How to Analyze a Salary


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How to Analyze a Salary

When Johnny and I got our first real jobs out of college, we were both just giddy that someone wanted to pay us a salary. Us! Our combined income the year prior had been $19k, so any sort of steady income made us feel like kings (ahem… or rather, king and queen). Our only real question when it came to job searching was, “How much does it pay?!!” I mean, what else was there? Well, actually a lot, which we learned as we became more immersed in this thing called “adulthood.” Blegh.

As many of you full-timers know, a lot more goes into a salary than just the number on your pay stub. So before you become all slack jawed and googly-eyed over the salary number a company is promising, it’s important to consider the following:

Health Insurance

As Johnny and I learned after Sally was born, the insurance your company offers can save you thousands. It’s important to look not only into the quality of the insurance, but also the amount of your monthly premium (here’s a refresher on insurance terms). When considering the quality of insurance, the premium, copay, and deductible are core considerations. Since the premium is the amount you’ll be paying each month, that number is especially important. Employers could pay anywhere from 0% to 100% of your premium.

401k

Does the company offer a 401k (or 403b)? Does it match any contributions you make? To what percent? I know these sound extremely boring and — if you’re under the age of 25 — extremely irrelevant. But they’re not! It’s important to know the answer to these questions, especially if you’re planning to work for a company long term. Having a 401k match from an employer is free money — free money that will grow exponentially and make money babies just for you.

Life Insurance

While no one wants to think about the depressing topic of life insurance, it is good to know whether your company offers it for free. As a newly graduated 22-year-old, I tried to opt out of my company’s life insurance because it seemed irrelevant. But they told me it was free, duh! This one isn’t a huge consideration, but it’s good to be in the know on a company’s policy.

Bonus

Bonuses are pretty self-explanatory. If possible, find out what kind of year-end bonus a potential employer offers. It could boost your salary thousands of dollars, or maybe just a few hundred dollars. It may also be dependent on other factors, such as meeting certain quotas.

Relocation

Relocating can cost thousands of dollars. Before you say “I do” to a company, knowing whether they offer a relocation package (and what it entails) is a must. Johnny has negotiated a relocation package with every job he’s accepted, which has made the whole moving process less stressful on us and our wallets.

PTO

It’s always important to factor paid time off into a salary. A company that offers 10 days off versus 20? Well, your quality of life at the latter company will most likely be better. Also, knowing the hours expected from employees is crucial. Asking about the work/life balance of other people at the company is probably a good indicator of what kind of hours you’ll be putting in as well. If you’re a single twenty-something, 60-hour weeks may not be a big deal, but if you’ve got a family, long hours could be a deal breaker.

Profit Sharing

Back to the talk of retirement nonsense? Yes. If the company has profit sharing, your retirement savings could really benefit. When the company does well, your retirement savings do well. While you won’t see that money right away, it could make a huge difference in your retirement years down the road.

So the next time a job offer (or two or three) comes your way, do your homework on what that salary really entails. Being a responsible adult is oftentimes totally dull, but when money is on the table, it pays to be just that.

Any other factors you consider before accepting a salary? Please share! 

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12 Comments

  • Reply andee February 19, 2014 at 9:55 am

    We just got my retirement account statement this weekend and my husband says, “you can never leave your job”. Yep, not to mention they pay for both of our health insurance completely. I know its rare and exceptional for an employee to completely pay for health insurance let alone for my whole family. I’ve looked at other jobs but no one can complete with the benefits side of what I have now.

    • Reply Johnny February 23, 2014 at 3:23 pm

      Haha. I think those same words have come out of my mouth before, too. But having an employer pay the premium for you AND your family?! That’s amazing! I’m glad that you’re fully aware of what an awesome benefit that is and what that likely equates to in your total salary.

  • Reply Rob February 19, 2014 at 12:29 pm

    Well guys, over the years (before I retired), I worked for several employers where I was lucky to receive all of the benefits that you mention. My last employer, besides all of these benefits, also offered an optional employee stock purchase plan as well as an attractive employee discount plan (applied to purchases made in their retail stores). For every dollar of company stock that I bought (via payroll deduction) my employer would match it at 50 cents on the dollar – a very nice benefit considering that the stock’s value increased over the years (while I was working there) by over a 1000%.

