Changing Jobs Or Industries? Take A Pay Cut And Swallow Your Pride

Taking A Pay Cut To Change Jobs Or Industries

One of the funniest things I've come across are people who want to gain experience, but aren't willing to sacrifice. Changing jobs or industries means you'll likely need to take a pay cut and put in a lot of time.

Several years ago, there was a lot of debate regarding employers taking advantage of their free interns. So, like any good Big Government would do, the US Department of Labor stepped in. They established the Internship Programs Under The Fair Labor Standards Act to protect these poor interns.

The “unintended consequence” of course is that there may be fewer opportunities for eager beavers to gain experience. Why? Employers might as well hire qualified, full-time employees if they have to pay!

Take A Pay Cut And Like It

The $4.25 an hour job at McDonald's was the worst job I ever had. The manager was abusive. He yelled at us when we spoke Spanish and never told us we did a good job. You try making six Egg McMuffins in a row under pressure. I guarantee you'll mess up once in a while!

But getting to work at 6am to open up the store made me think about changing jobs a lot. In addition, never feeling the love of a superior also helped prepare me for a much more lucrative job in finance. 

5:30am start times weren't a big deal once I graduated from college. Getting yelled at for making a mistake on a presentation slide was just par for the course. McDonald's toughened me up and eradicated any feelings of entitlement I would otherwise have!

Trying Things Out Again

I could have found another job in traditional finance the first two years after I left in 2012. But I didn't want to go back. Instead, I applied to probably a hundred tech/internet jobs.

I hardly got a response from anybody until I took a part-time consulting job at Personal Capital in 2013. The pay was not bad, but it was a 60%+ pay cut, even on an annualized income if I were to work there full-time.

Personal Capital was seeded with $2 million in 2009 by CEO, Bill Harris. It grew into one of the leaders in the financial technology space. They have over $120 million in funding and $1.3 billion+ in managed assets and growing.

Clearly, I was fortunate enough to pick a winner to grow with. Now, every time I reach out to a company in the fintech space I always at least get a courtesy response, instead of a classic ignore.

Changing Jobs Is Exciting

But after 16 years in some finance related occupation, I thought it might be interesting to explore a new industry. My interests in changing jobs went to startup land since content marketing is scaleable across multiple industries.

One of my blogging buddies at WSPB commented in my post on “How To Get Hired If You Are Overqualified,”

Some of your posts are downright hilarious. You’re successful enough that working for $135K or even considering it, is lunacy.

Again going to stick with my guns, you don’t want a new career/job… You are simply bored. This is why we chose the “start a product company” option from one of your posts 1-2 weeks back.

It makes more sense.

More Pay Cuts When Changing Jobs

He's right. I wanted to try something new, and to do so, would require another massive pay cut. But that's what having financial freedom allows.

You get to explore different things that may excite you with much less regard for what you're getting paid. It's kind of like an ex-NBA basketball player sportscasting for a major media network. They're in the mix and have respect. And probably tell themselves all the time, “I can't get believe I'm getting paid to do this job.”

$135,000 is not chump change, but everything is relative in finance. Accepting the job would mean cutting out consulting activity and taking another large pay cut.

Logically, taking a 50%+ pay cut is probably not a financially wise decision in the near term. But in the long-term, who knows? I was more curious to get to know the CEO. I wanted to understand his business model, and see if we could build a business relationship. Besides, I love to negotiate and share all these interesting stories with all of you!

Pivot To A New Industry

If I really want to pivot into a different industry, I need to take a cut. The same goes for most people. Nobody is going to hire someone with no experience, who they don't know, for the same bucks, no matter how well you've performed elsewhere.

Through this particular job hunt process, I was able to write a post that might help overqualified people win a job they desire. In addition, I figured out where my own pay cut limitations lie. The idea of joining an exciting new company is interesting, but the economics have to be reasonable.

Main point: You don't know your true risk tolerance until you start losing money in a bear market. In addition, you don't really know how much less you are willing to “work for your passion” until you're faced with making a very real decision.

I decided that taking a full-time job for less than $200,000 a year without good responsibility and great equity upside is not in my cards at the moment. I'd rather be completely free to work on my own online business and consult part-time.

