Money Management
New Job Offer? Think Beyond Salary Before Accepting
So you’ve just been offered a new job in your same field but for a higher (perhaps much higher) salary. It’s time to celebrate, right? Not so fast.
When it comes to compensation there’s more to consider than just salary alone. So before popping the bubbly you should take a closer look at all the monetary pros and cons of your new position and decide if it truly measures up to what you’re currently making. Here are a few examples of things to consider when eyeing a new job:
Cost of living
If your new job requires a move to a new city there’s a lot to be researched regarding the cost of living. This includes looking at rent or home prices in your new area, the average price of groceries, and other factors that will affect how far your salary goes. For example a $10,000 raise might not equate to very much if it means living in a larger metro area where rentals go for premium prices.
A great place to start when looking at what you can expect is Bankrate’s cost of living calculator. This will not only give you an idea of how much you’ll need to make to maintain your current lifestyle but also break down some common expenses and how much they go for in each location you’re comparing. Keep in mind that these are averages and may not be 100% accurate or applicable to your situation but can still be a good jumping off point.
Commuting
Even if you’re not moving to a new city a change in your job’s location could have major implications on your finances. In addition to the increase in gas and maintenance costs associated with driving a greater distance to work, expenses like your car insurance could go up as well. Of course, as they say, time is money and taking on a significantly longer drive or commute also adds to your work day and is unpaid. Because of this it’s worth thinking seriously about whether or not the extra money you’ll receive in salary properly accounts for this time.
Healthcare, 401K, and other benefits
While most employers offer benefits such as health insurance and 401K matching, not all of these programs are created equal. Not only could one employer’s health plan cost you more out of your paycheck than another but could also end up costing you more out of pocket depending on the coverage they have. Additionally the rules and nuances of how employers match your 401K contributions can vary greatly and impact your retirement savings.
The hard part is that these items are a bit harder to research on your own and it may feel awkward to discuss them with your potential employer before accepting a position. In spite of that it may be worth it to ask for some of those specifics before making your decision. Also be sure to account for other benefits such as profit sharing, commissions, and other bonuses even if you won’t know definitively how much such programs will net you overall.
Being offered a new job with a higher salary is very exciting. However don’t let that supposed extra money cloud your judgment. Be sure to weigh these and other factors that could ultimately affect your actual compensation before you jump to a new position.
