Salary is typically the most important factor when choosing a job, and for pretty obvious reasons. You need money to put a roof over your head and food in your stomach, and a salary represents that money.
But in many cases, an employee’s total compensation is made up of much more than just their salary—it includes a wide variety of benefits whose worth could total in the hundreds, thousands, or tens of thousands of dollars (or even more)! So if two potential employers offer the same salary, the one with a better compensation package might win out. In fact, benefits can be so substantial that the best financial decision is to take the lower of two salaries just to get them.
Today, I’m going to talk about financial considerations (outside of salary) that you should be aware of during your job search and negotiations. And I promise you: Annual company pizza parties are not included on this list.
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Don’t Forget About These Forms of Financial Compensation
When you’re choosing a job, you’ll consider any number of factors, and many of them won’t directly involve pay—job responsibilities, competent leadership, and workplace culture among them.
That’s not what I’m talking about today.
The following list of perks are all financial in nature, whether it’s giving you more money or even helping you save money. But ultimately, each of these forms of compensation impacts your bottom line, so understand where your company stands on them before choosing a new job.
1. Retirement Plan Contributions
We frequently harp on about the importance of saving money for retirement. Tax-advantaged workplace retirement plans are among the easiest (and most beneficial) ways to do so.
That’s in part because of the tax benefits—but also because employers can (and typically will) contribute to those retirement plans. In fact, according to the Plan Sponsor Council of America, a trade group, roughly 98% of companies that offer a 401(k) plan regularly contribute to their employees’ workplace retirement accounts. That occasionally is a straight-up contribution regardless of whether you put a single penny into your 401(k). But most of the time, you’ll be offered an employer match—25%, 50%, 75%, even 100% of your contributions, usually up to a percentage or dollar limit. That’s effectively free money.
And the generosity of an employer match could easily tip the scales between two job offers. Consider these two scenarios:
- Company A offers a salary of $80,000. It also offers a dollar-for-dollar match on contributions of up to 3% of your salary to your 401(k) account. So as long as you contributed at least $2,400, your employer would also contribute $2,400. Assuming no other compensation, your total compensation package would be $82,400.
- Company B offers a salary of $77,000. It offers a dollar-for-dollar match on contributions of up to 10% of your salary to your 401(k) account. So as long as you contributed at least $7,700, your employer would also contribute $7,700. Assuming no other compensation, your total compensation would be $84,700.
Despite a lower salary, then, Company B’s compensation package would actually be more generous. However, that $2,300 annual difference involves socking a lot more money away into your retirement account, so if you need more of your salary to go toward expenditures such as student debt and housing, Company A’s offer would actually make more sense.
Related: How to Invest for (And in) Retirement: Strategies + Investment Options
2. Workplace Commute
COVID accelerated the rise of remote jobs, but most people still have to commute to work—and even some employers who were remote-friendly are starting to force people back into the office.
You’ll hear these return-to-office (RTO) moves as “salary cuts” because suddenly, people have to spend more on a number of things compared to when they were remoting in. That includes the commute, which includes spending money on gasoline, more frequent car maintenance, and sometimes parking. Or it could mean bus or subway fares.
Plus, time is money for many people, whether that’s the ability to work more paid hours at their main job, or having a side hustle—and time spent in transit is time not spent earning more money.
These costs add up to a substantial sum. The average American commuter spent $8,466 on their commutes each year, per a 2022 report from Clever Real Estate. The calculation includes fuel and vehicle maintenance costs, as well as an annual opportunity cost based on the time it takes to get to and from work. (And that doesn’t include parking costs for workers who have to eat that expense.)
In some cases, then, a remote or hybrid job with a smaller salary, or even an in-person job with a short transit time, might still make more sense than an in-person job with higher headline pay but a long, costly commute.
Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested’s free retirement planning newsletter.
3. Childcare
Don’t have kids or plan to have them in the future? Go ahead and skip this one. But if you do have children, or plan to, working for a company that provides child care or reimburses you for the costs is a major perk.
