Pay Cuts: Your Focusing Worksheet
If you’re on the fence about taking a job that requires a sacrifice in pay in exchange for work-life happiness, consider the below questions.
Q1: Can you afford it?
Try this: Create a simple monthly budget flow modeling income minus expenses and essential savings. Check the numbers, review them, grasp them — feel them.
Why it helps: As Charlotte Cowles of The Cut says, “You will need to adjust your expenses to align with your new income — which is not a bad thing, but it will require some practical changes.” It’s good to anticipate what scenario you’ll need to adjust to.
Q2: How will the new job with less pay lead to more enjoyable experiences?
Try this: Make a bulleted list.
Why it helps: Excited by the prospect of change, you might see your new gig through rose-colored lenses. Doing this exercise helps ensure your optimism is grounded in reality.
Q3: Break all the rules and compare yourself to others.
Will you be making significantly less than your partner, peers, or coworkers?
Why it helps: As this NPR article points out, studies repeatedly demonstrate a human desire to be treated fairly. In one example, subjects experienced the most significant drop in morale and productivity when they took a pay cut but their acquaintances did not.
Q4: Consider the ripple effect.
Try this: Is there room for career growth? The possibility of increased pay? Or is your new salary a ceiling for the next ten years?
Why it helps: After you take a pay cut, you’ll adjust. It will soon be your new reality. The time before you make a decision is an opportunity, a chance to systematically evaluate two possible futures before you’re locked into either.
Q5: Consider the true value of your benefits.
Try this: Start with the quantifiable ones, like dollars of subsidized health care and stock option values. Then look at the intangible benefits. Some of those, like sabbaticals, for example, may hold more value to you than other benefits with more dollar signs attached.
Why it helps: Making a car-purchase decision based on sticker price alone doesn’t make sense; neither does making a job-change decision on base salary alone. Benefits like education stipends and daycare subsidies won’t plump up your salary, but they may boost your quality of life.
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