Whether actively sought or just a passing moment of frustration, almost everyone has thought about whether to look for a new job. Millions of Americans participated in the Great Resignation after the pandemic. It brought to the forefront job tradeoffs as people sought greater flexibility and nonfinancial benefits. A job change can improve your financial outlook. Making these choices intentionally, understanding all the facts and implications, is quite empowering. Here are some considerations to think about as you consider your next move.
Comparing compensation between your current position and your next opportunity is at the top of the list, but do you truly know what you earn? Of course, salary is the headline with a job. How much you earn each hour, each week, or each year enables you to meet your needs and satisfy all your other goals. But it is not the only part of compensation. You want to make sure you are comparing total compensation and not just salary when considering a job move.
Potential bonuses, commissions, long-term incentive compensation and stock option opportunities provide a clear path to realize value from your hard work. It can also be a form of golden handcuffs that make you reluctant to take the next opportunity as you lose the unvested amount when you quit.
Retirement benefits such as company 401(k) matches vary from one firm to another and should not be overlooked when thinking about your total compensation. You may be allowed to contribute on day one or not for up to a year. Company matches vary and may vest over several years and may be lost if you change jobs. The difference between no company match and a 6% match has a big difference for your long-term plans and overall compensation.
Healthcare costs can be significant and company health benefits can be a hidden source of compensation. We have seen clients who pay almost nothing for company-sponsored health insurance and others who pay over $1,000 each month in premiums. A large increase in insurance costs can take a big chunk out of what you thought was a nice bump in pay. For the young and healthy, a high deductible plan may be sufficient. Companies may add benefits by contributing to the health savings account. For those with health issues and high health costs, not having a PPO option may be a hidden cut in pay.
Consider other common benefits that support your lifestyle and goals. Common benefits include group dental, vision and life insurance. Other companies may offer benefits for legal advice or assistance with finding childcare or mental health services. Discounted gym membership or company-provided childcare are benefits found at some large companies. At certain life stages, benefits such as tuition assistance or fertility and adoption assistance are great opportunities to help you reach your goals. For those in jobs with high hour expectations, assistance with daily chores, such as dry cleaning, may be offered or funds to pay for pet sitters. Sometimes forgotten when looking at benefits are reimbursements such as cell phone and internet costs.
Realize that any benefit offered may include a waiting period before you are eligible. Some start medical insurance on day one and others have a 90-day wait. The ability to contribute to a 401(k) and receive company matches may start on day one or force you to wait for your one-year anniversary.
High on the list these days is the ability to work remotely for all or part of your job. While more companies are calling for a return to the physical office, are you willing to trade compensation to get rid of that commute? How much salary can you give up to save on the cost of commuting each day, not to mention the lower dry-cleaning bill? Or do you crave the daily in-person interaction of an office setting? Working from home may provide the flexibility you need for family care and be worth a lower salary or slower job growth potential. The ability to work from anywhere may appeal to those who want to live in a lower-cost area, although many companies are not willing to pay people who live in rural Iowa the same as those who are willing to endure the commute and high cost of New York City. Vacation benefits vary greatly as well and you may lose that extra week you have now as you lose seniority at a new job.
The Opportunity Itself
As much as the financial aspects will drive job decisions, the opportunity itself is important. We spend many hours a day at work. Does the job provide a career path or just improve your pay? Does the job provide the stability you want or are you willing to take risks and even a lower current salary for a potential payout in the future?
Does the Opportunity Align with your Life Goals?
After the initial feel-good moment of a job offer knowing that someone values you, it is time to step back and look at the big picture. Confirm that the job fits with your goals for your life, both financial and quality of life. Make sure you have all the information and are making the right move for both today and tomorrow and then make the leap with confidence. Happy job hunting.