Evaluating Benefits Packages

What are benefit packages worth to you? It is important to evaluate the benefit package when deciding on a job offer.

Job interviews are stressful enough without thinking about whether our future employers will pay to get our teeth cleaned. It's pretty common, especially for those new to the job market, to walk out of a job interview without even discussing benefits packages.

On the flip side, an employer may be so focused on selling you on all the great perks the company will supposedly provide that it's hard to tell whether you're getting a good offer or not. That's when you need to stay clear-headed and sort out the different parts of a job offer.

First there's the salary -- and we all know what that is -- and then there's this nebulous enticement known as the "benefits package." Benefits are essentially extra services your employer provides on top of salary. When you're considering job offers, you must understand what benefits are being offered and how much they mean to you.

Some benefits include:

  • health insurance
  • vision care
  • dental care
  • free gym membership or reimbursement for gym expenses as part of a wellness plan
  • paid vacation plus personal days
  • discounts on subscriptions to publications
  • paid educational expenses for courses you take -- or entire degrees earned -- that are related to your job
  • company car or reimbursement for mileage or parking
  • life insurance
  • disability insurance
  • contribution to a pension plan or matching contribution to 401(k) plan
  • stock options
  • profit sharing

Evaluating the Benefits Package

Think of perks or benefits as expenses you can avoid. For example, say you're comparing freelance work for a company that pays you $50,000 and no benefits with a staff job at a company that pays $43,000 plus benefits. Say the benefits include health insurance, gym membership and a contribution to a pension plan of 15 percent of your salary.

If you took the staff job, you might end up saving $100 a month -- or $1,200 -- for health insurance, $45 a month -- or $540 -- for a gym membership and getting a pension plan contribution of $6,450. So the total value of your salary and benefits would be $51,190, or slightly more than the freelance total.

By the same token, a benefits package may not be particularly enticing to you. The value of your benefits package depends on the cost of those benefits if you had to pay for them yourself and the value to you of having those benefits. If your job provides a gym membership but you know you'd rather take yoga classes somewhere else, the gym benefit is virtually meaningless to you.

So step one is to put a dollar amount on the benefits. Then remember that benefits are only beneficial if they save you money you'd otherwise spend.

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