not enjoying your work<\/strong><\/a>, you\u2019re not truly enjoying your life. Starting a new job doing something you genuinely love, or in a more positive work environment, could contribute significantly to your quality of life. You have to make sure that the pay cut isn\u2019t so large that it will damage your quality of life in other ways.<\/p>\nWhen Should Taking a Pay Cut Be Avoided?<\/h2>\n
So, now you\u2019ve learned the seven main reasons why taking a pay cut for a new job may be worth it. However, there are some circumstances under which you should not<\/em> accept a lower salary. Let\u2019s go through these now.<\/p>\n1) There\u2019s No Good Reason<\/h3>\n
When your potential new employer has offered you a lower wage, ask yourself why. Why does this employer think that you\u2019re not worth as much as your current one does? Is it a reasonable pay cut, or do you feel insulted?<\/p>\n
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There may, of course, be a perfectly good reason. The company may be smaller and not be able to afford a higher salary. You may be breaking into a new industry in which you\u2019re inexperienced and unskilled. In these circumstances, consider the above criteria to determine if the pay cut is worth it.<\/p>\n
However, what if you\u2019re experienced in the industry, and you know that your new employer could afford to pay you more? In this case, tread carefully. The company may be deliberately low-balling you, to see if you\u2019ll take the bait. It may be worth sticking to your guns and demanding a higher salary. If they refuse for no good reason, it\u2019s no significant loss.<\/p>\n
2) You Won\u2019t Be Happier<\/h3>\n
Do you know for sure that you\u2019ll be happier in your new job?<\/p>\n
Before accepting the offer, make sure you know every detail of:<\/p>\n
\n- Working hours, including breaks<\/li>\n
- Job duties and responsibilities, including how reachable you\u2019d have to be after hours<\/li>\n
- Any benefits<\/li>\n
- Vacation time and sick leave<\/li>\n
- What your work targets will be and how your performance will be evaluated<\/li>\n
- The working environment and office culture<\/li>\n
- The company\u2019s stability<\/li>\n
- The location of your new workplace, how long (and expensive) the commute will be<\/li>\n
- Downsides to working for the company (don\u2019t be afraid to ask this at interview)<\/li>\n
- Others\u2019 experiences working for the company (search on the internet, or ask around)<\/li>\n<\/ul>\n
Carefully consider whether you\u2019d feel happier, and be generally better off, under the new employer. If the cons outweigh the pros, or your current job seems better, it won\u2019t be worth it. Also, be wary of an employer who isn\u2019t completely transparent about the above. Don\u2019t accept question-dodging or indirect answers.<\/p>\n
3) Your Budget is Already Stretched<\/h3>\n
Next, it\u2019s time to consider your budget. What\u2019s your lifestyle like at the moment, and how would it have to change on a lower salary?<\/p>\n
To do this, figure out how much money you\u2019d be taking home each month compared to your current job. What\u2019s the differential? How could you adjust your lifestyle to make up for this loss, without digging into your savings?<\/p>\n
It might be the case that you can quickly identify aspects of your lifestyle to cut back on. For example: going out to eat, taking expensive day-trips or holidays and splurging on new clothes. In that case, carefully consider whether you\u2019re happy to give up these perks of a higher salary.<\/p>\n
If, on the other hand, your budget is already at its limit, you may not be able to afford a pay cut. If you already shop at discount stores and live paycheck-to-paycheck, it may be wise to stay where you are. Otherwise, you may end up going into debt.<\/p>\n
4) No Advancement Opportunities<\/h3>\n
You\u2019ll be taking a pay cut for this new job. Therefore, you need to know whether this would be a permanent step-down or only a temporary one. Would you be expected to remain at this lower salary for a considerable amount of time?<\/p>\n
Talk to this new company about advancement opportunities in the new position. Ask them to be frank about your chances for raises and promotions in the future. If they dodge the question or don\u2019t give you much hope, it may not be worth taking the pay cut. You may find yourself stagnating at the lower wage, unable to advance.<\/p>\n
Of course, you may feel that this new job is worth a permanent pay decrease. If it\u2019s your dream career, and you\u2019re sure the new job will increase your happiness, go for it. However, in this case, you\u2019ll need to make sure your budget can handle the pay cut.<\/p>\n
How to Adjust Your Budget Following a Pay Cut<\/h2>\n
So, let\u2019s imagine that you\u2019ve decided to accept this new position. Although you\u2019ll be earning less, you feel that the new job is worth it.\u00a0 You\u2019ve carefully weighed the above considerations, and you\u2019ve concluded that you\u2019re going to do this.<\/p>\n
As you\u2019re now making less money, you\u2019ll need to alter your budget in accordance. Unless you currently live on much less than you earn, your lifestyle will probably need some significant adjustments. Here are our top four tips on handling your pay cut.<\/p>\n
1) Decide What You Can Live Without<\/h3>\n
The first step is to separate your budget into necessary and unnecessary expenditures. You\u2019ll probably be surprised at the number of things you can live without.<\/p>\n
