How to Evaluate a Job Offer

Zachary Ashburn, CFP®, EA, AFC®

Your career moves arguably make a bigger impact on your financial life than almost any other decision. Last week on The Dollar Derail Podcast we talked about navigating job changes and how your employment likely represents one of the most concentrated risks to your financial plan. To make a good decision for your family it’s important that you weigh your job options carefully. Here are 3 steps to consider:

Valuing Company Benefits

You’ve got a shiny new job offer and they are promising you the full benefits package but what is that really worth? Take each benefit that the company is paying for and shop how much it would cost you to purchase it on your own in the market. Some common examples would be health insurance (at varying levels of quality), childcare, or a company car. Each of these takes the place of something you would otherwise be paying for out of pocket and that market rate should be considered in addition to your salary (1).

Some things, like preventative medical and dental care, carry benefits that extend beyond the current dollar amount they are worth. A great example is a company that matches your 401(k) contributions. To find out what this match really means to your family you need to take the value that they would be contributing each year and do the compound interest calculations to see how big of an impact that benefit really has (You might be surprised how big it is) (1).

Valuing a Job Offer in Another City

Moving adds another dimension to your job change both financially and emotionally. If your job will involve a change in geography it becomes doubly important to do your research on the compensation package they are proposing. Several tools exist to help you compare the cost of living between two areas of the country. Some tools, like this Family Budget Calculator from the Economic Policy Institute show this by breaking down some categories of expenses and what they cost in one area of the country verses another (2). Other resources, like Numbeo, assign an index value to different locations as a form of ranking cost of living in different cities. This lets you do some simple math to show what you would need to earn in one city to live the same lifestyle in another (1):

COLI Equation.png

BONUS TIP: Don’t discount your vision. It’s important to know the dollars and cents surrounding your job opportunities but the accompanying lifestyle changes matter as well. Have some conversation and do some work with your partner to see what the lifestyle in your new position means for your long-term family vision

If you’re ready to create a strong vision and get organized toward your ambitions I’d love to hear from you! Use this link to Schedule an Intro to discuss what it means to Live, Achieve, and Give more.

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