Change Your Money-Making Time Horizon

Actor Jared Leto disappeared from the movie scene for years. Then he resurfaced as a sickly transgender character named Rayon in Dallas Buyers Club.

The film paid little, but he went on to win an Oscar for his incredible role in 2014. Then, he made around $7 million as The Joker in the new Batman movie!

Short-term thinking is limiting

Short-term thinking can really limit financial gain. If I didn't keep Financial Samurai going for the first three years, I wouldn't have been able to escape Corporate America. 

By doing 25 hours of consulting work on the side for a year and a half, a huge opportunity to consult with dozens of startups has emerged. And by spending time learning about how startups from various funding stages operate, I might just try and do something bigger on my own.

It would be nice to go straight to the corner office in everything we want to do. Unfortunately, we've got to pay our dues. But once you've made some sacrifices, you'll appreciate it so much more when you finally reach the top. Be willing to put in the effort and get excited about changing jobs!

Recommendation For Leaving A Job

If you want to leave a job you no longer enjoy, I recommend negotiating a severance instead of quitting. If you negotiate a severance like I did back in 2012, you not only get a severance check, but potentially subsidized healthcare, deferred compensation, and worker training.

When you get laid off, you're also eligible for up to roughly 27 weeks of unemployment benefits. Having a financial runway is huge during your transition period.

Conversely, if you quit your job you get nothing. Check out, How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye.

It's the only book that teaches you how to negotiate a severance. In addition, it was recently updated and expanded thanks to tremendous reader feedback and successful case studies.

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Brand yourself online, connect with like-minded people, find new consulting gigs, and potentially make a good amount of income online one day by selling your product or recommending other great products.

Not a day goes by where I'm not thankful for starting Financial Samurai in 2009. I have maximum freedom now thanks to working on my side-hustle while working for 2.5 years. You never know where your journey will take you!

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49 thoughts on “Changing Jobs Or Industries? Take A Pay Cut And Swallow Your Pride”

  1. Pingback: Who Spends Over $100,000 A Year On Rent? Apparently All Types Of People! | Financial Samurai

  2. Pingback: Want More Money? Ask Yourself This One Question | Financial Samurai

  3. I’ve interned twice, but of course it wasn’t for free. If a company wants to know why they should hire me even though I have no experience I let them know that it is the companies responsibility to provide full training and experience for whatever position they need. That’s the secret to getting paid for an internship. Also I never reveal the details of previous employments, such as previous pay, due to ethical confidentiality concerns. Doing these things make employers respect you and your time a lot more.

  4. I think this is pretty well common sense. I’m making more in retail currently than I would in a starter position doing tech work, but that’s to be expected. I have experience, but not what they’re looking for, yet.

    The real problem is even getting the starter position, which I will be pursuing shortly.

    I’m currently part time and won’t go back full until I get the job I want. I am not concerned with pay right now, but will be eventually of course.

  5. Stefanie @ The Broke and Beautiful Life

    I think it’s easier to take a pay cut when you know it’s temporary. For example, Broadway actors who make 200k will do a staged reading of a new musical for a $500 stipend to be a part of a new project- that said, if it were a more traditional career trajectory, I would worry about anchoring. 40k sounds great when you’ve been making nothing, but it can stunt your future pay potential.

    The way I’ve seen interns used and abused- most notably in finance and in fashion, is rather horrifying. Just now, as they’re turning 29, my peers are finally being paid salaries more “acceptable” that said, I graduated in 2008 so that certainly contributed to the problem.

  6. BeSmartRich

    I think taking a paycut to jump into the industry and career that we love is totally worth it. Money will follow if we do a great job which is more likely as our passion is in it. Thanks for sharing the great post.


