Should you ever take a pay cut?
Should salary be your main focus when you are looking for a new job or is there ever a good time to be willing to take a pay cut?
When you are evaluating a new job role there are many different factors to consider in addition to salary. There’s the job itself, your level of responsibility, your job title, potential for future growth and so on. There are also benefits which may compensate for a pay cut i.e: longer holidays, bonuses, commission etc. to factor in.
Here are some reasons you may consider taking a pay cut:
When you’re making a career change
A good reason for taking a pay cut is when you are changing career. It may be worth a cut in pay to gain a new set of skills and experience to broaden your knowledge. It would not be reasonable to receive top pay when you move in to a role where you have little to no experience. In these situations it is a good idea to take a long term view as to what you will be earning in 18 to 24 months.
When you want a better work-life balance
Salary isn’t everything to everyone. Many people would be happy to take a pay cut if they could reduce their commuting time and get a job nearer to home or a role which allowed them to work from home a couple of days of a week. Additionally you may feel that having a less demanding position because of family needs could be the right career choice. Whatever your reason for wanting to obtain a more balanced life it could require you to consider a pay cut.
When a new role is much better
Sometimes a new job offer is a fantastic opportunity. It could be you have always wanted to work for this specific company or that you are miserable in your current job and you have the chance to obtain your dream role. In these circumstances it could be worth taking a pay cut in the short term in the hope that you will be earning more in the future.
When it evens itself out
If you can reshuffle your priorities and out goings so that your reduced salary doesn’t make a significant difference to your lifestyle then you’ve meditated much of the pay cut. Look at the costs you could reduce if you took the new position. Would it save you travel and childcare costs and reduce the number of take-aways you have weekly because you would have time to cook. Look at your expenditure and if the new position could save you money it is definitely worth considering.
When there is something you want more
Basic pay is generally only one component in an employee’s total compensation. Sometimes it is beneficial to take a cut in salary if there are other payment methods or bonuses which sweeten the deal in other ways. These could include an annual performance bonus, extra holiday, a study package, training opportunities and attendance pay. Look at these it could make the drop in pay worth contemplating.
When starting your own Company
Maybe you have always wanted to start your own Company. Self-employment always comes with some risks and often includes a short term pay cut while you get your new Company off the ground. But in starting your own business you will likely be able to make your own schedule and hopefully your life will be less stressful. Perhaps best of all once your business starts to make money you will be able to take whatever salary the business can afford.
You have hit the salary ceiling
If you work hard and have been at your job for a long time you have probably received regular pay rises, after enough time you may have maxed out the salary range for your position. In this situation future increases may not be possible without promotion. If you salary has reached its potential and your career path is blocked then it may be time to look for another opportunity. By taking a position with a fast growing Company, for example, may lead to multiple opportunities for career growth and ultimately salary increases. So taking that initial drop in pay may be more beneficial in the long term.
If you do consider taking a pay cut make sure you are really prepared, it is not something you should accept lightly. You need to know yourself well enough to understand if a pay cut will lower your motivation and passion for work, you also need to take a close look at your personal finances to make sure that the pay reduction won’t create a situation that’s not feasible at home.
Be self-aware and make sure that you’re taking a pay cut for the right reasons and won’t regret it later.
Happy job search