Beyond salary: Benefits may matter more than you think
So you’ve just gotten your first job offer. While the salary number may be your main focus, there’s much more to consider. Here’s how benefits—many of which are factored in pre-tax—can translate to real money in your pocket.
Take some time to note how you expect to use health care over the next few years—do you have any chronic conditions, for example? You may want to figure out the cost of your insurance if your employer didn’t provide it for comparison. Would you pay out of pocket for individual coverage? Now look at what your employer offers. Ask about your monthly premiums and copays for doctor visits and prescriptions. Are dental and vision included? What is your maximum annual out-of-pocket expense? Once you know these things you can estimate how much you’ll spend or save if you accept your offer.
A retirement plan—usually in the form of a 401(k), 457 or 403(b)—is another significant benefit. These accounts allow you to put aside a portion of your pre-tax pay for retirement. Your employer may even match part of your contribution, boosting the amount you invest. Retirement may seem like a long way off, but your earnings may produce earnings of their own, so early planning can pack a real punch when it comes time to retire.
Some employers reimburse commuting costs outright. Others offer transportation spending accounts (TSAs) that let you set aside pre-tax income to cover commuting costs. This benefit could potentially save you hundreds, by paying you outright or reducing your tax bill.
While you may not be thinking about life insurance in your first job, it is valuable. Coverage is more important if you have dependents. But a policy can also be vital if you have significant private student loans that your parents co-signed, or other burdens that may pass on to your family in case of a tragedy.
Like life insurance, disability insurance may not be something on your radar if you’re young and healthy. However, if you have an accident and are unable to work, disability insurance can provide a portion of your pay until you get better. These policies can have fine print, so be sure you understand how extensive these benefits are when considering them as part of your pay package.
Think grad school may be in your future? What about professional development courses? Tuition reimbursement packages can be a big help. Not only can these plans help your finances while you take classes, they can also help you position yourself for higher earnings.
Many employers offer health club discounts that reimburse you for all or part of your gym membership. If your employer doesn’t offer it directly, the health insurance plan might.
Don’t underestimate the power of a stocked office kitchen or free cafeteria. Even free coffee and snacks can translate into savings on your monthly food bill. While we don’t suggest raiding the office cabinets to supplement your grocery runs, you should be aware of the difference it makes on your budget.
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