Consider more than the salary
When considering a new position it is easy to get caught up in the salary… It sounds like the bottom line, but it really isn’t. Let’s get out our calculators and do some real analysis before we say yes.
1. Do they offer a bonus?
Typically they will let you know about this one up front, but you might want to ask a few followup questions. What is your bonus based on? Is it dependent on your performance, or the company’s performance? Did staff receive bonuses in the previous year? If they say they have a bonus program but nobody has gotten one in 3 years that’s a red flag. Also make sure the bonus isn’t a just a Cost of Living Adjustment posing as a bonus.
2. What portion of medical insurance are they paying?
This one can really get you in a bind if you don’t ask. You could get two job offers that both “offer” medical insurance and pay a salary of $100K a year. But it could be that Job “A” pays 70% of your $1500 premium each month, and Job “B” pays 0%. If that’s the case then Job “A” leaves over $12,000 in your pocket. Also pay attention to the deductible amounts so you can compare apples to apples.
3. What’s the 401K match? And when do you Vest?
This one can really make a profound difference over time. You should always calculate what the employer will be providing as a 401K match; this is real money!
Here’s a basic breakdown of some common company matches:
– If you make $50K and your employer matches 50% of what you save, up to 6%… Then that’s $1,500 in your pocket.
– If you make $50K and your employer matches 100% of what you save, up to 6%… Then that’s $3,000 in your pocket.
– If you make $50K and your employer matches 200% of what you save, up to 5%… Then that’s $5,000 in your pocket.
Vesting: The other important consideration is when you will be vested. Being vested is basically when you take ownership of the matched funds from the company. I have worked at places that took 4 years to vest, while others I was vested the day I started. Very important to ask because if you find out you need to stay with a company 5 years to be vested you take on a lot of risk when compared to someone who vests in 12 months.
4. Are there stock options?
This is something that could be a pretty big perk if you’re in a growth industry. If you think you might be working for the next Dell Inc., and they have a good stock option program,,, that could tip the scales toward taking the position.
5. What’s the vacation time? (PTO)
Remember, paid time off is free money!
Imagine that one company is offering you a $100K salary with 2-weeks vacation, and another is offering the same salary with 6-weeks vacation.
When you look at it this way:
– The first company is paying you $100K to work 50 weeks. (That’s $2,000 a week)
– The second company is paying you $100K to work 46 weeks. (That’s $2,175 a week)
“The second company is paying you 8% more for your time!”
6. Education Opportunities
A lot of companies now offer incentives to help with your college tuition. I have worked at companies that offered $0 in incentives, and I have also worked for a company that offered $10,000 per year. This is usually outlined in your offer letter. Things to look for are how much is offered, and whether that amount is an annual or lifetime limit. Do you have to work with the company a certain amount of time before you have access to this tuition assistance? Will you owe the company any money if you leave them before a certain date? You need to understand any fine print before you make your decision.
7. Is the Salary Negotiable?
The employer usually isn’t going to tell you if the salary is negotiable or not, so you’ll have to ask. If you’re not off by too much, and you are pleasant about it, there’s a decent chance they will come back with a revised offer. They have already decided that you are the person they want after all.
8. COLA (Cost of Living Adjustment)
The price of goods and services goes up every year. If your salary does not, then you are essentially making less money each passing year. It’s smart to ask if COLAs are done yearly to make sure your pay stays accurate to inflation.
9. Is There Room for Growth?
When we think about careers we have to think long term. Will the place you are going be an avenue toward your career goals? Will it offer you the experience you need to move into the higher position you want? Will it put you in projects that will create impact? Think about where you want to be in 5 years, will this get you there? If not, what would?
C.J. is the blogger behind the Vow of Practicality. “Let’s grow your wealth, increase your productivity, and maximize your happiness.”