key signs that job hopping will hurt your finances.
According to Patrice Williams-Lindo, career strategist, workplace culture expert and CEO of Career Nomad, frequent work transitions can lead to missing out on valuable benefits such as:
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401(k) vesting schedules
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Annual bonuses
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Healthcare coverage gaps
While not everyone is motivated by traditional benefits, especially if you’re in career pivot mode, launching side businesses or investing in flexibility and well-being, Williams-Lindo said you should just make sure you’ve got a plan to self-fund what you’re walking away from.
This could include opening a high-yield savings account, a solo Roth IRA and/or getting on an affordable healthcare plan.
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While job hopping to find the right fit can make sense, be warned that “when your résumé reads like a revolving door with no through-line or upward mobility, that’s when the red flags go up for recruiters,” Williams-Lindo said.
However, if your moves make sense, show advancement or are tied to life or values pivots (like caregiving, health or building a business), you can still maintain leverage in the job market, she suggested.
Inconsistent employment can make things tricky if you want to take out loans, especially with traditional lenders who want to see two years of stable income in a similar field, Williams-Lindo said. However, this is also changing, especially for entrepreneurs, gig workers and consultants.
What matters most is having the following:
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Documented income (W-2s, 1099s, bank statements)
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Good credit
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Proof of financial responsibility
There are some other possible financial downsides of job hopping too quickly, Williams-Lindo said, including:
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Sign-on bonuses that must be repaid if you leave before a certain date
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Higher tax bills if you have multiple W-2s or untaxed contractor income
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Delayed health benefits that leave you vulnerable
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Missed vesting on equity or profit-sharing plans
