Taking a Pay Cut for Less Stress: Is it Worth It?

There are many people who wonder if taking a pay cut for less stress is worth it. The overall general answer is that it’s not. While it may be hard to believe, there are jobs that pay very well but come with less stress than what you’re currently feeling. It’s hard to find but the jobs are out there.

I was having a brunch session with one of my former coworkers working in private equity. He made the jump to private equity from corporate banking. His life changed with one job change and with one move.

His compensation changed from making something close to $115,000 to something closer to $300,000. That’s with a mix between base salary, bonus, and restricted stock units. He’s in his mid/late 20’s. His lifestyle actually improved with the change. He used to work until Friday night.

Now he works a standard 40 – 50 hours per week. Life is just so much better for him, even with the increase in pay. Taking a pay cut for less stress isn’t worth it because you can definitely get a pay increase for less stress. Notwithstanding my friend, I recently made the jump too.

Now, don’t get me wrong, I still work very hard. I work weekends, nights, and the like. However, the hours are nothing like what I endured when working in my prior job of being in lending space in financial services. In the past, companies offered me a pay cut and I thank my lucky stars I declined them all.

First, Figure Out WHY You Have a Job

If you’re thinking about taking a pay cut for less stress, figure out why you have a job. Many people get a job because they want to grow their skillset, develop professionally, and have a good work life balance. That’s a very noble goal. However, these jobs are in the rarity.

Most jobs’ sole purpose is to fund your life. They are to make sure you can put food on the table, secure your family’s future, and be a productive member to society. A job is not to make you happy or give you meaningful purpose. It’s to make sure you don’t starve and can put food on the table.

If the job DOES give you that satisfaction, then that’s great! That’s icing on the cake. However, expecting a job to provide you with purpose, happiness, and life is not the right way to look at it. Companies are trying to make money through employees.

They are using you to serve their interests as much as you are using the company to serve your interests. If a job is giving you unbearable stress, then by all means, it’s a good idea to change jobs. However, jobs are supposed to be stressful. There aren’t a lot of people whose jobs don’t give them stress.

If you decide that taking a pay cut for less stress is worth it, remember that we see money as what others view our time is worth. While it’s not tied to your self worth, it is tied to how much your time is worth. Every paycheck feels like a slap in the face if you find out that others are undervaluing your potential.

Taking a Pay Cut for Less Stress: Why You Shouldn’t

Let’s go over the concrete reasons why you shouldn’t take a pay cut for less stress. It may just be the biggest mistake you make.

1) You Can Get Paid More For Less Stress

I’ve heard so many people say how high paying jobs HAVE to be stressful. No. They don’t have to be stressful. Take it from me. I recently increased my pay by 30% with one job jump. While the new role is challenging and more intellectually stimulating, it doesn’t come with more stress.

Maybe it’s because my boss is so great or maybe it’s because my coworkers are amazing. However, whatever the reason is, I feel less stress than what I felt in the past year of working in my prior job. Too many people think high pay means high stress without knowing that the opposite is true.

There are people with jobs that pay $200k who feel less stress and work less than the ones who are making $100k. One of my former coworkers was making $140k per year and she was working less than when she was trying to move up the ladder. It may take some time to find these jobs, but they are out there.

That’s why taking a pay cut for less stress doesn’t always make sense. Sometimes, the lower paying job gives more stress.

2) You Will Feel Pain Every Paycheck

When I was underpaid at my last job, I felt an enormous amount of pain every paycheck. I knew I was worth more yet the company was paying me so little. Every two weeks felt like a slap in the face and I felt heartburn. It just physically hurts knowing how much you are worth yet the company is refusing to bump up your pay.

It may not feel that way for the first six months or so but it feels that way thereafter. The second year is when I felt an extreme amount of pain. Other companies even offered me less money than what I was getting paid! I declined all of their offers.

It wouldn’t be in the company’s best interest for me to accept because I would not be motivated to do good work for them. Taking a pay cut for less stress will breed a new kind of stress. Discounting your valuable time. Your time isn’t free. It’s the most precious asset that you have.

3) No Guarantee the New Job Will be Less Stressful

Ever think about the possibility that maybe pay doesn’t have anything to do with how stressed you are? Maybe even lesser paying jobs are more stressful than six figure jobs? Take it from Kevin from Financial Panther. He took a $50,000 pay cut but the job was even worse than when he was in big law.

This isn’t a bad thing for Kevin by any means, Kevin has been doing phenomenal since he graduated law school. It’s to highlight that taking a pay cut doesn’t mean that there’s going to be less stress. You could actually experience more stress but only now, you’re getting paid less than before.

That is the ultimate trap. It’s hard to move from a high paying job to a lower stress job. It’s even harder to go back from a low paying job to a high paying job. Companies are vultures and they WILL take advantage of any cheap employees that they can acquire. And take full advantage of them.

4) It’s Not Easy to Go Back

I know bosses who went from making $300k in the nineties and are now making LESS in nominal terms. Not even in inflation adjusted terms. In dollar terms. He is now making $250k, all in. While that’s not a bad salary by any means, on an inflation adjusted basis, that’s a mega pay cut.

