Accepting a pay cut for your new career

Step 4 of a 10 step career change plan

Perhaps the main reason for your career change is to earn more money? If so, then that’s great, but it’s always wise to get as much information on your new career to ensure that you will actually earn more money doing it. So much depends on location, experience, job role and a host of other variables (some of which shouldn’t in this day and age, but countless surveys point to gender inequalities in salary for instance). Anyway, you can find a great little salary tool at salary.com which should give you more information.

If, however, your career change is not driven by wanting to achieve more money, you may need to accept a pay cut. The popular press and countless television programmes talk about people who have ‘downshifted’. They’ve accepted a lower salary in exchange for a less stressful job, perhaps with more time at home, a new location or a more spiritually rewarding career. Again, use the salary tool to find out how much you might be paid after your career change, and assess whether that will be enough to live on.

The best way of doing this, I think, is to rigorously record all your expenditure for three months – from the coffee you buy on the way to work, to the insurance payments on your car, to the presents you bought your children – absolutely everything! Then, if this amount is greater than you’ll earn from your new job in a three month period, think about how you’ll make up the shortfall.

Either you’ll need to dip into any savings you have (and it’s a simple calculation to work out how long those savings will last) or you’ll have to trim your expenditure a little – just remember that it’s worth it to gain the improved quality of life from your career change!

To work out how much you might be able to save from your monthly expenditure, calculate how much all of those discretionary items cost. Did you really need that coffee on the way to work instead of having a coffee at home or waiting until you hit the office? Did you need to eat out on Thursday night, or could you have prepared a nice meal at home instead? It’s not unusual to be able to take 20-40% out of your monthly outgoings without materially affecting your quality of life. Of course, you will need to involve your family in these decisions, but make sure you remind them of the additional benefits they will also get from your career change!

Move on to Step 5: Financing your career change