Why I Took a $12,000 Pay Cut and Why It Was Worth It

Why I Took a $12,000 Pay Cut and Why It Was Worth ItWhy I Took a $12,000 Pay Cut - and Why It Was Worth It There was only one problem with accepting the best job offer I had ever receivedIt meant taking a $12,000 pay cut.As attractive as the role was, I had to wrap my head around making such an unconventional career move. In the end, heres why I decided to switch jobs for less money - as crazy as it sounds.There are all sorts of natural reasons to take pay cuts. You might be transitioning into a new career field and starting at the bottom of the food chain. Or you might be starting your own business and keeping your companys expenses low.More likely, youre taking a smaller wage because you have to, whether because you need the work in your current city or because youre moving to a new one .In my case, there was no single reason for deciding to cut my salary by $12,000. In fact, there were four.Working mostly in digital media, I have been a producer, an editor and a content marketing strategist. But I had never been paid to write full time. Tired of jack-of-all-trades jobs, I wanted to jump at this new opportunity because it fit my desire to type words like these on a daily basis.For me, it wasnt just about the opportunity to write. It was the opportunity to specialize.I understood that Id have to lower my salary expectations . After all, you typically work your way up in pay by taking on more responsibility, not less.Maybe finding your better fit isnt about a role but is instead about a better fitting environment. You might be willing to deal with a lower salary, for example, in exchange for rewarding work at a mission-driven dem gemeinwohl verpflichtet or for-profit company. Feeling like your work matters might erase your concern about being paid below market value.Often in the case of small companies and bootstrap startups, employers know that theyre offering less money than you can get elsewhere. Theyre not fooling themselves. So, they try to make up for it.In my case, my new company offered me the ability to work from home, from a co-working space, and on the move. I now have colleagues based in every corner of the U.S., Chile, and Russia. A few of them travel the world as they work.To me, this closed the deal. Im not the only one who thinks so. The average professional would be willing to sacrifice 8 percent of their pay to work from home, according to 2017 research from two Ivy League professors .Similarly, a 2017 survey performed by Qualtrics found that 37 percent of millennials would take a pay cut between 6and 12 percent for flexible work hours.My companys flexibility when it comes to location and hours is important to me because it helps me achieve a better work-life balance . The work wherever policy allowed me to work from California when my sister gave birth. It allowed me to play beach volleyball on a Wednesday morning before putting in Uber driver-like hours in the evening.When evaluating job offers, look past the salary to other perks. Decide for yourself if theres something you can no longer imagine living without. Thats how I feel about working remotely.As nice as it is for your company to show it values you in other ways, your salary is almost always a primary consideration. At the end of the day, many of us do what we do because we getpaid for it.In fact, 47 percent of employed Americans describe their job as just what they do for a living, according to a 2016 report from the Pew Research Center .Although I have had the fortune of enjoying each of my post-college jobs, Im like any young professional. I want to keep enough money coming in to pay off debt, cover current expenses and save for the future.Thankfully, my big decrease in base salary - $12,259, to be exact - wasnt what it initially seemed. Thats because my new job offered five financial benefits that my previous one didntEven if youre math-wary, its not difficult to put a dollar figure on all of these benefits.Im agine the dividends for 401(k) accounts. If your company matches5 percent of your contributions, youre essentially giving yourself a 5 percentraise.Similarly, if a company is offering to cover 100 percent of your health care plan, the arithmetic is simple. I had been paying $85 per month for similar coverage at my previous job, for example. My new job would save me $1,020 per year as a result.Run the numbers of your potential benefits package . Also, consider other factors like whether youd be switching to a lower federal income tax bracket.All told, you might find that your potential pay cut isnt as significant as it appeared at first glance.The most difficult parte about giving up salary is that you could be stunting your long-term salary growth . Enter your information into any lifetime earnings calculator, and youllsee that what youre earning now invariably affects what youll be making five, 10 and 20 years from now.All things being equal, giving up $12,000 per year could cost me more than $775,000 between now and my 65th birthday, according to a Calculators.orgs tool .No amount of benefits - even the disappearance of commuting costs - can change that. But heres what can If your new job puts you on a better trajectory to earn more over time.My $12,000 pay cut, for example, could be lessened by climbing the ladder more quickly. I could eventually get back to my original salary number by excelling in my role or earning a promotion .Assess whether you might be able to rise through the ranks faster at your next employer. If you have to take a lower salary in the short-term for a better opportunity to advance in the long-term, the decision could pay off.This is especially true if you move to a company where you can successfully negotiate regular raises .Take a look at your overall financial health before deciding to either take a pay cut or chase a bigger salary by job-hopping . If youre burdened by student loan payments, for example, maybe you need to put off a better fitting role for a higher-paying one.But dont rule out a lower paying position in the future. Youll know the right opportunity when you see it. Sometimes you just have to look past the dollars and cents.This article was originally published on Student Loan Hero . It is reprinted with permission.