You've nailed your interviews and accompanying assessments, and now have an offer letter from a great company in hand (or a few!). Congrats! From assessing a company’s available career growth opportunities to learning more about their company culture, there’s a lot that goes into choosing where you want to start your career as an entry-level employee. One of the biggest points of comparison is salary – but it’s not as simple as choosing the offer with the highest number. There are many non-base salary things that go into a compensation package that would actually make the value of one offer higher than the other. Before making a decision on your offer, consider some of these other factors when comparing the true value of the different offers you’re assessing.
Companies that have more than 50 full-time employees are required to offer health insurance, and many smaller companies include health insurance as part of their overall benefits package. Typically, the cost of the monthly health insurance premium is split between the employer and the employee. But some companies might pay for a higher percentage of your healthcare premiums than another, which can have a huge impact on your finances. For example, one company might cover 90% of your monthly insurance premium while another company might cover only 50% of the monthly cost, even if the insurance plan is the same at both companies! The difference could amount to hundreds or thousands of dollars each year
After receiving an offer, ask for detailed information and rates for health insurance so you can make a clear comparison between two jobs. It’s important to estimate your out-of-pocket costs.
It is worth noting that health insurance may not be a high priority for you – and that’s okay too! You might be in a situation where you plan to stay on a parent’s or spouse’s insurance, so the cost of healthcare might not factor into your employment decision.
It’s never too early to start thinking about retirement. In fact, the earlier you begin to save, the more time that compound interest can work in your favor and help you reach your target savings goal. One of the main retirement vehicles is a 401k, which is typically offered through employers.
A 401k is a retirement account that enables employees to contribute up to $19,500 per year (as of 2021), pre-tax. Moreover, some companies offer a 401k match, in which they will contribute additional retirement savings up to a certain percentage of the employee's contribution. One way this might work is that an employer offers to match every dollar that an employee contributes to their 401k plan, up to 6% of the employee’s salary. That means that if an employee makes $100,000 and contributes 10% ($10,000) to their 401k, the employer will contribute an additional 6% ($6,000) to their 401k. The total would be $16,000 toward retirement for the year. That’s like adding an extra $6,000 to your salary (or more, when you take into account that the contributions in a retirement account will grow over time with compound interest)! Note that an employer’s 401k match does not count toward the $19,500 limit for 2021.
If one company offers a 401k match, that could add up to significant savings. You should also check if the company has a waiting period before you are eligible to contribute to a 401k or to receive the employer match.
Additional pay structures, like bonuses and commissions, are particularly common in sales, finance, and consulting roles. For example, a sales representative or tech consultant might earn a commission of 5% for every sale they close. Investment banking analysts often earn bonuses in addition to their base salary, so their actual annual earnings are a lot higher than what might be outlined in the offer letter. Make sure you understand the structure behind each company’s bonuses and commissions, and if HR can give you any information about the typical bonus or commissions for current employees in the position.
Does the company offer free lunch every day? What about a wellness stipend that you can use for a gym membership or fitness classes? Tuition assistance? Will you get four weeks of vacation? Think about some of the other benefits that the company offers and what the financial value of those benefits are. You only need to take into account the benefits that you would actually use (for example, 20 PTO days might not be worth it to you if you don’t think you’ll use more than 10) and how it would impact your finances. If any of those are important to you, it might make sense to take the job that has a slightly lower salary but better perks.
Looking to move to a new city to start your new gig? Moving can be expensive, especially if you’re going to a notoriously expensive metro area like New York or San Francisco. To alleviate some of the financial burden of moving, some companies offer a one-time relocation allowance. This can be used for packing, paying movers, storing items, arranging transportation to a new city, or staying in short-term lodging. Calculate any moving expenses and see if the company’s relocation allowance would cover it, or if you would be spending a lot of money upfront before you even begin working.
If you have offers in two different cities, you can use a Cost of Living calculator to make a better comparison between what food, housing, transportation, and other daily expenses would cost. According to the Bankrate Cost of Living calculator, a $50,000 salary in the Austin metro area is roughly equivalent to $120,000 in the New York metro area. That’s a huge difference! Even if the base salary at one company is lower than another, if the job is located in a more affordable city then it might be worth it after all. Break out the Excel spreadsheet and run some numbers so you can make an apples-to-apples comparison.
Remember, it’s up to you which of these benefits are most important and how that would affect the true value of each job offer. It is okay to go with a lower base salary if the total value of the job offer is more appealing, and it’s also okay to choose the higher salary if that is your priority. As always, do your due diligence before signing on the dotted line.
Did you know that RippleMatch can help you land your dream internship or job? Make a free profile today.