Is a new job the right financial decision? [Column] – herald of time
Whether you call it “The Big Resignation,” “The Big Reshuffle,” or just it’s time for a change, millions of American workers are looking for new jobs – and some have already left the one they are looking for. ‘they have. Better pay is not necessarily the motivator, say labor experts. Many people are looking for more flexibility, the ability to work remotely, or other non-financial benefits.
Still, money is important, and a job change can be a great time to dramatically improve your financial outlook. In addition to the pay that a new job offers, you need to consider the value of a wide range of benefits and other compensation. Once you have a clear idea of what is on offer, you may be able to negotiate a better deal.
TOTALIZE YOUR CURRENT COMPENSATION
Start by calculating the pay for the job you currently have, or your most recent job if you are unemployed, says Seth Mullikin, a certified financial planner in Charlotte, North Carolina. In addition to salary and bonuses, commissions, profit sharing, or stock options, you should include employer-paid health and life insurance premiums as well as company contributions to corporate accounts. health savings and retirement plans. (These contributions are often written on your pay stubs, or you can ask the human resources department.)
Include any other perks you get – cell phone reimbursement, employee discounts, gym memberships or company-provided daycare memberships, for example – as well as the value of any perks you’re likely to use over the years. next three years, like infertility coverage or tuition assistance, suggests Mullikin.
Then think about what you could give up by leaving now. Some benefits vest over time, such as stock options, 401 (k) considerations, and traditional defined benefit pension plans. This compensation may not be enough to handcuff you to your job indefinitely, but you may not want to withdraw from a large payment prematurely.
“If you were to leave a company where you had stock options that were about to vest, would you better wait another year? Said Mullikine.
HOW DOES THE NEW JOB COMPARE?
Perform similar calculations for a job offered to you: add to the proposed payment all employer contributions for benefits and other perks you are likely to use. If these benefits are not clearly stated, ask for specific details and figures.
Then check to see if you deserve more. Your current salary may be lower than most other employers if you’ve worked at the same company for many years, says Lazetta Rainey Braxton, CFP in Brooklyn, New York. She recommends using sites like Salary.com to get a feel for what similar jobs pay to better assess the offer.
TAKE A DEEP LOOK
The benefits can take very different forms in different companies.
Some employers offer a range of health insurance plans to choose from, while others do not. If the only option is a high deductible plan, for example, it could be fine if you are a young, healthy person – or disaster if you have substantial medical bills and not enough savings to cover the deductible, said Mullikin. Likewise, a plan with a limited network of providers could become expensive if your doctors are not included.
Also find out about waiting periods. Employers can make you wait up to 90 days for health insurance coverage or a year to contribute to a 401 (k). Parental and other leave policies may also provide for waiting periods.
Company policies regarding time off vary widely, and small businesses may be exempt from laws that apply to larger ones. For example, companies with fewer than 50 employees are generally not required to comply with the federal Family and Medical Leave Act, which grants covered workers up to 12 weeks of unpaid leave with job protection for serious health care or problems.
USE YOUR LEVER
Financial considerations must be weighed against all other aspects of a potential job. Are there opportunities for advancement? Flexible working hours and locations? Is the workforce diverse and the culture engaging?
Risk tolerance matters too. You may be prepared to accept lower pay and fewer benefits in exchange for stock options that could one day pay off big. Or you can prioritize job security and the ability to save for the future rather than rolling the dice.
If the job is tempting but the offer is lacking, see if you can negotiate a better deal. You may never have more leverage than you have until you formally accept an offer that has been extended, says negotiation expert Kwame Christian, director of the American Negotiation Institute in Columbus, Ohio.
Christian recommends negotiating salary and other financial matters before asking for more time off, flexible hours, or other “creative options” that don’t directly cost your employer.
“You always want to get the money first,” says Christian. “Because we know money is exhaustible, but with these creative options, a lot of it really is inexhaustible.”