When is a lower paying job worth more? When you get to keep more of your paycheck. An excellent benefits package, for example, can save you money, while a long commute might cost you. The little things add up fast. Whether you’re comparing job offers or determining whether to start looking for a new gig, being able to figure out how much money your job is actually worth — and how much it costs you — can make your decision a lot easier.
While you want to negotiate the salary you deserve, there are other factors to keep in mind when working out how much extra income you’ll gain by switching to a new company or role.
Whether there’s a pension plan, 401(k) with match, or you’re left to save with earnings after tax, the retirement options available will have a serious effect on your net worth over time. Working for an employer who offers matching contributions to your 401(k) is essentially like receiving free money. Don’t leave it on the table if you can help it.
If a 401(k) isn’t available, investing with an IRA or Roth IRA may be the next best thing. But since that will be funded with your earnings after they’ve been taxed, it can cost you a decent amount of money in the long run. Contributing to a 401(k) might also move you into a lower income tax bracket, potentially saving you even more money every April.
Work Culture Can Cost You
How often do you go out to lunch with coworkers? Is it monthly, weekly, or perhaps daily? It can add up, meaning you’re not taking as much money home as you might think. Similarly, consider how formal or casual the dress code is in an office when you go in for your interviews. If you have to buy an entirely new wardrobe to appear appropriate at work, you’ll have to allocate part of your budget toward those costs. Fitting in and networking with colleagues is important, but the bottom line is that company culture can influence how much money you end up actually having available for other necessities.
Care and Commute
Commuting expenses, childcare, and even pet daycare should also be considered as part of the overall costs of going to work. If costs are high enough, a work-from-home job might be a better bet, even if the pay is somewhat lower.
Not everyone has the luxury of working from home of course, and many don’t even want to. That said, if you’re trying to choose between a job with a slightly higher salary that is much further away from home, and one that’s close by, don’t assume that you’ll actually be better off financially by accepting the former position.
Commuting can be expensive, stressful, and add hours to your workday. Be honest with yourself about all these little costs that could actually make a job less lucrative than it first appears.
Tell Us What You Think
Is salary top priority for you, or are you conscious of the other aspects that factor into a job’s financial potential? Do you budget for regular costs like work lunches and commuting? Let us know in the comments or join the discussion on Twitter.