Work can turn into such a grind over time that we start daydreaming about doing something else. If you’ve been in the workforce for at least five years, I’m sure you’ve thought about jumping ship many times already. But daydreaming about changing jobs is quite different than actively pursuing a new position. After all, it takes time and effort to land interviews and find a new job! When you’re motivated enough, however, anything is possible. With so many opportunities out there waiting to be seized, should you switch jobs?
First, let’s review the main components of job satisfaction:
- Compensation package
- Strong working relationships
- Work-life balance
- Feeling appreciated
- Training and development
- Job security
- Rewarding assignments
- A stable and respected firm
How many of items above does your current job offer? If you can only check off a few boxes, it’s probably time to turn your daydreams into a reality and start actively looking for a new job.
It Takes Effort And Determination To Get A New Job
While I was working full-time, I was never lucky enough to have headhunters chasing after me with job offers. I thought about switching jobs many times. But over the course of 13 years, I only had 3 jobs. As it turned out, my job hops were not by choice either. The first two departments I worked for shut down within one to two years apiece, so I had to scramble and find my second and third jobs out of survival. I held my third job for a long and tolling decade until I completely burnt out and engineered my own layoff to freedom.
It truly takes effort and determination to switch jobs. There were also a lot of things I thought about during the 10 years at my last job that kept me rooted in place.
- Part of me was lazy and didn’t want to put in the extra time and effort it takes to search for a job.
- I was also scared of rejection and feared being unable to find something better.
- At times I also just wanted to coast and relish in my existing seniority.
- Having to hustle and prove my worth at a brand new firm hampered my motivation to move.
- My salary was sufficient. It wasn’t amazing, but it wasn’t chump change.
- We had a great benefits package.
- Oftentimes, I was happy with my autonomy and assignments.
- I also enjoyed the dynamics of my coworkers.
I was never fully ready to give up my position until the very end of my 10 years. But if I didn’t have all of things going for me, I likely wouldn’t have lasted as long as I did in one place. Ten years at one firm is not the norm these days. Many people change firms every 1-2 years. While this can sometimes be worthwhile, it an also become costly and signal instability and unreliability to employers.
8 Factors To Consider Before Changing Jobs
I’m sure many of you will come across several new and enticing job opportunities which you’ll debate about during your career. There’s more to take into consideration than just the components of job satisfaction above. To help make your debate about switching jobs a bit easier, here are some tips and thought exercises to help you make a decision that you’ll feel good about.
1. Calculate Your New Compensation Amount After Tax
You might get $100,000 more a year on paper at your new firm, but that may only translate to about $70,000 after tax, depending on your tax rate. Before getting too excited about a bigger salary, take your expected gross increase and subtract ~20-40%. Make your decision regarding compensation based on how much extra take-home pay you are expected to get after all those pesky payroll and income taxes come out.
For example, a 50% increase a year is really only about a 30% increase a year. If you have to move cities or take on a longer commute, you may find yourself thinking twice about taking a new job offer after baking in taxes.
2. People Matter More Than The Company
Think about the phrase: people join people, not firms. At the end of the day, who you’ll be working with has a huge impact on job satisfaction. Strong, reliable, and trustworthy working relationships are vital to a great job. If you enjoy your current colleagues, respect their intellect, and have developed a lot of goodwill, that should count a lot towards staying at your existing job. Don’t take those folks for granted!
When considering a new job, try to spend as much time as possible getting to know your potential new direct colleagues. If you don’t get a warm and welcoming vibe from them, it’s probably not going to be the best place for you.
I clearly remember interviewing at one firm at the very end of my full-time career. The job offered a lot more money than I’d been making, but the responsibilities were huge. Plus, my direct boss would have been a super intense woman. My gut instinct told me she would make my life a living hell there. Even though the extra money would have been great, I’m pretty certain I would have been miserable every day. Getting rejected right at the finish line was a true blessing in disguise.
3. What Could Happen After A Compensation Guarantee Period?
If you’ve been offered a signing bonus or a two-year compensation guarantee, consider yourself fortunate! I wish I was given incentives like that to switch jobs, but I wasn’t in the right field or in a high enough pay bracket. But there certainly are those of you who are. Let’s say you’ve been offered a two-year guarantee for 50% more compensation. Have you thought about what could happen in the third year if you don’t live up to their expectations during the first two? You should expect your salary to be normalized in the 3rd year. Always think ahead and consider various scenarios.