In 2023, the national average price for child care was $11,582 per child, according to an analysis by Child Care Aware of America. Importantly, that cost can vary substantially by region. For example, in Alabama, the average price for an infant in family child care was $8,186 annually. Comparatively, in New York, the average cost for an infant in family child care was $16,383—more than double that of ‘Bama.
Having that large expense covered could definitely offset a lower salary. Plus, if an employer offers onsite child care, you could also save on gas, and you couldn’t beat the convenience.
Related: How to Achieve Financial Minimalism to Reduce Stress
4. Paid Parental Leave
Paid parental leave is unfortunately a relative rarity here in the U.S. According to widely cited data from the Bureau of Labor Statistics, as of March 2023, only 27% of civilian employees and private industry workers had access to paid family leave.
If you intend to have children, paid parental leave can stop your paychecks from completely drying up following the birth or adoption finalization. Without any type of parental leave, you might need to take time off work to physically recover from a birth or travel for an adoption. Plus, unless your company covers the costs, immediately returning to work requires most people to start paying exorbitant child care costs.
Offering this benefit helps employers, too. From a 2020 SHRM analysis:
“Firms that offer paid leave [which includes new child, extended family care, and personal extended medical leave] also attribute boosts in performance to their offerings. When asked how paid leave offerings affect various factors, many say they strengthen employee health and wellness (61%) and engagement (60%); well over half say paid leave offerings strengthen the ability to attract (58%) or retain (55%) talent.”
Related: 10 Home Improvement Investments That Don’t Pay Off
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5. Paid Sick Days
You can religiously take your vitamins, exercise, and get enough sleep, and still end up falling ill. If your job offers sick days, you can simply use them and getting sick won’t affect your paychecks, assuming you don’t exceed your allotted number of days per year.
However, if your job doesn’t provide sick days (or more commonly, provides too few), you have two options: 1.) Go into work anyways, which won’t help you recover and risks infecting coworkers and customers, or 2.) Take one or more unpaid days off, which many Americans can’t afford to do.
Data from the Bureau of Labor Statistics shows that the percentage of civilian workers with access to paid sick leave in March 2024 was as follows:
- Companies with 1 to 49 workers: 72%
- Companies with 50 to 99 workers: 76%
- Companies with 100 to 499 workers: 88%
- Companies with 500+ workers: 90%
While most companies offer at least some sick leave, you can see that not all do, and it’s less common with small companies. So when you’re considering pay packages with very different sick-leave policies, you’ll want to consider the lost wages you may have to absorb if you had a particularly illness-filled year.
Related: 10 High-Paying Jobs You Can Get With ‘Vanity Degrees’
6. Bonuses + Commissions
Bonuses and commissions are the most straightforward financial considerations outside of your salary. They represent extra money—and unlike retirement plan contributions, they’re typically money that goes directly into your pocket.
However, how these financial incentives are awarded varies highly by business. Some companies have bonuses tied to reaching specific quotas, others are awarded upon the completion of a project, and still others are completely at a boss’s discretion. The frequency of workplace bonuses also varies. Some award them quarterly, others yearly, and some on no set schedule.
Commissions work differently than bonuses. These are based on individual performance and are prominent in sales and real estate, among other industries. Commissions are often a predetermined percentage or another set formula. For example, a home selling for $500,000 may have a 6% commission to be split between the buyer’s real estate agent and the listing agent, giving each side a $15,000 commission (which may also be divided between the broker and agent, leaving the agent $7,500). Selling a more expensive home would lead to a larger commission.
How much bonuses and commissions will factor into your decision largely hinges on how your compensation is structured. In some professions, like sales, commissions might be as or even more substantial than your salary. In others, bonuses might just be gravy. And if you’re viewing two jobs where all else is equal, the one offering you the potential to perform your way to higher pay could very well be the more attractive option.
Related: How to Make Your Money Work for You: 7 Mighty Money Moves
7. Student Loan Help
Student loan debt is common. Roughly 25% of adults between the ages of 18 to 39 have student loan debt, per Pew Research Center analysis. That amounts to tens of millions of Americans, and you very well could be one of those adults who are saddled with debt.