  7. Ten years ago, I came to the US from a non-English speaking country with a-BS degree in Accounting and quite a few years of finance/treasury experience. Got my first temp job, working as a clerk in a bank . In my 40-people team, most of them did not have bachelor degree, therefore I knew I was considered as a high school graduate too. The pay was really low, but I had no choice but to take it. I was even paid lower than most of the people in my group. During my tenure there, my manager let go many people but I was the last five people that he kept as I was able to meet his demand (98% accuracy in reviewing the files). I was unhappy since I knew they took advantage of me. I got another temp-to-hire and this time I was doing AP (accounts payable). I worked hard and proved myself, and asking for more responsibilities, especially the ones related to month-end closing even though without any pay increase. After a few years, I decided to get my masters and I finished with flying colors. Even though with masters, it was not easy to get my foot in the door. I worked as a book-keeper in a very small company for a year. Then a friend emailed me saying that somebody was looking for an Accountant and luckily I passed the interviews and tests. Though I was hired only as a staff, but I knew that I would have opportunities to learn more than what Staff Accountant usually handles if I asked. I did not bother if my paycheck was lower than I was supposed to get, especially with the many responsibilities that I had to do. Before my manager left, he promoted me. Now I am working with a Fortune-500 company.
    I think that’s the price I paid to survive in the US. I was not switching industries, but switching countries, and crawling my way to my career in the corporate world :-)

  8. One more comment I’d like to add as someone who switched jobs while staying in the same industry, high tech in my case. The best way to do it is to make a lateral move within the same company first and learn as much as one can. Your colleagues already know what type of worker you are and will typically welcome someone to a new role, even though it’s your background is different as long as they believe you can do the job well. Typically this will allow someone to maintain their salary and make a smooth transition. I was able to move from engineering to a marketing role while keeping the same salary.

    As for Sam’s case, as you mentioned in a previous article, your case maybe a bit more extreme since you made much more than the average professional person due to working in a high paying finance field. Most people will likely have to take some pay cut to go to a different field, but in all likelihood it won’t be as drastic of a cut as you experienced. I would definitely recommend doing so, because after someone has accumulated even a modest sum, keeping doing a job one isn’t interested in just for extra money is almost never worth it.

    1. Exactly. The good things, others may only have to take a 10-25% pay cut. Who cares, after taxes especially? I was taking a 60-85% pay cut. To get over this, I decided I better have fun. Also, I used 100% of proceeds to pay down mortgage debt, so I gave the consulting work more purpose.

  9. Gen Y Finance Guy

    Since starting my blog and doing a ton of self discovery and introspection I have been having lots of similar thoughts. I have had this voice inside my head since I was a kid that I should/would be in business for myself.

    I have always had side hustles bringing in a little extra money here and there at a decent rate. But nothing that I was ever interested in enough to scale.

    But I now know that I am not made to be in the corporate world long-term. Even though I have great prospects at my current job for an executive level position in the next 3-5 years, I really don’t want it. The only reason I ever thought I wanted it was because of the money.

    Switching industries has crossed my mind as well, but then I am just jumping from one rat cage to another. So I would rather stay in my current role and leverage the cash-flow while I continue to build the blog and try to build a business around it.

    The past 6-months make the future look promising. I have been able to build up a community much faster than I anticipated with almost 4,000 visitors a month now (which I have averaged for the last 3 months).

    I would love to build something that was making about $10K/month. That would be enough for me to leave my corporate job. But I would want to see a full year at that pace. I know there is still lots of work ahead. Still so much foundational stuff to get done.

    Its nothing to write home about yet, but already I have been able to earn approx. $250 online after only implementing monetizing 40 days ago. Its really cool to be in the black already this early in the journey.

    But like you mentioned to FI Fighter above, you have to ear your first $1 before you earn your first $100, before you earn your first $1,000, before you earn $10,000, etc.

    You blog has been very instrumental in shepherding me during my journey. I appreciate everything that you share with all of us here and look forward to continued learning and inspiration in your posts.

    Also excited to see what you have planned for the second half of the year.


    – GYFG

    1. What about the $10 million net worth goal though? :)

      Blogging is a long road to make money. Write b/c you love to write and connect. Find products you use and love. Create some synergies. Write for 2-3 more years, and I think good things will happen.

      There are more people making $10K+ a month online than you may realize!

      1. Gen Y Finance Guy

        Oh, don’t worry, I still plan to reach my $10M goal.

        $10K/month would be enough for me to leave my corporate gig, but I will also need to feel confident that I will still be reach my $10M goal before I leave.

        I don’t plan to make any drastic changes.

