Four Times it May Pay to Take a Pay Cut
There’s a tried and tried (and outdated) piece of advice that says you should never move jobs for less than a 20% pay raise. Now, don’t get us wrong, we’re all for moving upwards and onwards in the career track but, when it comes to employment choices, the definition of upward movement doesn’t necessarily line up nicely with a pay increase.
In the real world, it’s possible to come across scenarios where it actually makes more sense in the long term to take a pay cut in order to make greater career advances. For those operating on a tight monthly budget, these types of difficult choices may not make much fiscal sense. But if you have the wallet space and are inclined to think outside the job-market box, we’ve got four scenarios where taking a pay cut may make good sense, and cents.
Making a Career Shift or Switch
You know that person who picked a career out when they were in kindergarten and worked their entire life to make it happen only to land the gig, work in the field and retire happily ever after, many years later? Yeah, neither do we. The reality is that most of us will make one, two or more mistake in our career path before choosing a field that satisfies and meets our personal and professional needs.
Taking a pay cut when switching career fields is a perfectly reasonable choice if the new career fits your long-term career needs. Staying on a path that isn’t fulfilling or in which you don’t have the capability or desire to succeed can mean that long-term your potential success for taking a career cut in a more favorable field makes more sense. Plus, you can’t put a price on happiness and fulfillment. As the other old saying goes, if you do what you love you’ll never work a day in your life.
Allowing for Personal or Professional Flexibility
It’s an increasingly accepted reality that some of us just aren’t cut out for the typical 9-5 routine. Whether it’s raising a family or creative pursuits, some people are in need of a little bit of flexibility in work hours, status or the need to be sitting in a physical office space from 9-5.
Working moms and dads can, and do, take pay cuts in order to have the ability to stay at home or work from home part-time, allowing them to raise their families. Some people are better adapted to variety in their professional lives and prefer working two part-time or disparate jobs in order to accommodate either scheduling or creative or personal needs. This may mean taking a pay cut but can often produce immeasurable career gains.
Eliminating a Career Ceiling
From time to time you may have done everything right in selecting an education, career and personal path, only to find yourself at a complete standstill on the corporate ladder. Whether it be your individual company, your specific title or niche job role, there may come a time where you find yourself unable to advance further in either pay or responsibility. This can pose a frustrating scenario to the typical employee who is interested in advancement and challenge in their daily job life.
Taking a short-term loss order to achieve long-term gains may be the most no-brainer decision on our list of valid reasons to accept a pay cut. The trick here is to be sure that your potential growth is realistic given the position and isn’t either influenced by personal bias or an HR rep or recruiter talking fast and loose. If the potential is real, however, then jumping to a bigger and better ship may be a wise decision.
Those Intangible Benefits
Our last justification for taking a pay cut involves that category of compensation that’s just a bit harder to measure. Intangible benefits often don’t appear as dollars and cents on your paycheck but can have an equal or greater affect on your overall life. Perhaps your current job requires a great deal of travel so that your dog can’t even remember you 8 months out of the year. Maybe a job offers health insurance or retirement plans that are little more than feel-good facades but provide no real stability.
Accepting a position that pays less day to day but adds intangible value is more than acceptable for smart and savvy career seekers. Whether it be a financial benefit or quality of life consideration, try to quantify your overall benefit in a language other than monetary. If the improvement to your life is greater in the new position, it may mean a pay cut is in order to get ahead.
While we think we’ve come up with a few good reasons to take a potential job cut in your career path, our list certainly isn’t exhaustive. Have you taken a pay cut in order to accept a new position? Let us know your reasoning and maybe we’ll feature your case in our next update.