A recent report from PricewaterhouseCoopers has revealed that Australian employees would take up to a 10 per cent pay cut to pursue their dream job.
But what does that actually mean? Many Hollywood actors take pay cuts to work on passion projects or indie films. Matthew McConaughey was rumoured to have earnt less than $200,000 for his role in Dallas Buyer Club, but winning Oscar for best actor was career gold.
Likewise George Clooney reportedly mortgaged his house and paid himself $1 each to write, act and direct Good Night, and Good Luck. His passion paid off when the movie, which cost $7.5 million to make, grossed more than $54 million at the box office worldwide.
So while settling for a lower salary may cut your bank balance in the short term, it can add value to your life in other ways – here’s how:
To unleash your passion
Natalie Clays left her six-figure salary at a large, well-known retailer in order to work as a therapist to help people quit smoking, running the New South Wales franchise of the Allen Carr program.
“I had a bit of an epiphany,” Ms Clays, a former smoker, recalls, “I quit my job and worked at a pub then a restaurant to fund me during my training.”
The financial change was drastic.
“In hospitality, I was earning about $15 an hour which came to about $26,000 a year – that was an annual bonus in my old job.”
Despite the long hours and dramatically lower income, Ms Clays found she had the passion to persevere and it eventually paid off. Within two weeks of starting her new business after more than a year of hospitality work, she was making enough to quit the restaurant gig.
“I was lucky in that I didn’t love my previous job. I was getting nothing out of it except the money. Now, I’ve found my calling.”
To enjoy more freedom
If the corporate world isn’t for you, you may decide to go out on your own and start a business. While the risks are high, the rewards can be great.
“I decided to go skiing mid-week last week because I could,” Ms Clays says. “I didn’t have to ask anyone.”
To travel the world
Professional trader Nick Radge had a high-paying job at a Sydney investment bank when he took a 50 per cent pay cut to move his wife and one-year-old daughter to London in 1995.
“One day I just remember thinking: ‘Gosh, I don’t want to do the same thing for 15 years.’”
He nabbed a job at HSBC bank in London, which quickly led to another job in Singapore.
“You’ve got to take a bit of short term pain for some gain, and once you open that door with that experience, a lot more open straight away,” Mr Radge says.
Today, Mr Radge runs his own business in Noosa using his extensive overseas experience to advise clients about global markets and stocks.
According to Anne-Marie Orrock, founder of Corporate Canary HR Consulting, moving overseas as part of a long-term plan could allow you to “leverage your unique experience” to negotiate a higher salary upon returning to your home country.
To gain more stability
Unfortunately, for many people, taking a pay cut isn’t always voluntary.
“A [struggling] company may ask an individual to take a pay cut to enable them to keep their job for a longer period of time,” Ms Orrock says.
While you may be forced to take the cut in order to maintain a steady, reliable stream of income, be aware of the risk involved should the company fail to turn around and keep your feelers out for other opportunities.
To be closer to home
Often, taking a salary decrease to be closer to home will mean you eventually break even.
“If it means that the savings on transport, petrol or tolls will even out the salary decrease, or if they’re saving the time to spend with family, it can be worth it,” Ms Orrock says.
To allow for progression
While a small company may provide comfort and stability, it often offers little in the way of opportunity. Making a sideways move to a bigger company or one better suited to your career path may allow you to work your way up the ranks.
However, Ms Orrock warns to make sure you do your due diligence before making the change – don’t just assume a bigger company will mean a salary increase or promotion.