        I am in this for the long game. I have become addicted to connecting and writing. It is actually kind of funny because I have built up a backlog of about 20 posts now and I am so anxious to keep writing.

        You may laugh but it is so hard for me to wait 3-4 days in between publishing posts. But I also realize the benefit of letting a post marinate and get engagement before publishing a new one.

        The people I have connected with during this process has made it all worth it. I am building a community and its nothing without the people. To me that is the most important thing to remember. Above all else make the readers the priority.


        1. Cool, so you have two goals of making $10 million before leaving your career and $10,000/month online before you can leave your career. But, if you make $10,000 a month online, do you think you will actually leave your career? And, if you do leave your career, what about the $10 million goal?

          It could be actually much easier to get to $10 mil as an entrepreneur. I’ll show you in an upcoming post.

          1. Gen Y Finance Guy

            Those are great questions Sam. It’s easy to say right now that I would leave my career once I hit $10K/month in online income. However, I do realize that if say this happens in 3 years, I may be making double that in my career and it may be much harder to make that decision.

            I can’t say with certainty that I will leave my career once I get to the $10K/month mark. That is just when I would consider it, and it would depend on a lot of factors. And I would still want to be confident that I could reach my $10M goal without my present career path.

            Looking forward to your post you mentioned.

            Thanks for being such a great sounding board.


  10. I’ve spend the last couple of years debating whether to change careers after 10 years in finance (in the same job), but just last week I accepted a new job in my same field which is a promotion from where I am now. I had thought if I changed my career path I should be earning the same or more, even without the experience, but came to the same conclusion you’ve presented here that it’s just absurd to expect that. I certainly wouldn’t pay that much for someone who didn’t have enough experience!

    So instead, I’ve decided to make hay while the sun is shining, and instead build up a bigger financial nest egg while there’s still great earning potential ahead of me, before I decide to try something new. Fortunately I still like the work I do, but we’ll see in another 10 years!

  11. Love this post! I have decided to change gears in my current career too! I want to start a online business and am scared to death but what the hell! My plan is to start the business while at my current job and save up as much money as I can then leave next summer for good. I have three jobs in my field and multiple income properties. I paid off Sallie Mae two months ago and feel great. I plan on keeping the two part time jobs so I can have a steady income while I build up the online buisness. The savings will help make me feel more secure and not to panic. Thanks for sharing Financial Sam!

  12. So after taking the pay cut and gaining the requisite experience in the new role how do you pivot to a higher paying role in the new field? (as hopefully the pay cut is temporary)

    Do you have to find a new job in the new field or how best do you convince the new employer/boss for a large bump in pay well beyond the normal raise amounts? (Hey, I’ve paid my dues for a few years, now you need to pay me what I’m worth….)

    1. Either got to show your worth and ask for that raise, or jump to a new employer who doesn’t see you as that newbie.

      Jumping ship is the quickest way to a pay increase.

  13. It’s hard to say how much I would want in order to go back to work in a full-time corporate setting. If I wasn’t under pressure, it’d probably take a 30%+ pay increase for me to go back to doing similar work that I was doing before. If I really needed the money though I’d go back for less, more like a 10% increase. If I were to switch industries and take a full-time corporate job doing something much more in line with my interests, I’d take maybe a 25% pay cut. Hard to know for sure what I’d accept as a lot would depend on my financial situation, the job itself, the people I’d be working with, the commute, and the amount of stress.

  14. Good article. I would add that having a horrible boss at a real career type of a job is much worse than having a crappy boss at a minimum wage job. Anyone can walk away from a minimum wage job easily and get another one the next day at a different place, whereas, it’s not always so easy with a professional type of job.

    1. Hmmm, both bad scenarios. I would sit down and have a heart-to-heart chat with the horrible boss immediately. Life is too short to go through the motions and dread work every single day. Look for some other employment on the side.

  15. What an incredible post! I totally agree with this and can personally relate to the experience. I am currently pursuing my dream job and I cant recall being happier about waking up to work in my passion each day. I am still in the phase where I am trying to make things work so I can make a healthy living within my passion. However, this is the price we temporarily have to ‘pay’ to reach greatness. Thanks for sharing this.