The good news is that employers with educational assistance programs can use them to help pay principal and interest on their workers’ qualified student loans in a tax-advantaged way. These tax-free benefits, which apply to both principal and interest payments, are limited to $5,250 per employee per year and are available for payments made between March 27, 2020, and Dec. 31, 2025, unless extended.
If you’re weighed down by student loan debt, this perk could greatly help ease that burden. The sooner you pay down student loan debt, the less you will need to pay overall in interest.
Also worth noting is another student loan-related perk. The Securing a Strong Retirement Act (SECURE 2.0) allowed employers to link retirement-plan matching contributions to their employee’s student loan repayment. Per the IRS: “The 2022 legislation permits employers with a 401(k) plan, 403(b) plan, governmental 457(b) plan or SIMPLE IRA plan to provide matching contributions based on student loan payments, rather than based only on elective contributions to retirement plans, in plan years beginning after Dec. 31, 2023.”
Related: How to Pay for College [12 Ways to Save for Tuition + More]
8. Top-Notch Health Benefits
W-2 employees are often offered health insurance, though it’s hardly guaranteed. And even if your workplace does offer health plans, employer offerings aren’t at all equal. Not only are the insurance plans themselves likely to vary from one to the next, but Company A might pay all of a worker’s premiums, whereas Company B might pay as little as a quarter of those premiums.
Some companies also help pay for vision or dental insurance, family growth benefits, therapy, gym memberships and other health-related perks.
On top of all this, some companies offer tax-advantaged accounts dedicated to health spending. Health savings accounts (HSAs) and flexible spending accounts (FSAs) allow people to put away pretax dollars to pay for out-of-pocket medical expenses such as insurance copayments and deductibles, as well as qualified prescription drugs.
The various perks above can amount to many thousands of dollars. Indeed, a company with a smaller salary but a robust set of health benefits might be preferable to a company with high headline pay but lousy insurance and no HSA/FSA option.
Related: How to Plan for Health Care Expenses in Retirement
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9. Stock Options
Employee stock options give employees the right to buy their company’s shares at a fixed price for a predetermined number of years. These plans assume that the share price will increase over time, allowing the worker to purchase shares at a lower price, then sell them down the road for a profit.
If you’re awarded a lot of stock options and/or your company’s stock value increases significantly, you have the potential to make hundreds of thousands if not millions of dollars.
If a company is offering you stock options as part of your compensation package, you need to weigh that carefully. Yes, the potential is clearly sky-high. But there are potential downsides, too.
Stock options typically come with a vesting period; you might not get all of your options at once, but across a vesting period that could last years. Your company’s stock could go down in value. Your company’s stock might not even be public, so its price might change infrequently (during funding rounds) and it could be extremely difficult to sell.
And beware: Some companies offer stock options to make up for a well-below-market salary, hoping you’ll “gamble on yourself”—but if you earn too little in salary, you could live a much more difficult life for a de facto lottery ticket that you might not ever get to cash.
Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested’s free retirement planning newsletter.
10. Employee Discounts
OK, OK, it’s rare that you’ll get an employee discount so substantial that you should accept a lower salary just to get it. Still …
Let’s say you work retail. If you got a job with REI, you could get 50% off REI Co-op Great and Apparel, 30% off vendor merchandise, and access to the vendor ProDeal Discount program, which lets you make purchases directly from vendors. Want to learn a new skill? Employees get discounted prices for REI’s Outdoor School. Plus, workers get discounts on trips through REI Adventures, with most trips discounted by 30%.
Those discounts could easily outweigh a modest salary difference at another store if you’re an outdoorsy person.
Similarly, a car enthusiast may be interested in the GM employee discount that lets them purchase or lease a new, eligible vehicle below MSRP. Or a tech lover might end up saving a chunk of money each year on phone and computer discounts.
Again, this perk is usually far less material than the others listed above, but it’s still worth a quick mention.
Related: How to Invest Money: 5 Steps to Start Investing w/Little Money
