Should You Ever Take a Pay Cut? Here's How to Decide
Should You Ever Take a Pay Cut? Here's How to Decide
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Common Reasons for Pay Cuts
– Returning to the workforce after an extended leave– Making a career transition– Moving to a new city where the cost of living is less– Transitioning to a smaller company– Demotion or stepping back in a role
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You Should Take a Pay Cut If...
You're Not Juggling Too Many (Inflexible) ResponsibilitiesSit down and consider: What are your life commitments and related expenses? Are you married and covering at least 50 percent of your household expenses? Do you have children (or are you talking about having them in the next year or two)? Is your current salary just enough to cover rent, student loans, car bills?
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You Should Take a Pay Cut If...
If you’ve got wiggle room—meaning you’re free to order take out regularly, buy yourself a nice new sweater whenever you please, or you’re setting aside more savings than your target goal—and no one else is relying on you or affected by the potential corners you’ll have to cut, you’re probably primed to take a reduced salary for a job you really love.
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You Should Take a Pay Cut If...
If things are tight, but you feel confident that you can sit down with your significant other (or family) and find ways to cut back so that you can make the move, it’s worth considering. Start by gauging your flexibility, then decide if you can really make it work.
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You Should Take a Pay Cut If...
Your Current Position and Salary Have PlateauedEven if your salary and perks are great, does it feel like you’ve climbed as high as you can at your current company? Maybe your manager has even told you that regular raises and more purposeful work is just not available. Then it's time to ask yourself honestly: Are you at a dead-end,
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You Should Take a Pay Cut If...
or are you too burnt out to wait long enough for things to change? If so, moving to a more dynamic, albeit lower-paying, company with growth potential is totally worth it.
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You Should Take a Pay Cut If...
You're Switching IndustriesWere you convinced you wanted to work in finance, but a few years of dogged work and tense office politics have proven that maybe you jumped the gun? Are you aching for the days when you worked on your college newspaper? If you want to make a career transition, you’re going to have to take a few risks—and probably a pay cut—to get that fresh start.
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You Should Take a Pay Cut If...
You Want to Pursue an Advance DegreeDo you know you want to pursue an advanced degree like an MBA but your current company doesn't offer tuition reimbursement? Look into the cost of advanced degrees, and you'll see why some people are happy to take a lower salary in exchange for tuition reimbursement.
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You Should Take a Pay Cut If...
However, before you jump into collecting other degrees, consider how that education will support your future growth (both professionally and financially) offer you better long-term career prospects.
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You Should Take a Pay Cut If...
Your Personal Life Is Taking a HitIf you’re working 90-hour weeks, rarely seeing your friends, catching colds 15 times a month, missing out on important life events, fighting with your boyfriend, and developing ulcers—you’re probably suffering more than your salary's worth. Let’s say that pay reduction means shorter or flexible workdays,
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You Should Take a Pay Cut If...
additional vacation time, the chance to work from home, and just a better work-life balance. Truth: Benefits count as much as dollars. It’s definitely worth considering because you can't put a price on your mental health and quality of life.
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You Should Take a Pay Cut If...
The Title Change and Responsibilities are Just That GreatIf you’ve been treading water as "Associate III" at a giant corporation, and suddenly you have the chance to take a job as Director of Marketing at an exciting startup, consider it. Even if the role pays less or if it’s potentially unstable, the chance to learn (and have
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You Should Take a Pay Cut If...
those experiences on your resume) could net you a higher salary down the line.
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You Should Take a Pay Cut If...
You Want Less ResponsibilityThis is the complete opposite of the previous reason. Perhaps you've been the manager for a long time and this next role allows you to be an independent contractor (i.e., no management of people), but it requires a lower salary. Depending on where you are in your life and your career, that tradeoff might totally be worth it.
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You Should Take a Pay Cut If...
You Want to Pursue EntrepreneurshipMaybe you've been building and growing your side hustle and working a full-time job but you're getting to that tipping point—the place where your side hustle is almost breakeven with your current salary. Not to mention your job satisfaction continues to decrease as your business
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You Should Take a Pay Cut If...
grows. Even if you're not 100% breakeven, maybe you're getting close, and the risk of being a full-time freelancer and being fully responsible for covering your finances outweighs it all. If you see a bigger potential upside with your business vs. your current job, it might be worth it. Just remember taxes and benefits.
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You Should Take a Pay Cut If...
You Want Something Else—Or Something More Than SalaryIf you've been re-assessing what you want most from your career and you're in a place where a certain salary is not on your "must-have" list, then you might consider taking a pay cut to be part of something you want more. Maybe you're dying to work for a specific company. Or you
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You Should Take a Pay Cut If...
want to work somewhere where you make your own schedule with a remote location, which allows you to move somewhere with a lower cost of living.Alternatively, maybe you're willing to take a lower salary in exchange for equity or other types of total compensation. Equity can pay off a lot more in the long run if the company performs well.
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You Should Take a Pay Cut If...
Another common reason for taking a pay cut is to get better health insurance or work somewhere where they cover most of your healthcare costs. Maybe you've recently been diagnosed with health issues or your immune system is just not your friend. Maybe a larger company with great benefits is what you need more than a pay raise right now.
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You Should Take a Pay Cut If...
You "Hate" Your Job (or Boss, or Coworkers, or Commute)If an element of your current job is leading to workplace burnout and bleeding into other areas of your job, it might be time to go a different direction—and take the pay cut that could potentially come with it. We don't talk about how much happiness is worth nearly enough. Happiness affect
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You Should Take a Pay Cut If...
s your health, your relationships, and the quality of your work. If you "hate" something about your job—whether you hate your boss, the mundanity of your job, or your insane commute, it's time to make the move to fix things. Money isn't everything.