It was just a little over a week ago that I got offered a new job. While I wrote about the juicy details on my blog, this new job is a great opportunity. It offers a lot of room for advancement, while also being a job that is both interesting and fulfilling. Yet, it isn’t without its few downsides.
Even though I used the phrase, “perfect’ to describe this job, there are a couple aspects of the position that are not attractive. It is causing a lot of lifestyle changes that negatively affect my earnings. While I received a decent pay increase on paper, the actual difference in my salary between my new job and old job is a little bit less. If you are looking at applying for jobs, you need to make sure to calculate your true earnings. The salary may be flashy, but there are many other factors to take into consideration.
Factors that Affect Your Salary
There are many things that can both positively and negatively affect your salary. In order to make the most informed decision, don’t forget to consider all of these:
Is this new job located farther away from your home? Is it located in an area where public transportation is readily available? One of the new challenges that I faced with this new job is that it was both farther away from my home than my old job and in an area where public transportation is not accessible. While my wife and I had normally been a one-car family, we now had to buy a second car. I was able to minimize the damage by buying a used car, but it adds additional fees. While the gas is about the same cost as the train pass to my old job, I still have additional costs: insurance and maintenance for the car. Over a 1 year period, I estimate this to be an additional $1,000 in expenses.
Another factor to consider is the health benefits. My new employer is in the process of acquiring health benefits for its employees, but for the time being I am forced to get on my wife’s plan. For us, that means an additional $100 per month just to add me to her plan. While it is probably rare to have an employer without any health benefits, it is very common for employers to reduce expenses by offering less attractive plans, so make sure to consider this as well.
Another important factor when it comes to compensation is the retirement package. This was another huge impact on my compensation. My previous employer, despite lacking in other areas, offered a pretty generous retirement benefit, contributing 8% of my entire salary. From what I understand, this is a rare occurrence. Many employers will match up to a certain dollar amount each year. Make sure to take this into consideration, as this could also influence your total compensation package. My new employer does not currently offer any retirement benefits, so it will be up to me to save money for my retirement. Luckily, we can use my wife’s 403(b) in addition to our Roth IRA’s to save for retirement.
While my new employer does not offer as many benefits as my old employer, the increase in salary was more than enough to still offer a 10% raise in total compensation. Had I looked just at the starting salary, I would have over-estimated my raise. Instead, I had an accurate picture of how this change would affect my finances. Understanding all of the influences is the first step in being responsible with your life decisions.
What other factors do you include when calculating your true earnings?
This post was written by Corey, a staff writer from 20’s Finances.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.