When I left my job almost 5 years ago, I was making more with freelancing and side hustles (I was a writer for several travel blogs, taught French and Spanish on the side, etc.) than at my day job. I did not want to include any money from rental properties or other investments into my “freedom plan” at the time, because I didn’t have a long enough track record to know how much should be discounted for bad years, rental vacancies and other bumps in the road.
So anyway, I thought I would be fine earning more than I used to at my day job, and just working for myself. But the next month, I also moved from the UK to Morocco. Suddenly, I could live on much less money. Just the price that my tenants were paying for one room in my old UK flat was enough to cover my 700sqft one bed flat, all utilities, my food, and then some. I realized I could have left my job much sooner than I did, as my lifestyle changed and my needs were drastically reduced. I don’t regret leaving a few months later as the extra paychecks allowed me to get approved for a mortgage on a rental property, and I left soon after closing on the property, adding an extra cushion to my freedom plan with the rental income.
Your circumstances will be different
If you leave your job to work from home, you may not need day care anymore. Or a second car. If you earn less money, then the household will pay less taxes. If your spouse makes much more than you do and you are in a high bracket, you may have been paying close to 50% in taxes, so any $1,000 less you are making are “only” $500 less in your pocket.
When you make your financial projections, try to evaluate what your life will be like. Something I often hear from people who are reluctant to quit their job for a dream job paying less is “we barely make ends meet as we are, I can’t afford to get a job that pays less”.
But if you switch to part time work, you will have more time to shop carefully and save on groceries, to cook at home and save on eating out, to plan your family fun and save on leisure and holidays, and so on. It is hard to put a value on those things as you live a busy life and can’t imagine yourself without all the convenience you happily pay for.
Try to picture it. At the moment you pay for a teenager to get the kids back from school. That expense is gone. You need to dress smart for work and pay for dry cleaning and a seasonal closet upgrade. Gone. Your colleagues insisted on going out to lunch every Tuesday and it always cost over $15. Gone.
Does your dream job have perks?
Often, if you accept your dream job, it is because the perks attached to it are something you dream of doing, love doing, and/or pay to do at the moment. For example, you become a diving instructor because you love to dive and it allows you to dive for free, when you used to have to work another job then spend money on that hobby. Always dreamed of being a bartender? You can now hang out at the bar every night without the price tag.
Another noticeable perk to working your dream job is that you actually enjoy going to work. Goodbye therapists, pills, depression, sleepless nights, hurtful back, clenched teeth… The benefits on your health, your most important asset, are priceless.
A dream job is not necessarily a job that allows you to work in your dream field, but could also be a job that maximizes your free time to enjoy your dream. Say you love to paint, and it is hard to live off your art. A dream job could be a good enough paying job that has reduced hours, is close to home, and is not very demanding so you keep your energy and creativity for your art. A friend is a postwoman, she has a mail route and starts around 5am. By 11am she is done, paid full time, and can go home to do whatever she pleases.
I talked about my job flipping burgers at McD, making minimum wage, and how it was great to have a job that respected the laws (you work one more minute, you get paid for that minute), and fed you three times a day if you worked 8 hours. It is not demanding at all, when you hang up your hairnet at the end of the day you can go back to having a life, while your passion picks up and provides a steady paycheck.
Defining a dream job’s minimum acceptable wage
It can be scary to accept a 30% pay cut to be able to work your dream job, but in many cases, if you take your current salary, deduce all the previous perks and savings due to lifestyle changes we talked about above, you should be just fine. After I had been freelancing for about 3 months, a contract dried up. Then another one around the 6 months mark. This very blog was actually born because my writing gigs were going away one at a time, and after 4 years I was fed up of working for someone else anyway, so I tried to start making money online by myself. I was lucky to succeed, and be able to cover my living expenses, charity giving and expansive travel plans with that new dream job. But even when my income was much lower, I was still willing to reduce a little bit my lifestyle so I could live the dream and not go back to an office ever.
I talked previously about the survival budget, that would bring your expenses down to the bare minimum in case of a job loss or extreme circumstances. Your dream job should pay more than that, you are not about to leave your day job to end up happy professionally, but miserable in other areas of your life.
If your dream job has some room for expansion, like in the case of a freelancer, if you still have time and possibilities to take on more clients down the road, I would say your dream job’s minimum acceptable wage should be whatever covers your current expenses, and the minimum amount of savings that makes you sleep comfortably at night. For me, it would be just expenses as I have enough savings to cover an emergency already, and do not need to add up to that.
If your dream job has no room for income growth more than a yearly 3% raise, like the diving instructor would get at the dive shop, I would include a bit more for savings, in case the raise doesn’t come the next year, but your landlord still raises the rents.
I know I would work for free for a true dream job, because I can afford it. But my list of requirements would include having tons of time off to travel and simply be, so it would have to be something sporadic, like working backstage at a major band’s concert, or being a maid in the space shuttle. If it was 5 years back, I would take a pay cut to work my dream job, and I am always the optimist, so would be convinced that I could turn that around and make more soon. In the meanwhile, working a job I love would be worth the smaller paycheck.