What do Johnathan Ross, Barack Obama and David Beckham all have in common? They all have taken a pay cut. Should you and could you afford to take a pay cut too?
Taking a pay cut was once frowned upon; you were not progressing up the career ladder, or you were on the wrong track. With the recent recession, pay cuts are now seen as par for the course and can actually be a prudent move.
Here are the top reasons it is OK to take a pay cut:
1. You are changing career
2. You are starting your own business
3. You want to gain work – life balance, such as extended leave or shorter working week
4. Personal fulfilment such as a job you have always wanted to do, or company you have always wanted to work for
5. You are moving to an area with a lower cost of living
6. You want a shorter commute
Should you take a pay cut to stay employed with your current employer? Whilst it offers an opportunity to stay employed, I can tell you that as a UK employment agency we are very busy with job opportunities, so I would use it as a reality check to seek out another job paying your market rate.
Nor would I advise taking a pay cut because you are taking a long time to find a job; I would review what you are doing in your job search, your CV and your interview technique first.
A pay cut should be a short term pain to a long term career development, allowing you to do something you love, nearer your home, with more work life balance. Before taking your pay cut, consider this:
1. Can I cover my current cost of living?
2. Will shorter working hours balance out that I don’t have to pay for services such as childcare, decorating, ironing or cleaning my home, as I can do them myself?
3. Will a shorter commute actually save me money on travel costs, especially given rising fuel costs?
If the answer is yes to the above and you are doing it for the right reasons, then a pay cut is a sensible move for you.