By Amanda Abella
Good Call —
There’s a lot more to a job offer than how much is going to show up on your first paycheck. However, when faced with multiple job offers, most people assume they should just go for the job with the highest starting salary. The reality is that you need to look at your future earnings potential and the benefits package.
A good benefits package, for example, can actually mean more money in your pocket than what’s in a salary or it could mean a better work-life balance. And vice-versa, the wrong benefits package can sap away at your paycheck or put a strain on your home life, future goals or personal well-being.
Understanding everything that makes up a job offer can be difficult for anyone. This guide to choosing the best job offer will help to break down a lot of these concepts and prepare you to make the right decisions about a job offer.
Salary is definitely an important part of a job offer for anyone. One thing you should always keep in mind is that the salary in a job offer can be negotiated if it doesn’t meet your needs or expectations.
For many, it may be difficult to initiate this conversation. Research shows that women especially tend to negotiate less when it comes to salary. However, future raises will typically be based on what you start earning, so where you start matters a lot.
If you make $40,000 a year and receive a 3% raise. That’s $1,200 more. However, if you start out making $50,000 a year and receive the same 3% raise. That will equal $1,500 more in your paycheck!
If you don’t negotiate your starting salary, you’re not only missing out on earnings upfront. You could miss out on even more when raises are applied.
Opportunity for growth and bonuses
One thing companies may entice you with is the opportunity for growth and bonuses. “Opportunity for growth” is actually the buzz phrase. This looks like getting promoted or getting more money after a certain amount of time. Some companies may lump promotions, raises and bonuses into the same category so it’s important to ask some questions so that you get clear answers.
Here are some questions you’ll want to ask:
- How quickly do these promotions happen?
- What’s the typical pay bump when you get promoted?
- Do they offer bonuses instead of raises or do they offer both?
- What is the bonus structure?
- How often do you get a bonus?
- What kinds of bonuses do they offer? (Yes, there are different types).
Don’t just take the company at their word when they say they offer bonuses and opportunity for growth. By asking for more details, you can then use this information to compare bonus and pay structures between different job offers.
What are the best job benefits?
The best job benefits are the ones that help YOU live your life better, financially or in another way. The first thing to do when looking at a job offer is to think about your personal situation. Everyone’s life is completely different. This means you may benefit more financially from some perks than others. This is especiallyimportant if you’re trying to choose between multiple job offers.
For instance, if you or someone in your immediate family has a chronic illness or disease that requires frequent doctor visits, tests or prescription medication, the kind of health insurance benefits in a job offer are going to be especially important. Understanding how much will come out of your own pocket and how comprehensive the plan options are will weigh pretty heavily on the decision to accept a job offer or look for something better.
Another thing to ask yourself is whether or not you carry a significant amount of debt in student loans. Some companies are now offering to help their employees with student loan repayment. This is essentially money in your pocket if you have student debt. But, if you don’t have any student loans, for example, then you might not place a high value on these types of benefits.
Similar to student loan repayment, some companies also offer tuition reimbursement as a part of their benefits package. If you’d like to go back to school or get some extra credentials under your belt to help you earn more in the future, having employer funding to pay for all or part of this could be a good option for you to consider.
There is no one-size-fits-all or the “perfect job offer,” there’s only “this job offer is what works best for my situation.”
At the end of the day, all of these benefits equate to money in your pocket or improving your life in some way. Maybe you’re not seeing the money in your paycheck, but you are getting part of your student debt paid off, for example. Or, maybe your salary is lower but you’re saving a significant amount of money on healthcare costs, which would have otherwise eaten away at your paycheck. This is why it’s so important to remember that a job offer isn’t always about the paycheck and that you must also look at benefits.
Keeping this in mind, let’s dive into some of the common components of a benefits package:
One of the best parts about a regular job is the fact that an employer helps you pay for insurance. Anyone who is self-employed and pays for insurance premiums out of pocket knows the immense value of this particular benefit. Insurance is not cheap, even with new options like the Health Insurance Marketplace.
A company may offer several different kinds of insurance to its employees as a part of a benefits package. These different types of insurance and/or different levels of coverage will typically come at different costs to the employee. Be sure you understand well what you’ll be responsible for in terms of premiums, co-pays, deductibles and maximum out-of-pocket costs. Insurance isn’t the most straightforward thing in the world, so if you have any questions about the specifics of what a company is offering make sure to ask them.
