Last week, a dear friend of mine was at a career crossroads. He had a job, but was in line to be offered two other jobs with two other well-respected companies. He was torn. He was stressed out. And he was losing sleep over the prospect of making the wrong choice. His current job paid well, it was in his dream industry, but it still left a lot to be desired. One of his suitors offered to match his current pay, but the health insurance benefits became an issue due to their added expense. The other suitor offered to pay more, but the position presented some challenges of its own. Don’t get me wrong, he was in the midst of “good” problem, but a problem none the less.
He needed an objective way to make an informed decision. He would be foolish to accept the highest paying job based solely on the fact that it is the highest paying job. This was his career that we were talking about, not just a paycheck. Assuming that you aren’t willing to take just any job that you can find, selecting the correct job is vitally important to your financial life. There are times when income is all that matters, but for your career’s sake, letting the income guide your path is a really bad idea.
There are several factors to consider when selecting a job. Ignoring the “other” factors will often result in leaving a job after just a couple of years. Money isn’t everything. And for that matter, base salary isn’t the only thing you should consider in regards to money. Below you will find what I feel to be the ten most important factors. They are in no particular order.
- Base income: Traditionally, base income is the very first factor in whether or not you should accept a new job. We’re talking dolla dolla bills, ya’ll. Don’t be ashamed if all you care about is base (guaranteed) pay. I get it. There are times in life when your base income is all that matters. However, I urge you to think bigger. The longer you have been in the workforce, the more you will care about other things.
- Additional compensation: Will your potential new job allow you earn commissions, bonuses, or overtime? If so, you need to fully understand how difficult it truly is to earn this additional comp. Don’t just take the hiring manager’s word for it. Ask to speak to someone else in a similar role, and make sure that the compensation claims actually are possible.
- Income growth potential: Some jobs will only allow you a “cost of living” salary adjustment from year to year, while other jobs will allow you to earn substantially more money as your role increases. Don’t take the higher paying job now, if the lower paying job can be higher in just a couple of years. Be sure to think long term.
- Health insurance benefits: Health/dental/vision insurance benefits are not created equal. Don’t take a job unless you have fully investigated the insurance benefits that come with it. I have seen several instances of people accepting “higher” paying jobs, only to find out that the higher cost of insurance caused the new job to be lower paying.
- Retirement options: Does your new job have a retirement plan? If so, does the company add money to the plan for you? Will you have a pension? A pension is MUCH different than a 401k. Make sure you know what you are getting yourself into.
- Equity options: Does your potential employer offer stock options? Can you own part of the company? I have had several friends take jobs with tech startups based on the equity shares they received. Not only did they get a job, but they were given partial ownership of the company. This isn’t all roses, though. Often times this sort of benefit is given when job stability is in question.
- Professional development: Is your mind turning to mush at your current job because you are in a rut? That feeling could stem from a lack of professional development. Some employers truly see the value in developing talent within by pushing (in a good way) their employees to be more. Other companies just don’t get it. They don’t help you work on you, and everyone suffers.
- Distance from home: Will your new job force you to commute hours per day? Or will your potential new job allow you to walk to work? I moved my offices from 12 miles away from my home to .25 miles away from my home. This is so I could walk to work. The cost of a commute can be substantial. Make sure you factor these costs into your decision.
- Time commitment: Does your new job force you to travel all over the globe? If so, is that a good thing or a bad thing? Do you have to work longer hours in order to get a higher pay? Some people would rather give up thousands of dollars in salary in order to manage their own schedule. Consider how flexible your hours are when you select a new job. This matters tremendously, especially if you have children. Kids get sick, kids have soccer games, and kids need their parents to sleep at home, not in hotel rooms on the other side of the country.
- The people factor: Have you ever seen the videos of people “losing it” at work? I’m sure you have. They are throwing computer monitors, tipping over desks, and various other acts of temporary insanity. All of that can be caused by an unhealthy work environment. As we discussed the other day, office bullies are real, and they can make your career hellish. You need to consider the people who you will work closely with. Don’t make the wrong people choice. You’ll end up spending all your extra money on therapy, seriously.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.