This is a repost from a post from our other blog, Kitty & Kevin back in January of 2015. I'm reposting this because I just went through the process of this transition as I decided to take a new job recently...more on that at a later date! That being said, whether its your first job or your 10th job...there are lots of things to think about when you have a job offer on the table!
I'm in my 20's, which means most of my friends are as well. During this time it seems we are all so quick to jump into new jobs and careers, just for the hope of a bit higher paycheck. We move to new cities or complain about how a friend makes more than we do at a similar job.
I've walked through a new job offer with many of my friends these past few years, explaining the pros/cons of a new position in terms of finances. I encourage them to take a step back, get past paycheck that you'll be receiving, and think of the offer as a whole package, not just dollar signs. When it comes to money at a new job, the question to ask is not what your salary will be, but how much more or less disposable income will you have at this new job? A salary of $40,000 a year may mean you actually have $15,000 MORE to spend each year than a salary of $50,000 a year! It's not just what your paycheck is each month...but think of the bigger picture and look at how much disposable income (how much money you'll have in your pocket) at the new job.
Here are a few things to consider when you're looking at a new job offer, or when you're looking to increase your salary at an existing job. Maybe your employer can't give you a raise, but can pay for your gym membership or public transportation card that costs you $80 per month...that is the same to you as a $1,200 raise (this is assuming you pay 20% in taxes on the $100 a month more they would be paying you) Consider looking past what you'll be receiving each pay period, and look at the additional items that may be offered that increase or decrease your overall disposable income.
Vacation- What is vacation worth to you? If you don't travel, or live in the same place that your family lives, vacation may not be as important since you may not need extra days to travel over the holiday. I technically don't have set vacation at my job, because of the flexibility of my work hours, the goal for attorneys is to bill so many hours each year, they don't care how you get there. Kevin gets 3 weeks of paid vacation, which we use up every year! Vacation is so important to us both! At this time in our lives, vacation is worth a lot to us. If I had only 2 weeks vacation, I'd be taking unpaid vacation for all the times I'm gone. (or not be able to go at all!) We also use our vacation for out of state weddings, which are a great source of income for us.
Cost of living- If your apartment/house costs double in a new city or state, consider that when you're looking at moving for a job. We have a reasonable $700 1 bedroom apartment that would likely cost $1,500 in a bigger city. Moving for a $3,000 raise wouldn't be a raise at all if our costs increase that much.
Insurance Benefits- Are you getting health insurance through work? What is that worth to you? It's worth some to our small family, but probably worth a lot to a mom with 2 kids, and one more on the way. It saves us a few thousand or so to have insurance through Kevin's work every year, while a pregnant woman, dad, and kids may save them 5x as much. You may hear that health insurance is worth a lower paycheck, and it may be...sometimes. We have insurance through Kevin's employer, so the fact that mine doesn't offer health insurance isn't a big deal to us.
Commute- How far will your office be from home? Will it be a 10 minute commute, or an hour? What is that time worth to you? Some people enjoy time in the car to relax at the end of the day. I see time as money as I'm often wasting daylight hours (where I could be photographing) on my drive home. Will you have to buy a more reliable car for your commute or pay for parking? Do you have to pay for an extra hour of daycare expenses because of your commute?
Flexibility- Flexibility in a job is almost priceless to me...almost. My flexibility allows me to work my 2nd job more easily. I can schedule lunch photo sessions, leave work early for a wedding, all of which make me extra money. I am paid less than many of my attorney peers, but my job flexibility is amazing and allows me to make thousands of extra dollars a year doing other things I love (photography!) Flexibility may mean you don't have to pay for daycare, can share cars, or work from home and cut gas expense!
401(K) Match- Say it with me Free money!! A 401(k) match is straight up money in your pocket...if you actually use it...and you all should!! Figure out what they will match and add it with the money you're getting from your paycheck. It's worth every dime.
Additional Benefits/Fringe Benefits- Are there other benefits that the job offers that may be worth extra to you? Likely they are small but can be a few thousand depending on what they offer! For example: student loan forgiveness or tuition reimbursement, daycare, additional memberships (gym, zoo, costco), use of a company car?
Bonuses- Does the company have a history of giving out a sizable Christmas bonus? Or how about the opportunity to make a commission? Don't count on it (don't buy a pool like Clark Griswold assuming you'll get one) but keep it in mind that there may be an additional monetary perk at the new job that wasn't offered at your old one.
Travel- will moving further from your family mean you're spending $500 per person to go home for the holidays? Will you do it once or twice a year? Moving may mean more costs that you might not otherwise consider!
Future Income- Is the new job a $10,000 pay raise, but will your job cap off at a certain amount? For example if you're in a large corporation, it may be policy that the max you can earn in that position is X, whereas if you go somewhere else the opportunity to move up or make lots more may be much higher. Look at your potential earning capacity at a new company.
There are hundreds of other things to consider when you're looking at a job offer: Do you like your boss? Will you like the work? Will you have a corner office or stuck in a cubical? What I'm looking at above are more of things you can quantify in terms of your overall disposable income when you look at a a new job.