Some examples may include:<\/p>\n
\n- Gym memberships<\/strong>. You could just as easily go for a run, or practice body-weight exercises at home.<\/li>\n
- Cinema trips<\/strong>. Wait for the movie to come out on DVD or Netflix.<\/li>\n
- Takeaway coffees<\/strong>. You could brew your own at home instead.<\/li>\n
- Magazine subscriptions<\/strong>. There are some great news websites out there.<\/li>\n
- Eating out<\/strong>. Home-cooked food is not only much cheaper, but it tends to be healthier, too.<\/li>\n
- Shopping trips<\/strong>. Do you need another pair of jeans, or can you make do?<\/li>\n
- Manicures<\/strong>. A cheap nail file and bottle of polish will do the job for the time being.<\/li>\n
- Snacks<\/strong>. You may not realize it, but those cookies and chips add up over the month. Stick to the good old-fashioned three meals a day. You may even feel healthier.<\/li>\n
- Cable TV<\/strong>. Netflix and Hulu memberships are cheaper, yet offer a good range of TV shows.<\/li>\n<\/ul>\n
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Figure out how much you spend on unnecessary things per month, and then decide what you can lose. You may find that this is enough to keep you afloat.<\/p>\n
2) Scale Back Your Necessities<\/h3>\n
Of course, there are some things that we can\u2019t budge on. We all need to pay utilities, buy food, and to pay for things like childcare. However, that\u2019s not to say that you can\u2019t find ways to scale back your necessities.<\/p>\n
Here are some examples:<\/p>\n
\n- Shop at cheaper grocery stores<\/strong>. Do some research to figure out which grocery stores in your area are the cheapest. You could save a lot of money, even when purchasing the same items.<\/li>\n
- Buy in bulk<\/strong>. Sometimes, buying larger quantities of certain items less frequently works out cheaper than buying smaller amounts every week.<\/li>\n
- Search for discount codes and coupons<\/strong>. You might find these in newspapers or magazines, or even online.<\/li>\n
- Shop at thrift stores for clothes<\/strong>. You might balk at the idea, but thrift store clothes are often good quality and always clean. This is a particularly good idea if you\u2019ve got children, as they tend to outgrow clothes so quickly.<\/li>\n
- Switch utility companies<\/strong>. Some electric, gas and internet companies charge more than others. Shop around and see if you can find a better deal.<\/li>\n<\/ul>\n
After some time, you may be surprised at how much all these savings add up.<\/p>\n
3) Add Extra Income<\/h3>\n
Don\u2019t forget that your job need not be your only source of income. There are ways to make extra money here and there which could come in useful.<\/p>\n
For example, if you have a spare room in your house, consider getting a roommate or a lodger. They\u2019ll contribute to utilities, and pay rent. If you live in an expensive area, you could end up making a lot of money. Alternatively, use a site such as Airbnb to rent your room out occasionally to vacationers.<\/p>\n
Now is also time for a good clear-out. If you have anything that you don\u2019t use anymore \u2013 such as old clothes, electronics or games – sell them. Even if you don\u2019t think each item is worth much, it will all add up.<\/p>\n
Depending on your new job\u2019s hours, you may even be able to fit in a part-time job. It needn\u2019t be anything too demanding or prestigious. Even a Saturday retail or customer service job would help bring in some extra cash.<\/p>\n
4) Create a Strict Budget<\/h3>\n
Finally, now that you\u2019ve sorted out your income and expenditures create a budget. From your monthly income, subtract the amount that you\u2019ll need to spend on rent, utilities, and other necessary expenditures (such as car payments and childcare). You\u2019ll then be left with an amount that you can play with.<\/p>\n
From this amount, give yourself a budget for groceries each week. Don\u2019t forget to factor in household products such as toilet paper. Try to be frugal, but also be realistic. You can always readjust your budget if you find that it\u2019s not enough.<\/p>\n
Then, with the remaining figure, decide how much you want to put into savings. Some believe that you should aim to save at least 20% of your monthly wage. Depending on your income, this may not be possible. However, try to save at least a little each month. The rest you\u2019re free to spend on \u201cextravagant\u201d purchases, such as meals out and day trips.<\/p>\n
Make sure that you stick to your budget religiously. Every month, go over your bank statements and make sure that you\u2019re not losing money.<\/p>\n
We hope that we\u2019ve been able to shed some light on your situation. You should now be familiar with the main reasons to take a pay cut, and the red flags indicating you probably shouldn\u2019t. Finally, you know how to adjust your budget to cope with a lower salary.<\/p>\n
If you still aren\u2019t sure whether to take the new job, we\u2019d recommend erring on the side of caution. You know yourself better than we do, after all. Jumping into a new job is not always as straightforward as making a list of pros and cons. It takes serious thought and involves a complete upheaval of your life.<\/p>\n
Make sure that you know what the deadline is for accepting or rejecting your new position. Don\u2019t be afraid to make the most of that time, to ensure that you\u2019ve considered it carefully. And remember, you can always change jobs again in the future.<\/p>\n
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