“What I’d really love to do is X, but to do so I’d have to take a pay cut…so forget it” If I had $1 for every time I’ve heard that statement from a client, friend, or family member, I’d be typing this from a yacht in the South of France. Yes, there might be instances where making a career change or changing jobs does necessitate taking a pay cut. But before you start rationing your fancy wrinkle cream in sacrifice to your new career, let’s look at the bigger picture. There are a lot of resources out there to help you navigate the potential financial implications of a new career path (see Ama La Vida’s Instagram post on this very topic!). Before you begin your research, let’s take a step back and explore some of the reasons why we might anticipate a pay cut in the first place. View this post on Instagram A post shared by Ama La Vida | Online Career Coaches (@alvcoaching) Common reasons for pay cuts Anticipating a pay cut stems from both legitimate and perceived (hello limiting beliefs!) instances and scenarios. Here are some common instances where people are most likely to consider a pay cut (or think they’ll need to take a pay cut): More opportunities Let’s say you work for a small, family-owned company with 100 employees. The pay is great, but there are no clear opportunities for growth and advancement. Moving to a company of 1,000+ people, with multiple departments or functional areas and more long-term opportunities for promotion and career growth, might be a more attractive option, even if it requires a pay cut in the short term. More flexibility Perhaps you’re working for a company that requires staff to be in office 5 days a week, with a long commute on both ends of your work day. If achieving better work-life balance is one of your main drivers for seeking new employment, you might be comfortable taking a pay cut to work for a company that allows staff to work remotely. Better benefits Maybe your current company offers all the standard benefits (health insurance, vision, dental) you’d expect, but nothing more. You might be comfortable accepting a lower salary at a company whose benefits package includes things like: IVF fertility coverage, long-term care insurance, gym and fitness membership allowances, and reimbursement for your Ama La Vida career coaching membership. Switching industries Not all industries are incompatible when it comes to salary offerings and ranges. However, there are instances where you might need to accept a pay cut to move to your desired industry. Consider this example: You’re an ER doctor at a big city hospital, but it’s been your life-long dream to be a stand up comic. Moving from a doctor’s salary to that of a stand up comic who is just starting out in the industry might require a downgrade in pay. Not keen on taking a pay cut for a new job? There are ways to minimize the possibility. How to minimize (or avoid!) taking a pay cut for a new job There are things you can do to avoid taking a pay cut. Transferable skills Consider your current job and how the skills, tools, and strategies you regularly use align with the responsibilities of the role you’re looking to step into. Things like: These universal strengths can be applied to almost any job with just a small amount of customized upskilling based on industry or field. Upskilling Looking to pursue additional training as a means to beef up your resume and potentially mitigate the pay cut that might result from that skill gap? Check with your current employer to see if tuition reimbursement is an option. Stay put (sort of) Feeling stagnant in your role but love the company you’re working for? Consider looking internally for your next job. Leveraging your current salary and knowledge of the business work in your favor when negotiating a new salary internally. As covered in Ama La Vida’s Instagram post, it’s not always simply about salary. The above process helps clients uncover exactly what they want and create a strategy to attain it. How to negotiate your job offer to maximize your compensation package It’s important to think beyond salary and instead consider the full compensation package. The idea of a lower salary and having less money each month can be a scary thought for most of us. But, it’s important to evaluate the big picture to see what we might stand to gain outside of dollars and cents. For example, the bonuses and regular raises paid to employees at the new company you’re considering might be significantly higher than the annual percentages you’re entitled to at your current company. Or, maybe the amount of paid time off you’ll receive right out of the gate is double what you have at your current company. Another thing to consider is the amount of work you’ll have on your plate compared to what you have now. Will your workload and other responsibilities be reduced considerably? The new role may also bring a drastic difference in your out-of-pocket benefits expenditures. Will your health benefits come at a lower cost to you personally, with coverage that is in line, or even better, than what you have at your current company? Lastly, there’s always wiggle room to negotiate any of the above, in addition to salary, no matter what a recruiter or hiring manager tells you. Don’t be afraid to (gently) push back and advocate for yourself. So, what other questions might you need to ask yourself before considering a pay cut? Questions to ask yourself before taking a pay cut As with any financial decision, taking a pay cut is a deeply personal choice that requires thorough investigation into your own unique financial situation and circumstance. Honest introspection and exploratory work will ensure you’re accepting a pay cut with your eyes wide open. Whether you’re exploring new professional possibilities or navigating your existing … Continue reading Should I take a pay cut to change careers?