In an ideal world, you'd be looking at a raise at your job. But if the opposite scenario has come to be and you're therefore facing a pay cut, you may be wondering whether you should agree to it or find work elsewhere. Answering these questions will help you arrive at a solid decision.
1. What do my finances look like?
A pay cut can be an unwelcome blow regardless of what your expenses entail. But if you generally have wiggle room in your budget and don't tend to spend your entire paycheck month after month, then a modest pay cut may be annoying, but it won't necessarily hurt you financially.
Imagine that you're looking at losing $200 a month as a result of your pay cut. If that's money you'd typically spend on dining out and leisure, then it could pay to cut back for a bit and let things play out at your company. But if losing that money will cause you to take on debt to cover your basic expenses, then you'll probably need to rush to find another job.
2. What are the perks of staying with the company?
Nobody likes the idea of getting paid less. But if there are other compelling reasons to stay with your company, then a pay cut may be worth it. For example, if your employer offers outstanding health benefits, a generous paid time off policy, and flexible scheduling, those are things you may not find so easily at another company, in which case it could pay to stay put and rework your budget to account for a lower paycheck.
3. Can I make up the money elsewhere?
Just because your primary source of income takes a hit doesn't mean you can't compensate. If you're willing to take on a side gig, you can supplement your income and make up for the pay cut you're forced to grapple with at your main job. Much of the time, employees take pay cuts in the form of reduced hours (as opposed to simply receiving less pay for the same work and amount of time on the job). If that happens to you, then it stands to reason that you'll start having a little more time in your schedule to work a second gig, thereby making yourself whole financially.
4. What will another job even pay me?
When you're faced with a pay cut, it's natural to bust out your resume and seek employment elsewhere. But before you do that, do some research and see how your salary post-pay cut compares to what's out there. If it turns out you were very generously compensated to begin with, you may find that another job won't actually pay you more than the amount you're looking at once your pay cut takes effect.
A pay cut at work can be a major drag, not to mention a source of financial stress. If you're miserable at that job anyway and have been looking for an excuse to leave, then there's no need to stay put for less money. But if you love your job and are motivated to stick it out for other reasons, then it pays to see if you can work around that pay cut. This especially holds true if it's likely to be temporary in nature.