    That all said, whenever I considered a new job offer, I would evaluate the total package: the offered salary plus the value of all the other benefits (mentioned above) – but also: the nature of the job itself – the career growth opportunities, the corporate culture, the management style of my supervising manager, the training opportunities, along with my gut feel on how well I would fit in with those whom I’d be working with.

    • Reply Johnny February 23, 2014 at 3:26 pm

      Oooo, employee stock purchase plan and company discounts are good ones to add to our list. I guess 1000% is a pretty good ROI. :)

      And good points on the intangibles of career opportunities, culture, ability to maintain a healthy lifestyle and work/life balance. While there’s not a dollar sign attached to those attributes, many of them are worth a lot more than money, anyway.

  • Reply Anne February 19, 2014 at 5:37 pm

    While rarer and rarer nowadays, I would add a pension to this list. 401k match is awesome, but if they offer a pension in lieu of or in addition to it’s definitely something to take into account when you look at “total compensation”.

    My previous employer also did an FSA match to encourage people to use their FSA accounts, which was really nice.

    And similar to relocation, for anyone considering moving (or working across state lines), WHERE the job is located is critical. What’s the COL compared to where you are, compared to other offers if you have them? What are the taxes like?

    • Reply Johnny February 23, 2014 at 3:29 pm

      Good call! It’s rare enough that it completely slipped our minds. I can honestly say that I don’t know any friends/family that have access to a pension through their employer. But that doesn’t mean the unicorn isn’t still out there — especially for a lot of public sector careers.

      Cost of Living is another major consideration. $50k in Kansas ain’t $50k is NYC. Thanks for your comment!

  • Reply Dear Debt February 20, 2014 at 1:32 am

    I always think of commute and dress code! That can really kill a budget if it’s too far away, or not near where you live. I know that’s not part of the benefits, but something to consider against those items.

    • Reply Johnny February 23, 2014 at 3:33 pm

      Really good points. We’ve been able to get by with a single car (or no car in Boston and NYC) for so long because we were so adamant about choosing jobs (and housing) that was close.

      Since I’ve always been in jobs where t-shirts are OK, dress code considerations have never even crossed my mind. But I’m sure it ain’t cheap to have to rehaul your wardrobe to look snazzy everyday.

  • Reply Little House February 20, 2014 at 10:07 am

    I work for a school district and when I was a substitute, not making a whole lot per se in salary, I still had full benefits which contributed to the overall value of the job. Now that I’m full-time, my salary isn’t comparable to other professions that require as much education, but I get a lot of “vacation” time that factors in, so it’s not so bad.

    • Reply Johnny February 23, 2014 at 3:34 pm

      Summers off?! Yes, please! Sometimes I dream about what that would be like. And while you already mentioned the salary trade-off, part of me thinks the raise on quality of life might offset that anyway.

  • Reply Diane February 20, 2014 at 1:51 pm

    I agree with the additions of commute & dress code~ Dress code would not be a deal breaker, but it’s cheaper & more comfortable to work in a place that has a business casual dress code. I’m much happier if I can be comfortable in my clothes, as I’m not a dress-up person.

    The commute is KEY~ It’s not part of your compensation package, but when you consider it could add hours & lots of $$ cost to each day, it’s definitely a factor. If you have kids, it also matters that your school or daycare is in the same direction.

    I once had a job in the opposite direction from my kids’ school. My older son could ride the bus, but the younger one was in preschool at the same private school and I had to drop him off & pick him up. It added lots of miles and time to my commute, plus extra cost for after school care until I could pick him up, but for other reasons it was better to have them both in the same school. It also added a tremendous amount of stress to the start of each day, because of traffic issues & not being able to drop him off until a certain time. Things to think about…

    • Reply Johnny February 23, 2014 at 3:38 pm

      Great points. While a lot of this post was focused on aspects that include $ signs, there’s no question that time commuting (and being away from home), stress level, and overall quality of life should be just as important when looking at a job offer. For many of those reasons, I’ve begun pivoting my career. I’d be happy to trade a more lucrative career for one that I can spend more time with family.

      Thanks for your comment!

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