Imagine this. You’re getting job offer after job offer and now have the difficult choice of choosing one. Maybe you recognize a need for growth that your current job cannot provide so you’re applying to numerous other companies. Maybe you want to change careers entirely which would require you to relocate. In these cases, you are faced with deciding if the new opportunity outweighs your current opportunity, or which new opportunity is the best. This week’s Weekly Wave addresses this common occurrence.
There’s a lot of things to consider when moving regardless of purpose. When it’s for work, we introduce more factors which will be discussed below. But first, we need to introduce an important concept called Opportunity Cost. This term is used a few times in this article, and we’ll use the definition from Investopedia.
Opportunity Cost – the benefit that is missed or given up when an investor, individual or business chooses one alternative over another
Lifestyle
What kind of weather do you like? Do you prefer a more quiet place or areas with a lot of activity? Is good restaurant proximity or numerous hiking trails something of importance? Are you a more social person or do you prefer to be alone? You can think of the lifestyle category as how your time will be spent outside of work. Is quality of life outside of work important, or are you now more focused on advancing a career or earning money. Ask yourself these kinds of questions to determine how important the lifestyle category is to you.
Salary
Probably the first and most common factor that comes to mind when considering a new job. Money is not equal to happiness, nor should it be viewed as an end goal. That being said, money does offer a sense of security and is important to living and thriving in a capitalist society. Being guaranteed a specific amount of money a year is definitely not a small factor to consider. Some jobs are not salaried, but instead offer an hourly wage. In this case, you can calculate the “estimated salary” by multiplying the hours you will be working a day/week/month/year at your pay rate.
Cost of Living
The cost of living is defined by Investopedia as,
The amount of money needed to sustain a certain standard of living by affording basic expenses such as housing, food, taxes, and healthcare.
Simply put, cities with higher costs of living like New York and San Francisco, will require a higher salary to afford. NerdWallet, a modern company that aims to simplify personal finance, has a useful cost of living calculator here. NerdWallet’s calculator is geared toward cities in the United States, so if you’re looking for global estimates, try Numbeo’s calculator.
Perks
Almost all jobs will contain at least a few perks of some sort. The companies that are ranked as the best to work at often provide employees with excellent perks. Some examples of perks include insurance benefits, retirement account matching, included gym membership, free coffee, lunch meals on Friday, company retreats, paid time off, etc. If you’re interested in seeing more about what kinds of perks companies offer, you can do research on Glassdoor here. Glassdoor contains millions of reviews from real employees on thousands of companies worldwide.
Commute
The importance of this factor is often overlooked. Specifically, people don’t consider how commute relates with time and opportunity cost. Let’s use my own experience as an example. There was a period of time where I crashed on my friend’s living room floor (The Drake apartments) for the low rate of $100/month. Driving from The Drake to work took on average 30 min each way. At the time, I was making around $35/hr and going in five/six times a week, which comes out to 5.5 hrs of driving a week. This weekly commute would cost around $40 in gas. The total expense of rent and commuting therefore becomes $1030/month [($35/hr * 5.5 hrs/week * 4 weeks/month) + ($40/week * $4 weeks/month) + ($100/month)].
Because the rent was so low, I believed I was saving money. Fast forward a few months where I moved downtown to a better apartment that cost roughly $800/month. Ps. This apartment was way nicer and I have my own bed! This new location was a one minute walk from work, making commute time basically non-existent. Also, no gas cost or depreciation on car meant even further savings. So, at first glance, a $100/month rent looks way cheaper than an $800/month option. However, when diving deeper into the opportunity cost of commuting, you’ll see that the more expensive rent option saves you more.
Moving Costs
Some companies offer you a moving bonus for accepting the job. The cost of moving will depend on distance of move, how much stuff you’re bringing, and time period of move. This factor is not as important as some others, but moving across the USA can still cost a few thousand dollars, while the ceiling for moving abroad costing even more. MoveBuddha’s estimator does a good job which you can try out here.
Ultimately, when considering multiple factors in any decision, you should try to quantity as many factors as possible with a common denomination. May your next move be great!
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