Here are some of the most common insurance packages a company may offer as a part of their benefits package:
Many companies offer employer-sponsored health insurance plans where they cover a portion or all of the cost of your health insurance premium. But, beyond premiums, you’ll need to look at types of plans, co-pays, deductibles, prescription coverage and out-of-pocket costs within the plan itself to see if it makes financial sense for you. Health insurance plans are not all created equal.
Similar to health insurance, except it’s for dental-related costs. You’ll specifically want to look at whether or not preventative care and surgical care are covered. If you’re thinking of getting braces for yourself or your kids, see if the company-sponsored plan helps with orthodontic costs for adults and children.
You’ll also want to ask about wait periods for health, dental and other types of insurance. Oftentimes, an employer may require you to work for 30 or 90 days, for example, before the insurance policy kicks in. It’s important to take any costs you may incur in the meantime into consideration.
This is similar to dental insurance, except for vision related costs. This is especially important if you need it now or will in the future (eye care is not cheap). If you don’t wear glasses or contacts now, you may not need this coverage now, but having access to the option to get covered with your employer may mean important savings for you in the future.
Most young people don’t really think about life insurance because they aren’t planning a funeral for themselves any time soon. It may sound harsh, but the reality is a tragedy can happen at any moment. Life insurance is meant to help cover the costs of a tragedy and make sure your loved ones are financially taken care of should you pass away.
Disability insurance kicks in if you are unable to work due to a disability. They have short-term disability insurance as well as long-term disability insurance. The idea is that you will receive anywhere from 45 to 65% of your gross income (tax free) for a period of time. Similar to life insurance, this isn’t something young workers tend to think about but it is a good idea to have it on hand.
Accidental death and business travel insurance
Some companies may give your family money if you happen to die in a freak accident or while traveling for business. Don’t bother shelling out money for this, but if they offer it for free, it doesn’t hurt to take it.
Higher education benefits
Most young workers should look at any benefits a company may offer when it comes to schooling. The reality is this can help save you a lot of money in the long run as well as help you earn more money throughout your career. Additionally, because of the current state of student loans in this country, some employers are rolling out new benefits as it pertains to school.
Many companies offer tuition reimbursement for employees who would like to go back to school. This is a big deal for two reasons. First, higher education is expensive so any help you can get is great. Second, your most valuable money-making asset is yourself, so you may want to consider upgrading your skill set to advance your career.
You’ll want to look at the exact details of what the company’s tuition reimbursement program is actually like. What do they cover? Is it contingent upon grades? Are there any restrictions? Do you pay for it yourself first and then they reimburse you or do they pay for it from the gate? All of these are important to look at. You’ll also want to keep in mind that you probably can’t get any degree you want and that you may be required to stick around with the same company for a while. Unfortunately, sometimes
You’ll also want to keep in mind that you probably can’t get any degree you want and that you may be required to stick around with the same company for a while. Unfortunately, sometimes this benefit comes with strings attached.
Student loan repayment assistance
This is the new kid on the block when it comes to benefits. A small percentage of companies are now offering student loan repayment help as a part of their benefits package. According to the Society for Human Resources Management, this benefit still isn’t widely available. Though, there is already a range of products, some provide a matching amount to help pay student loans directly, some similarly help parents pay off
Though, there is already a range of products, some provide a matching amount to help pay student loans directly, some similarly help parents pay off Parent PLUS Loans they took to help their kids, and others reward employees who are paying student loans with extra contributions to retirement savings accounts like 401(k). Companies are starting to see the recruiting and retention benefits of offering such a package so we may see more of it in the near future.
Retirement benefits & other financial incentives
A few other really important aspects of a benefits package are financial benefits other than your salary. In this case, we’re talking about retirement plans, retirement contribution matches, and stock options.
First, any help you can get with retirement savings is a boon for your financial future. Second, by having the ability to invest in the market and get your hands on some stock options, you’ll be in a better position to build wealth over time.
Here are the ways in which employer benefits can really boost your financial life:
A 401(k) is a retirement plan where you contribute a part of your paycheck into different investment vehicles. There are a few benefits to this.
First, you can build your retirement account without having to worry about taxes on it until later in life.
Second, any contributions you make in a given tax year can be deducted from your annual gross income and lower how much you owe in taxes each year.
Third, if your employer offers any sort of company match – meaning they match your contribution up to certain amount or percentage – you’re basically getting free money in your retirement account.