Let’s say you’d get $150,000 a year for two years at a new job vs. $100,000 a year for two years at your existing firm. At the new job, you might only earn $75,000 in your 3rd and 4th years because you missed expectations. This would total $450,000 over four years. If you stay in your current role, you might get a raise with the market and make $125,000 for your 3rd and 4th year. This would thereby also total $450,000, but with much less stress and no big changes. Plus, an additional four years under your belt at your current firm might earn you a promotion and major seniority perks.
4. Understand How Your Retirement Accounts Could Be Impacted
A potential benefit of staying at one firm for the long-term is increasing company matches and profit-sharing. When you start at a new firm, you typically have to wait a year, or two, or three before your company match vests. If you lose a year of investment gains, and several years of compounding, you might lose out on a lot of money. Retirement accounts really can add up over time. Before leaving your current job, make sure you understand what retirement benefits you’d be giving up and what you’d be gaining (if anything) at the new company.
Also, more and more people are striving for FIRE: Financial Independence Retire Early. If you hope to FIRE, be sure you won’t give up valuable retirement savings growth by switching firms. There’s a lot to consider before retiring, especially at an early age. For example, consider the amount of money needed to retire and live in abject poverty! I encourage you to check out the Retirement article archives on Financial Samurai. There’s a wealth of information there.
5. Have A Heart To Heart With Your Family
If you’re the primary income earner of your household with kids to support, you have a lot more to consider than someone who is single with zero dependents. Job security with a reasonable income may be much more valuable to you than a (short-term) increase in income and a higher risk of getting let go if the markets turn south.
If you have kids in school, think about how a job change could impact their lives, especially if you have to move locations, take on a longer commute, and/or put in more hours. They might end up hating you forever if you decide to relocate while they are in high school. Studies show that kids are much flexible moving under the age of 10.
6. Evaluate Worst-Case Scenarios
Visualize several worst case scenarios at your existing and new firm. If you leave a stable job for a new one, you’ll have to rebuild all your relationships. And that can take a long time. If the economy sours or your new company gets hit with hard times, remember that RIFs (reduction in force) are generally performed last in, first out. That could put you first in line for the chopping block.
Not to burst all of your happy bubbles, but one possible worst-case scenario could be that you are miserable at your new job, get fired, and need to find another job during a recession. If you maintain relationships with your former clients, colleagues and have updated skills you may survive just fine. But you just never know.
On the other hand, if you stay at your existing firm, there’s also a chance you could get passed over for promotions, replaced by someone less qualified, taken advantage of, and denied raises.
It’s worth imagining different scenarios and weighing the likelihood of each outcome before switching jobs. For example, if you don’t have an emergency fund saved up yet, you should probably work on that first before taking any big risks. Get in tune with your own risk and stress tolerance levels during your decision-making process.
7. Imagine Best-Case Scenarios
On the flip side, try to imagine a bunch of best-case scenarios. How good could things get on either side? You might really enjoy your new firm and feel revitalized and more motivated than ever. Plus, your new employer might love you so much that they continue to give you higher raises than your previous firm, making your move the best financial decision ever.
Or you could earn a promotion at your current firm this year, get a huge pay raise, major props from your clients and colleagues, a corner office, and better hours. Consider all the possibilities.
8. Consider Getting Laid Off Instead Of Quitting
If you get to the point where you are dead set on leaving your existing job, don’t hand in your two weeks notice – engineer your layoff instead! Most people who hear phrase that are either confused, taken aback, or too afraid to even imagine how that could work. Well, I can tell you first hand that it’s possible to walk away from a job you no longer want with money in your pocket!
How did I do this? I was inspired by Sam Dogen of Financial Samurai’s incredibly motivating book, How To Engineer Your Layoff. This book has helped thousands of people negotiate severances in order to start a new career path, FIRE, job hop to a competitor, become stay at home parents and more. The success stories are inspiring and excitingly realistic. You can read all about my own experience and also check out my thorough book review to learn more.
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Untemplaters, how many times have you switched jobs in your career? What were your primary motivating factors? Did you end up regretting your decision or was it one of the best decisions you ever made? Anyone currently pondering, should you switch jobs?