Despite the ever-increasing focus on financial gain, it’s worth looking beyond the remuneration figure when assessing a job’s worth. Sometimes taking a pay cut may not be as bad as it seems, especially when there are other positives. Here are a few reasons to take a pay cut.
1. When you’re making a career change
Many of us choose a career as adolescents, taking advice from world-weary parents and teachers who seem to know best. We stumble through tertiary education and come out the other side looking for a job that’s very different to the gig we’ve dreamed up in our heads. So it makes sense that at some point, many of us come to the realisation that we’re in the wrong job and that their career needs a change. Perhaps it’s more job fulfilment we’re after. More stimulation. More job satisfaction. Finding work that resonates with you is rare, so it’s worth looking past the drop in income and celebrating the gains.
But do your homework before making the jump – what kind of education is required to successfully enter a new career, how much of a salary drop is predicted and which companies are the most supportive for beginners?
2. When you need flexibility or work-life balance
One of the top requests of the thousands of returning-to-work mothers (and fathers!) is flexibility. There’s nothing predictable about young children, so returning to a nine-to-five job for a new parent is like trying to push a square peg through a round hole. It’s pretty much impossible. This is when dropping a portion of your salary in return for part-time work or flexi-hours can make for a good deal. It's vital that you weigh up the loss of income with the benefits of being around your family more, or being able to hit the surf after a shorter day at the office.
It could also be that you’re looking for a quicker commute to work. With the cost of urban housing rising every year, the lure of living in the suburbs becomes even more attractive. Working in a smaller company that’s not situated in the razzle dazzle of the city could pay you in more hours inside a bigger home, and less time spent on the road.
3. When you need to escape a bad role or company
Are you wearing the golden handcuffs? Sometimes a bad job is accompanied by a healthy salary that’s just too good to give up. Or maybe it’s a case of the boiling frog – the frog starts off in cold water that is slowly heated to boiling point. It doesn’t jump out because the changes occur so gradually that the perceived danger of staying in the water is not that bad. Over the years the job or company has changed significantly (for the worse), but those changes have happened so slowly that there’s no motivation to leave. But now the water is truly boiling, so taking a pay cut is worth the jump because the new opportunity represents rediscovering happiness.
4. When you need career advancement
In some job moves, one step back represents two steps forwards in the long term. In order to move higher up the career ladder, you may need to learn new skills, develop more networking opportunities, gain a little kudos in a new department or be part of a fast-growing company that shows promise in a developing market. Whatever the motivation, making less money in the short term may not be such a bad pill to swallow if your salary, job satisfaction and experience grow exponentially in the long term.
- When negotiating your new salary, try to sweeten the deal by asking work to cover phone bills, parking, health insurance or education costs, or ask them for a bonus or shares in the company at end of the financial year.
- Remember to adjust your budget with your new salary in mind. Make cuts where possible and live within your means.
Taking a pay cut isn’t necessarily a bad thing. If there are big gains to be had in other areas, then seeing your weekly wage take a small dent could be well worth it in the long run.