  16. Myself and some friends recently had this discussion. We all own our own businesses and all are reasonably successful. Unless we needed the money, “in which case we would do what we had to do” we would work for someone else for only 1 reason. It would have to be something we love and we could care less if we got paid at all.

  17. Some jobs like accounting and corporate finance have more mobility between industries. I have worked for casinos, corporate bond servicing owned by a bank, manufacturing, aerospace, and now healthcare. While some take more specialty focus like start-ups or agriculture most of the responsibilities are the same. It is one of the reasons I chose this field as I can cast a wide net and find a job pretty easily.

    You are right about taking a pay cut as a possiblity though. I could see taking a slightly lower level position in a different industry if I was interested enough in it. I think I would rather retire early than make that move though!

    1. Retiring early is fun. To work for the curiosity and joy of the position is an amazing feeling. Yeah, go the early retirement route and then consult PT at various places you may find interesting. I recommend it!

  18. Wall Street Playboys

    Ha! Thanks for the shout.

    Side question… So are you going to try a product company? Currently trying to launch another one right now… Start up cost is ~$50-100K if you are extremely *minimalist* about it. No risk no reward!

    Ps to other readers here: try to avoid the word “frugal” at all costs. Frugality = never makes you Rich.

    That is like trying to become a professional body builder… While eating nothing but lettuce and rotting cucumbers all day.

    1. No prob.

      Spoke to a patent lawyer. Might have to invest $20,000-$50,000 for this said product to get off the ground.

      I’ve got a better idea. You’ll see shortly so stay tuned!

      1. Wall Street Playboys

        Looking forward to it! With your connections… should be able to get some cheap marketing as well.

        $50K is generally the start up cost. No need to go past $100K.

  19. I was very lucky right out of school to land something that paid very well for my age and experience level. After a while I saw the writing on the wall and needed to get a more corporate education. I hustled big time to land the job and took a ~25 pay cut. But, I got stock, options, benefits and, most importantly, a great education, lasting connections and a solid resume. Within a year I was making more than I had previously.

    I have to admit, seeing companies like sliced has certainly had me thinking about similar opportunities within energy.

  20. Yes, timely article and I agree that you shouldn’t be earning what you don’t deserve. I’m an engineer, and in high tech, probably earn a better than average salary. With that said, I’m considering walking away for good to try and dabble in other areas that I know jack about, like how to grow an online business, and becoming a realtor. Do I expect the same crazy salary? Not at all… I just wrote a post about aiming for an online income of $1k/month, which I don’t think is absurd for a newbie, but correct me if I’m mistaken. In any case, it would represent a MASSIVE pay cut for me. But like you said, these career changes and payouts are a lot easier to swallow if you already have some good security, or financial freedom secured. At some point, one has to make the jump if they feel like their life is growing stale and mundane.

    1. You first got to make $1,000/month to get to $10,000 a month! If you set your mind to it, I think you’ll surprise yourself.

      You may have to broaden out beyond real estate though.

  21. The Professor

    Great article! Have you considered the effects unpaid internships have had on social inequality, though? My research has shown that, in general, wealthier students without debt take unpaid internships, while students from less affluent backgrounds with debt are forced to take low-paying jobs in undesirable industries. For instance, many students take unpaid internships in wealth management, and many other students with debt spend their summers working in fast food. When full-time hiring comes around, financial employers then hire the wealthy student who could afford his unpaid wealth management position.

    Obviously, there are exceptions, but this seems to be the trend. Just something to chew on!

    1. Now that is a logical theory and something to consider!

      I think it’s more a case of the brightest students work at the best internships, while kids like me work at McDonald’s during summer break because I didn’t know better and had no connections!

      What you say makes sense though. I noticed all the interns at GS came from pretty well-to-do families and private schools.

      Connections…. Or super collegiate stardom….. Or luck are the most important aspects of getting that good job right out of college.

    2. I was going to make the same point as Professor. When I graduated eons ago (pre-internet), I was interested in a few “glamour” industries like media, entertainment, and publishing. However, most of these companies expect people to get in the door through unpaid internship. For many lower-income students, it’s just not a realistic option. As a result, industries that rely on the unpaid intern pipeline unintentionally block people from less wealthy backgrounds and are less diverse.