When you decide taking a pay cut for less stress is the right path, understand that it’s not the easiest to make the same amount of money again. Companies don’t give out free lunches and they’re not a soup kitchen. A company gave me an offer for $70k, instead of the $110k I was making before.

I actually took the $70,000 offer until I reneged it. My life would’ve been drastically difference had I went through with the $70k job. I would NOT have been able to easily go back to making $110,000. Negotiating against companies would’ve been a painful process.

Taking a pay cut for less stress just might be the worst career decision of your life.

Is it EVER OK Taking a Pay Cut?

Does that mean that taking a pay cut for less stress is ALWAYS bad? Absolutely not. Some people take pay cuts because they got laid off. One of my coworkers were clearing $420k per year. He went back to making $220k per year after the lay off.

It’s never always bad to take a pay cut. Sometimes, we have to take a pay cut out of necessity because, well, it happens. Business lay off for no good reason or they just decide they want to save on costs. Also, if it truly IS taking a pay cut for less stress and you are completely OK with less pay, then by all means, it’s a good idea.

Sometimes, we take a pay cut out of necessity. The financial crisis made so many people lose their jobs and their homes. It took people years before they even got back to breaking even. Same with the coronavirus pandemic. Sometimes, pay cuts have to happen for you to live to fight another day.

Don’t be fooled by many people who say, “I don’t want to work this high paying stressful job anymore, I would be willing to be paid less for less stress”. I’ve met so many of my friends who say that taking a pay cut for less stress is worth it. None of my friends actually went through with that plan.

Misery while being paid a lot is better than misery while being paid a little. Jobs are for the benefit of the employer. Employees exist to service the needs of their employer, there’s little chance that there’s a lot of jobs that the employer will make you feel happy in.

Taking a Pay Cut for Less Stress: My Story

I was working in financial services straight out of college. While it was the lowest pay offer, somehow I knew I would be a big fish in a small pond. I was right. I got close to the highest raise out of all my friends. Increasing my pay by a whopping 60% in just six months. That felt good.

Then after one year, because I was doing so good, my company promoted me so I scored another 25% increase in pay. Then the job became unbearable. The boss was horrible, then the company processes were changed so much that it made working there not make sense anymore.

I had another offer to work for a ~30% pay cut. The job would’ve been the easiest job that I would’ve ever worked in. The coworkers there were so happy and it would be a truly 40 hour work week. So I took it thinking that taking a pay cut for less stress wouldn’t be so bad.

However, another offer came through such that put the pay cut idea to rest pretty quickly. Remember that I said that I was feeling bad that I was getting paid so little at the new job? I can’t imagine how badly I would’ve felt with a 30% pay cut.

It would’ve easily surpassed misery at that point. It would have been unsalvageable misery. That’s when I realized that taking a pay cut for less stress would’ve been the worst mistake of my life. When you are in your 20’s, that is your prime earning years. Don’t think about lowering your stress now, it’s when you should set the foundation.

Taking a Pay Cut for Less Stress is Not Your Dream Job

Your dream job is one that pays you what you know you deserve to make AND gives good work life balance as well. If you’re taking a pay cut for less stress, that’s not your dream job. That’s your settling job. You’re settling that that’s the best job for you to take right now.

Believe it or not, there are jobs that make you work even less while paying you more. It’s hard to find and hard to come by but those jobs are out there. It’s your job to get to that point. No one is going to do it for you, you’re going to have to find them out yourself. Don’t quit when you’re just six months away from the life.

It’s going to take a lot of trial and error before you find the answer. Some companies lie through the interview process. Which makes it harder for you to find the right opportunity. However, then it becomes more important than ever to never give up.

Don’t give up on finding your dream job. You didn’t come this far to only come this far. Life’s a big uphill battle. It’s what you make out of life that’s going to make the difference between a successful and unsuccessful person. Keep fighting just one more year. Keep going at it.

One day, you’re going to realize what a silly thing that you were considering doing. That you were even considering taking a pay cut for less stress in the first place. Toughen it out because the right opportunity is going to come knocking when you least expect it.

Is Taking a Pay Cut for Less Stress Worth It?

It is NOT worth it to be taking a pay cut for less stress. You are capable and your time is worth something. Once you make it in the big leagues, making the jump to the small leagues doesn’t make any sense. Don’t discount yourself because you’re worth much more than what you realize.

Take it from someone who almost had an opportunity to take a pay cut. However, I scored a fortuitous offer that erased all possibility of taking a big pay cut. Looking back on it now, I can’t imagine just how much more miserable I would’ve been had I stuck with the pay cut job.

There are jobs that’ll give you a pay increase for less stress. You have to keep fighting to find these jobs. Keep talking to people, keep networking. Keep on trying to fight and move up, even withstand a bad work environment in the meantime. It may take a year or two but as long as you put in the reps, you’ll get there.

Life isn’t about who is the smartest, it’s about who has the grit and the willpower to power through when everything gets tough. It’s a given that life WILL get tough. No one ever skated through life with an easy life. It’s how you handle these challenges and overcome them that’ll matter the most.

Taking a pay cut for less stress is not worth it. You are more capable than you realize. When you don’t have a job to fall back on, you lose your negotiating power. Taking a $50,000 job is better than making $0, is what you’ll start to rationalize. Just don’t do it.