After three years of dealing with a toxic work environment, I finally got a new job. My new company seems like a great place, and the people there seem a lot happier than my former co-workers. I love my new boss too. The only downside is I had to take a pay cut of about $10,000 (now making about $55,000, which doesn’t go very far when you’ve got student loans and rent in a major city). I was so miserable at my old company that this didn’t seem like a big deal, but now I’m worried I’ve set myself back. I also don’t know how to adjust my lifestyle to fit my new paycheck. I know that sounds ridiculous, but when you’re used to spending money in certain ways, it’s difficult to move backward. I’m not saving as much and, just the other day, realized I’ll barely make rent this month. How exactly do I do this? Sometimes I worry I made a mistake and should have held out for a new job that paid better. Any tips are welcome.
Congratulations on your new job. I agree that you shouldn’t have to endure a miserable workplace just to pay the bills, no matter what your uncle / grandmother / random friend says about sucking it up. A slightly lower salary is a worthy trade-off for a company culture that supports you instead of making you cry in the shower every night (not that I’m projecting my own personal experiences or anything).
That said, these situations aren’t binary, and making less money can cause its own kind of stress. And $10,000 isn’t just a couple bucks. You will need to adjust your expenses to align with your new income — which is not a bad thing, but it will require some practical changes. More on that in a minute.
But first, you can stop doubting your decision to switch jobs. As you probably know, you’re in very good company, and there’s a reason for that. “The pandemic has caused us to slow down and think about what’s working and what’s not and how that aligns with what we ultimately want for ourselves,” says Dr. Shonna Waters, a certified leadership coach and vice-president at the career-coaching firm BetterUp. “That has translated to a record number of people changing jobs, especially for a better lifestyle.”
Not only are people taking pay cuts for their mental health and quality of life — which are perfectly good causes on their own — but they’re also considering what’s best for their long-term careers. “People I’ve coached have taken significant pay cuts to change professions,” adds Waters. The same goes for people who are switching industries or just getting on a different track. “Sometimes you have to take a new job at a lower level, but then you quickly progress and end up surpassing where you would’ve been had you stayed on your previous path for the same amount of time,” she says.
Of course, that may not be the case for you, and that’s still okay. The point is salary is just one component of what a job can provide for you. Either way, you will need to cut back on your expenses. It won’t be easy, but it doesn’t have to be terrible either.
I don’t recommend the approach of simply trying to spend less across the board — that will lead to a lot more stress and tight corners like the one you’re in now. Instead, start with a big-picture inventory of your cash flow. I would personally do this by taking a thorough look at what I’m already spending — say, going through everything I spent over the past month — and figuring out what I can change. (This is a good thing to do at least once a year anyway if you don’t already. I’m overdue for it myself.)
Obviously, the most straightforward way to make your new paycheck go further is to reduce a major fixed expense like rent. However, moving is pricey, too, and may not be an option. If none of your bigger line items can budge, then take a look at what categories offer wiggle room. Does your new job give you more time in the evenings to cook cheaper meals? Can you get your monthly student-loan payments reduced? Are there any memberships or subscriptions you can give up?
To be clear, I’m not suggesting that saving thousands of dollars a year is simply a matter of canceling Netflix and avoiding Starbucks. You will need to be disciplined, intentional, and creative about making a new budget for yourself that doesn’t sacrifice important priorities like retirement savings. But for what it’s worth, being happy at work can make it a lot easier to spend less on “fun” stuff more generally. “When I got a job I actually liked, I stopped spending so much money on takeout and booze and all the other things I used to need to distract myself from how much my day sucked,” one of my friends told me. “My old job paid me a lot more, but it made me so unhappy that I was spending a lot just to cheer myself up.”
Zooming out, I understand your concerns about “setting yourself back” salary-wise. But know that it may not affect you as much as you fear. “It used to be that any salary negotiation started with your current salary. But that landscape has changed,” says Waters. “Now, in some states, it’s not even legal for a prospective employer to ask you what you’re currently making. So you don’t need to worry that it’s the starting point for your future paychecks.”
Instead, focus on what roles this job is setting you up for, what skills it will provide you, and most important, what you actually enjoy about it. “Remember that we work best when we’re doing something that we’re engaged and excited about,” says Waters. “So in the long term, you’re much more likely to be a top performer in something you’re passionate about than something you’re just doing for a paycheck, even if that paycheck is higher right now.”