      I do think it’s fair to take a pay cut if you change fields later in life. Hopefully, by that time, you could plan for this change and save up in anticipation of a pay cut. I took a small paycut when I switched fields but was making more in a year due to good raises. I also negotiated the starting salary so I got a higher pay than advertised in the company’s original ad.

  22. Joshua Myers

    You’re posts always seems very timely. I spent a large part of the weekend looking at other jobs and careers. I finish my MBA in a few months and I don’t feel that my current job is anything near what I can or want to do with this one life. The rub if that I have a family and the 200k/year makes taking care of them a lot easier. Until I get some more passive income under my belt I don’t know if I can take that leap of faith. I’ve decided on an alternative strategy for now. Keep buying rental properties for cash flow and find ways to build up my work experience without quitting. That way I’ll be able to make a move in the next 4-5 if I still want.

    It’s easy to make a plan, but it’s still hard in the moment when you’re not satisfied. I guess that’s the motivational factor you need to make big changes in your life.

    1. Josh, are you doing your MBA part-time?

      Having a plan 4-5 years out is a good one. It will help you save and invest like crazy to reach your goal. I always think in 4-5 year blocks b/c that’s what high school and college was.

  23. I had a friend in this situation. He actually was an entrepreneur and did very well, but the area he was in (pre-paid cell phones) was getting crowded and he wanted to move on. He ended up taking an entry level IT job to get experience in that field, and already has been promoted several times and is now getting into management level. It’s working out better than expected, but never would have had he not purposefully taken a big cut to get started in his new field.

  24. Awesome post! Most people probably consider working in a different industry, either from boredom, lack of growth, or just wanting to chase their passion. From most people that I talk to that have been as successful as you have, they all recommend going in part-time at first until you feel confident enough making the big switch.

  25. BE Pennypacker

    The biggest job change I made was going from financial analyst to software engineer. There wasn’t much of a change in pay, but I did have to start at the bottom. I started out in tech support for a mid-sized home builder. It wasn’t your typical 9-5 desk job. There were regular hours, but also lots of nights and weekends. It was hard work, but looking back, it was such a valuable experience. That entry-level job really helped give me a solid foundation of practical computer knowledge. I believe now I’m a better software engineer because of it.

  26. How timely! I’m strongly considering changing jobs and I would like to think that if something came up that sounded like I would enjoy it, I would take a pay cut. However, I really have no clue what else I want to do which means I don’t know where to even start searching.. So, I stay and make do with not liking my current job for the money. Fear does play into this – I don’t want to jump from the frying pan into the fire, though I do know that if I don’t take the risk, I don’t get the possible reward (less pay for a job that I can smile going in to each day). I just really have no clue what else I want to do which feels like a crappy place to be in. (Side note: I go to the doctor in a few weeks and it was suggested by a friend that I get a professional Myers-Briggs personality test done so I can have a better idea of myself, what I might have a better chance at succeeding in, what others like me have enjoyed, etc.. I might as well ask the dr what she thinks about this.) So Sam, if I do end up changing jobs in the next few months, I will check back and let you know what I find. :)

    1. If you don’t know what else you want to do, perhaps you are doing exactly what you want to do? Because if you’re not itching to do something else, then you’re satisfied.

      Best to draw out a diagram with a list of things you think you’d love to do, do research on them, speak to people who do those jobs, and then consider taking the leap!

  27. Robin Tucker

    Thank you, Sam! Sometimes taking a pay cut to get into a field you love is worth it. I had a secure, reasonably well paying job that I resigned from and began cleaning kennels at an animal hospital to gain experience to go to veterinary school. Kennel attendant is the lowest job, and is little more than cleaning up animals’ bodily fluids all day long. But it paid off– I got the experience, had the undergrad transcript needed, and got into veterinary college. I love being a vet, even though the hours are long, and the pay is modest (average is about 85 K/year) compared to many.

    1. Great job Robin, going from the bottom in a field you love and going after your dream! I hope other people reading this aren’t afraid to do whatever it takes to do what you really want to do.

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