Making Pay Cuts Work for You

Yep, you read that right—making pay cuts work FOR you—and no, I haven’t gone off my rocker or smoked something funny!

A story in CNN Money says that a pay cut can work for you IF:

• There is something better to take the place of the missing pay, such as more and/or better benefits, reduced workload or responsibilities, flexible hours, etc.

• Better opportunities lie elsewhere, such as a new place of employment, a new division of your current company, or more time at home.

• You’re young, not too talented, and/or not very experienced in your job field. Most young bucks get out of college and try to make mad grabs for big bucks long before their talents and experience warrant it.

• You live in (or are planning on moving to) a location with lower cost of living expenses, or are already frugal enough to weather a pay cut with your savings and spending abilities.

• You’re older, wiser, and stuck in a rut. A change of ANY sort may be just the thing you need to recharge your batteries and kick start your creativity once again.

• You need a break, or have a long list of unmet desires.

These apply to a pay cut from your current workplace or a new workplace. Sometimes a jumpstart involves a step backward, but only temporarily. If the step is made in a workplace that has plenty of room to grow forward and upward, then it is a right move to make the pay cut work for you.

My only suggestion is this: if you receive a pay cut from your current company, and have no prospects for getting out or away from it, try using it as a negotiation chip to get something better for yourself as compensation for the pay cut—benefits, paid time off, flexible hours or a change in work hours, telecommuting, fewer responsibilities, subsidized transportation or other things, you name it. Employers want to keep you, but can’t or don’t want to pay you for staying—at least in the PAYROLL sense. Use your imagination to figure out a way your company can make it up to you, and negotiate for it. Otherwise, your best bet may be to look elsewhere for employment.

Don’t use short-sightedness to guide yourself into a deadly job that pays big bucks—try to get some fulfillment out of the deal. Think long-term instead. Besides, the more you make in raw dollars, the more you get taxed! Benefits and other tangibles aren’t taxable to you. A job with saner hours, less commute time, less duties and responsibility, and a happier environment may be worth the reduction in pay—maybe more.