Should You Ever Take a Lower Paying Job?
If you’re on the job hunt, you know how real the hustle can be. Combing through online job boards to find the right fit, revamping your resume, interview after interview. The constant pressure to sell yourself and impress each interviewer can be exhausting.
When you finally get the offer for the new job you’ve had your eye on, it’s thrilling. You’re about to breathe a well-deserved sigh of relief, until you dig into the details, realizing that taking this job means taking a pay cut.
Deciding whether or not to take a job for less can be a complicated decision. There are a lot of factors to think about as you weigh the pros and cons of accepting a lower offer. It’s a personal choice and it’s worth noting that everyone’s situation is different.
If you’re in pursuit of your next job opportunity and are thinking about taking a lower paying job, it can help to review the situation from all sides. You’ll probably want to find out if there is any room for negotiation. If there isn’t, it might help to consider the following factors.
Making a Career Change
If you’re considering trading in your current job for one that might earn you a lower salary, you have company. Nearly 9 in 10 Americans would be willing to take a pay cut in exchange for more meaningful work, according to the Harvard Business Review.
Switching careers might be one reason to consider taking a job for less pay. If you’re interested in making a career change, try defining why you want to make the jump. If the career change will benefit you in the long run, it could be worth taking a temporary pay cut.
For example, if, after working for a year or two in a particular industry, you decide it’s not for you, adjusting your career goals could lead you to a more fulfilling path. And there are ways to pivot in your career that might not require taking a major pay cut.
As you make this decision, try to think in the long-term. Instead of thinking about where you’ll be in two years, consider where you’ll be in a decade. Perhaps the job you’re thinking about accepting is a step back, but if it has the potential to lead you toward a dream job in the future, it might be worth it.
Reviewing the Benefits Package
As you’re reviewing the offer, consider factors beyond the base salary, such as the benefits package. Benefits can account for 40% (or more) of an individual’s total compensation package. It’s important to understand the details of the benefits you’ll be afforded at this new job.
Take healthcare as an example—if the plan at the new company provides better coverage than your current plan, you might end up spending less in healthcare costs.
But if the insurance plan leaves something to be desired, you may have to spend more money than you currently are. Do they offer dental and vision as well or would you have to enroll in additional insurance plans outside of those offered by the company?
Saving for retirement might also be something to consider. Does the company offer a 401(k) plan with a better matching program than you current job? Matching contributions can be a powerful tool as you save for retirement.
Another consideration? Paid time off. Life happens, you (and your kids) get sick, your furry little friend needs a trip to the vet, you plan a trip to celebrate your college BFF’s wedding. Does the company offer a generous vacation policy or is it on the restrictive side? The ability to take time off when you need to is a valuable benefit.
Does the company offer any other benefits? Some companies offer employees assistance with student loan repayment as a benefit. If you are working your way through student loan debt, this could be a valuable perk.
Relocating for Work
If you’re moving to a new, less expensive city, a potential pay cut could be offset by a lower cost of living.
Researching and comparing the cost of living in each of the cities can provide insight to help you decide if the cost of living is enough to balance out the pay cut. This online Cost of Living Calculator allows you to roughly compare your current location with another area and factors in salary potential too.
Factoring in the Commute
Even if you don’t plan to relocate, you may want to think about the commute. It can sometimes be an afterthought as you’re evaluating all of the other pieces of the job offer, but it’s worth considering.
Will you be driving more than an hour each way? Are public transportation options available? Logging long hours in the car can be stressful, and commuting has been shown to impact physical and mental health. People with long commutes are also more likely to be unhappy at work .
Extending your commute can take not only a mental toll, it can add expenses to your budget. You may want to factor in the costs associated with the new commute: Will you spend more money on gas and tolls? Will you need to purchase a more expensive pass for public transportation?
Improving Work-Life Balance
For some, work-life balance can be a reason to consider taking a lower paying job. Working overtime and not having time to enjoy your family and friends can be exhausting and stressful. Long-term stress at work has been linked to issues with mental and physical health.
Will this new job provide a better work-life balance? Some jobs provide flex-time , and work-from-home days can help you fit your career and life pieces together.
Room for Growth
Sure, you’re earning a decent salary now—but what do your income prospects look like as your career progresses? Is there room to grow with your current company?
In some cases, changing jobs could lead to better growth potential down the line. Is this temporary step back going to start you on a path of career (and income) growth? If that’s the case, it could be a good move. If the change is a step back without opportunity, it might not be the best option.
Reviewing your Financial Plan
As you weigh the different factors, take a look at your financial plan. What do your finances currently look like? Can you afford to take a pay cut?
If you decide to take on the new role, you may want to update your budget accordingly and consider accounting for any changes in your expenses. For example, will you be spending less on healthcare but more on gas?
Finding an account that prioritizes you and your money can be important, regardless of how much money you’re currently making.
As you transition jobs, you might also be looking to make some updates to your finances. Consider a cash management account with SoFi Money® that has no account fees (subject to change). SoFi Money also offers an up-to-the-minute look at your finances.
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