If you're seeing this message, it means we're having trouble loading external resources on our website.

If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked.

Main content

Beyond salary: benefits may matter more than you think

Explore how job benefits—many of which are factored in pre-tax—can translate to real money in your pocket.
So you’ve just gotten your first job offer. While salary may be your main focus, there’s much more to consider. Here’s how benefits—many of which are factored in pre-tax—can translate to real money in your pocket.

1) Health insurance

Take some time to note how you expect to use health care over the next few years—do you have any chronic conditions, for example? You may want to figure out the cost of your insurance if your employer didn’t provide it for comparison. Would you pay out of pocket for individual coverage? Now look at what your employer offers. Ask about your monthly premiums and co-pays for doctor visits and prescriptions. Are dental and vision included? What is your maximum annual out-of-pocket expense? Once you know these things you can estimate how much you’ll spend or save on health care expenses if you accept the offer.

2) Retirement plan

A retirement plan—usually in the form of a 401(k), 457 or 403(b)—is another significant benefit. These accounts let you put aside a portion of your pre-tax pay for retirement. Your employer may even match part of your contribution, boosting the amount you invest. Retirement may seem like a long way off, but your earnings may produce earnings of their own, so early planning can pack a real punch when it comes time to retire.

3) Transit reimbursement

Some employers reimburse commuting costs outright. Others offer Transportation Spending Accounts (TSAs) that let you set aside pre-tax income to cover commuting costs. This benefit could potentially save you hundreds, by paying you outright or reducing your tax bill.

4) Life insurance

While you may not be thinking about life insurance in your first job, it is valuable. Coverage is more important if you have dependents. But a policy can also be vital if you have significant private student loans that your parents cosigned, or other burdens that may pass on to your family in case of a tragedy.

5) Disability insurance

Like life insurance, disability insurance may not be something on your radar if you’re young and healthy. However, if you have an accident and are unable to work, disability insurance can provide a portion of your pay until you get better. These policies can have fine print, so be sure you understand how extensive these benefits are when considering them as part of your pay package.

6) Tuition reimbursement

Think grad school may be in your future? What about professional development courses? Tuition reimbursement packages can be a big help. Not only can these plans help your finances while you take classes, they can also help you position yourself for higher earnings.

7) Health club discounts

Many employers offer health club discounts that reimburse you for all or part of your gym membership. If your employer doesn’t offer it directly, the health insurance plan might.

8) Free food

Don’t underestimate the power of a stocked office kitchen or free cafeteria. Even free coffee and snacks can translate into savings on your monthly food bill. While we don’t suggest raiding the office cabinets to supplement your grocery runs, you should be aware of the difference it makes on your budget.

9) Add it up

Say you’re deciding between two competing job offers. The position with the higher salary comes with no benefits, while the lower-paying job offers a few perks. Do the math to see how much value benefits can add.
Chart comparing annual salary and benefits for two job offers. Offer 1 has an annual salary of $35,000, but no benefits. Offer 2 has an annual salary of $32,000. It also comes with benefits: health insurance coverage ($200/month savings over an individual policy), retirement contributions (up to 3% which is $960/year), and parking (valued at $80/month). The total value of offer 1 is $35,000, while the total value of offer 2 is $36,320.
The material provided on this website is for informational use only and is not intended for financial or investment advice. Khan Academy assumes no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.
Khan Academy doesn't provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Want to join the conversation?

  • starky seed style avatar for user asiniguez
    how to save money if they pay you a little?
    (16 votes)
    Default Khan Academy avatar avatar for user
    • piceratops ultimate style avatar for user Z
      Budgeting. Analyze your expenses (maybe even your daily expenses). Determine the things that you need and the things that you want. The things that you want are actually things that you can live without (it might take some discipline though). Choose the generic brand instead of name brands. Modifying spending habits should be a good start for a person to start saving some money. And if you have any bills, make it a priority to pay those on time.
      (21 votes)
  • aqualine ultimate style avatar for user eckeral41
    what are other ways to make money (^ ^)
    (11 votes)
    Default Khan Academy avatar avatar for user
    • leaf green style avatar for user Ben
      There is something called "Drop-Selling". It's what Alex Becker does. Basically, buying something for a low price and selling in for a higher price (It is not that simple, but the price needs to be adjusted so you can pay for another one, and have some profit left over). Alex Becker has a trick. He creates websites that sell the item(s) to the target audience. It's a bit tricky (not to mention risky), but doing it correctly can help you get some cash.

      Also, everyone has a set of skills that can make them some money. I'm pretty good at baking. I plan on doing some catering (while balancing time out for my job).

      Speaking of job, you can pick up some extra shifts. I do that quite a bit, and it not only gets you cash, but improves relationships with your coworkers!

      On a final note, you could sell stuff you really don't need. I'm sorry this was a bit long. I hoped that help. Thank you for reading this!
      (21 votes)
  • leaf green style avatar for user 20clautensleger
    What's the average cost of good quality health care?
    (12 votes)
    Default Khan Academy avatar avatar for user
  • boggle green style avatar for user bean soup
    I will definitely choose offer two
    (15 votes)
    Default Khan Academy avatar avatar for user
  • blobby green style avatar for user Em Mabry
    What's the average cost of good quality health care?
    (12 votes)
    Default Khan Academy avatar avatar for user
  • duskpin tree style avatar for user iCanSING
    This will really help me in a few years!
    (11 votes)
    Default Khan Academy avatar avatar for user
  • blobby green style avatar for user Keven lebron
    this will help me allot
    (9 votes)
    Default Khan Academy avatar avatar for user
  • blobby green style avatar for user 101440
    how to save money responsibly
    (7 votes)
    Default Khan Academy avatar avatar for user
  • blobby green style avatar for user trentonrcolwell
    What is the best to way to save money with the attributes given?
    (4 votes)
    Default Khan Academy avatar avatar for user
    • aqualine tree style avatar for user David Alexander
      1) Spend less than you earn.
      2) Take advantage of every program where your employer matches what you "put into" an account with extra money that is untaxed until you retire.
      3) Once money is in an account for retirement, leave it there. Don't spend it.
      4) Borrow when you need to (to buy a house, car, or business improvement), but don't borrow for a vacation.
      5) Don't gamble, not even a scratch-off lottery ticket
      6) Before you take up a habit that will addict you (like tobacco), compute out the yearly cost and choose to put that money into savings rather than burn it up. For example, if you choose to smoke half-a-pack (10 cigarettes) per day, that's 183 packs of cigarettes per year. If you live in Minnesota, for example, that's $1,849 per year. If you would save that much for 50 years (from age 17 through age 66), that would be $92,490. Quite a saving!
      (7 votes)
  • blobby green style avatar for user zhang jing
    You need to know your cost in your life.
    (7 votes)
    Default Khan Academy avatar avatar for user