FOOL'S EYE VIEW
The Cost of Changing Your Job

By Maynard Paton (TMFMayn)
September 26, 2001

Carburton Street, London -- Let's face it. For most people, work is a necessary evil. Do the 9 to 5, get paid, spend the money on doing something you enjoy. 

But carriage clocks for 25 years service are rare commodities these days. Certainly in the private sector, there are no more jobs for life. To get on and earn more money over your working life, you have to be proactive. Get a little too comfortable with your job and employer, and before your know it, you're part of the next restructure.

My family are a good example of the present day working environment. In the past two years, myself, my wife, my mother, my brother, my sister-in-law and my brother-in-law have all changed employers. Furthermore, my mother-in-law will lose her job at the end of the year, while my father-in-law has just opted for voluntary redundancy. The only members of my family who have a long relationship with their employer are the self-employed ones!

Cost

But if you're on the look out for a better-paid job, primarily because it is better paid, you need to be careful. Moving to a job with a higher salary won't guarantee extra cash ending up in your bank account. You have to consider the "job switching" costs too. Take on a job with a higher salary, but ignore any additional expenditure, and you could be worse off than before.

So, what sort of switching costs are we talking about?

Probably the main one would be housing. Does the new job entail moving house? Move to an area where salaries are higher and jobs are plentiful, and you'll find property costs will almost certainly be more expensive too. Will your new salary increase cover the additional mortgage or rental expenditure?

If you don't move, then perhaps you'll be forced to spend more money (and time...) on travel. For instance, my move to the Motley Fool meant exchanging a five minute drive to work for a one hour commute into London. I'm sure the £2,000-plus I now spend on train fares each year is far more than the cost of the petrol saved. If extra money in your pocket is your inspiration, then there's no point in travelling to a higher salary if it's outweighed by the costs getting there.

Then there's the losing, or gaining, of certain "workers' perks" too. Pension provision is perhaps a notable candidate here. For example, my wife's job move involved abandoning a wonderful non-contributory pension scheme. How does any prospective employer's pension contribution square up to your existing arrangements? Other perk-related considerations could include a company car, those staff product discounts, or even a subsidised canteen.

Then there are other, more obscure, cost factors too. Such things as car parking may not be obvious things to consider. But all the same, such expenditure does add up. Going back to my wife's job change, before her move, she had to spend £30 a month of car parking tickets. But at her new employer, she now gets the benefit of free parking. And what about clothing? Working for the Fool, I've no idea how much I've saved from no longer buying new shirts and ties.

Penny pinching

Of course, you can take the prospective penny pinching too far. But if you're primary aim is to earn more money by switching jobs, then it's worth considering any changes in expenditure. And note: while any increase in salary is before tax, your own expenditure comes after tax.  And indeed, those looking to boost their income could consider moving to a lower paid job, if the possible savings merited it.

However, I suspect most people who change jobs don't do so for monetary gain alone. Motives such as enjoyment, fulfilment, challenge and so on also have some influence. Indeed, in retrospect, both my wife and myself have probably lost out financially on our job moves. But then again, we're now very content with our employers. And if you're one of the lucky few who actually enjoys going to work, who could put a price on that?

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