All three of these benefits are a big deal so make sure to take advantage. (Note: the tax benefits are for a Traditional 401(k). Some companies are now offering Roth 401(k)s which are taxed now instead of later.)
If your company is offering a pension, you’ve basically struck gold. Reason being that most companies have replaced pensions with 401(k) plans. However, some jobs, such as those for the government, offer a pension plan where the employer contributes to a retirement account for you (read: it doesn’t come out of your paycheck) and the money grows over time.
Stock options, or employee equity
Stock options are when a company let’s employees own shares of company stock. While this is usually reserved for executives, there are a few companies out there that are giving stock options to their employees. Start-ups, especially, are one example that like to offer stock options or employee equity to early joiners. You may also have the option for Employee Stock Ownership Plan which allows you to buy stock at a discounted rate.
One important thing to consider with stock options as well as with employer-sponsored savings like a pension or 401(k) is that the benefit may be tied to a vesting schedule. What is vesting? Your employer will typically have a vesting schedule that represents a time frame over which company matched funds to 401(k) or stock options actually become yours to take with you if you leave the company.
Money contributed by your employer to your 401(k) could vest at 25% a year, for example, or it could vest all at one time after you’ve been with the company for a specific amount of time. Every company has its own policies around vesting so be sure to ask questions. (Note: any contributions that you’ve made with your own money are 100% yours from the beginning.)
Profit sharing refers to when a company distributes profits among shareholders. Again, this is normally reserved for executives, but many newer companies are allowing all employees to participate. Granted, this works if the company stays in the black, or making a profit. Additionally, the percentage that gets distributed to employees is up to the company’s discretion and the amount may be different every year. Either way, extra money is extra money.
Time off and workplace flexibility
Benefits pertaining to workplace flexibility have been making waves in the news as of late. For example, plenty of surveys have come out to show that Americans, in particular, are adamant about wanting paid parental leave and some companies have delivered. Additionally, a recent executive order by President Obama has changed the game for overtime pay.
According to the Alfred P. Sloan Foundation, a non-profit associated with Boston College that specializes in the issue of workplace flexibility, we’re seeing trends in which companies are moving toward more flexible work models. Here are some of the things to look for:
Vacation: Take note of when you will become eligible for vacation days. With some companies, you may have to wait a specific amount of time to take vacation or you may earn your vacation time progressively with each month worked. Also, note how many vacation days are given, how they are accumulated and when they expire.
Holidays: There are six federal holidays in the U.S. that almost every company covers. Some also cover extra holidays like the day after Thanksgiving. Be sure to ask if the workplace is closed on observed holidays, or if it is open but employees who work that day are eligible for bonus pay.
Sick days: Many companies have moved away from sick days for salaried employees but some of them still cover it. This may also look like “Personal Days” which may count toward vacation hours.
Family Leave: At this stage in your career, you may not be thinking about children but it’s a good benefit to have to plan for the future. Plus, family leave can also come in handy if you have a sick family member, like a parent or grandparent, for example. Be sure to ask whether family leave is paid, unpaid, or partially paid and for how long.
Increasingly, some employers are offering the option to telecommute. This may be discussed in your job offer but if it’s not, it’s definitely worth bringing up if this is something that could be important for you.
Being able to telecommute all or part of the time could help save you money on gas and eating out for example, or it could help you balance your work and home responsibilities. If you’d like more flexibility to work when you’re most productive or during timeframes outside of regular business hours, be sure to ask about this as well.
Telecommuting may involve working from a home office or at a shared office space. Your job offer may include some provisions to cover expenses that you’ll incur to run a home office or work at a shared office space.
Salaried employees typically don’t get overtime pay unless they are below a certain threshold (The threshold now applies to workers who make less than $47,476 annually, thanks to a recent executive order by the President). Some companies also do bonus pay or comp time as a way of compensating employees for working more than the expected 40 hours.
Extra job perks
Some companies offer extra perks as a part of their benefits package. These perks may look like childcare, helping you pay for your mobile phone, health club memberships and a stipend for your car.
When looking at a job offer, it’s important to look at every aspect of compensation to see whether or not the offer works for you. There’s a lot more to a job than getting paid a salary, so make sure to crunch numbers and ask the right questions.
Amanda Abel is a financial writer and Amazon best-selling author of Make Money Your Honey. Her work has been featured in Forbes, The Huffington Post, Business Insider and more.