Should You Take a Pay Cut for Your Dream Job?
After nailing the interview, you receive the job offer of your dreams. It feels like all the pieces are falling into place — until you see the salary. It’s no only less than you asked for, but less than what you’re currently earning.
Now you have a dilemma: Do you take the position with the pay cut, or continue earning the same salary at a job you don’t really enjoy? According to a 2018 survey conducted by Lexington Law, 60 percent of Americans say they’d be willing to take a 50 percent drop in pay for a job they really loved.
It’s a less-than-perfect scenario, but the way you respond could change the trajectory of your career. If you’re feeling stuck, ask yourself these questions before taking a pay cut for your dream job.
Is It Financially Feasible?
This sounds obvious, but it’s easy to overlook your better judgment when enchanted by a seemingly great new job. It all comes down to running the numbers. After accounting for taxes and any automatic payroll deductions, like 401(k) contributions, where will your take-home pay land? Weigh that number against your monthly expenses, including saving for long-term financial goals like retirement or a down payment on a home.
If the math reveals a gap between your income and expenses, that’s a warning sign. However, you might find it to be workable if you tweak your budget a bit. In that case, professional career coach Cheryl Czach recommends paying attention to unnecessary spending you could realistically eliminate, like daily lattes or meal subscriptions. In other words, the question is: What could you cut in order to pursue the work you love?
“The trade-off may be worth it to you for a few years until you regain that earning potential,” Czach says.
Also look at your outstanding debt and see if there are any options to alleviate your financial stress in that regard. For example, income-based repayment plans are calculated based on your salary, so lower take-home pay could be offset with lower monthly payments toward your student loans.
Is This Job as Amazing as You Think It Is?
Czach also notes that, sometimes, the reality of the dream job isn’t exactly what we thought it would be. The truth is that no job is perfect, and every role is going to have its pros and cons.
“You think this is going to be the purposeful work that you’ve been looking for, so you sort of ignore red flags that pop up for you along the interview process,” Czach says.
These feelings might be even stronger if you’re unhappy in your current role. Think of it as the professional equivalent of the grass always being greener on the other side. Czach added that having unrealistic expectations could create a terrible situation where you’re still unhappy at work, but now you’re making less money.
Czach suggests clarifying your outlook on the situation by reaching out to people who are already doing the work you’re interested in and asking for a virtual coffee date. If they say yes, you can ask important questions like: What does their typical workday look like? What are the unique challenges and rewards of the job?
Another smart move is to research the company itself to better understand how satisfied its employees are on average. According to Harvard Business Review, most people who end up taking the wrong job didn’t do their research going in.
“Trust your gut,” Czach says. “If the red flags start coming up for you, pay attention to that and don’t minimize it.”
At What Point Will Your Salary Rebound?
Taking an initial pay cut doesn’t necessarily mean you’re doomed to low pay forever. Doing your research here could pay off, quite literally. Spend time on career websites digging into the average pay for the position in your area and what the typical professional ladder looks like for someone in this role. If you’re taking a lower-level position, what kinds of promotions do people in the job earn as they move up in their careers, and what does the compensation look like?
The endgame is to figure out the point at which you’ll make up the money you’d be missing now. Those informational coffee dates mentioned earlier could also be a way to gain some valuable insights into this question.
“You might initially have to take a step backward, but it might only take you a year or two to get back to where you were once you start to build experience in the industry,” Czach says.
Is the Salary Negotiable?
Flex your negotiation muscles before blindly accepting a low offer. It’s a strategy that could make the difference between taking your dream job or turning it down, especially since research suggests that 70 percent of managers don’t expect candidates to accept their initial salary offers. According to Czach, things are usually negotiable to a certain extent.
“I suppose it would depend on how far the gap is between what you’re looking for and what they’re offering,” she says. “If it’s not that large of a gap, I’d say absolutely try to negotiate. But if it’s significant, you’re probably going to come up against some issues.”
Either way, it never hurts to ask. Another alternative is to explore reasonable lifestyle changes to help dial up your income or reduce your expenses. This could include picking up a side gig or seeking debt relief from your current lenders.
Can You Leverage the Offer With Your Current Employer?
If the lower-than-expected salary is a deal breaker, consider leveraging the new job offer to your advantage with your employer. If your manager knows you’ve got a great new job prospect, they may be willing to provide some incentive for you to stay. This could be anything from flexible work hours to higher pay or a promotion. (FYI, you don’t have to share the salary the other job offered.)
Of course, this is only an option if your current role is one that could be improved with a few minor tweaks. If the company culture is a terrible fit and you’re truly unhappy, don’t try and force it.
When all is said and done, you may find that taking a pay cut for your dream job just doesn’t make financial sense, and that’s okay. It that’s case, Czach suggests exploring nontraditional opportunities to pursue your dream work. This could be everything from volunteering to taking on a related side hustle. Doing so will likely make you worth more in future salary negotiations.
Marianne Hayes is a longtime freelance writer and content marketing specialist.