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Comparing Job Offers

Comparing Job Offers. Financial Literacy. What Should Sara Do?. Sara has just graduated from college with a degree in teaching and has been offered a $35,000 job in Reno, Nevada and a $40,000 job in Anchorage, Alaska. Which should she take? $35,000 in Reno $40,000 in Anchorage

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Comparing Job Offers

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  1. Comparing Job Offers Financial Literacy

  2. What Should Sara Do? • Sara has just graduated from college with a degree in teaching and has been offered a $35,000 job in Reno, Nevada and a $40,000 job in Anchorage, Alaska. Which should she take? • $35,000 in Reno • $40,000 in Anchorage • Not enough information to decide

  3. The correct answer is: C The scenario does not provide information about the cost of living in either city

  4. Base Salary • Base salary is the amount a person will receive in his/her annual salary before taxes • Salary is based on: • Location • Education • Laws of supply and demand

  5. Fringe Benefits • Additional compensation offered by a company beyond the base wage • May include: • Paid sick time • Holidays and vacations • Bonuses • Health and life insurance • Workman’s compensation • Retirement contributions

  6. Opportunity for Advancement and other Work Incentives • Can an employee easily advance within the company and earn more money? • Raises based on performance • Bonuses

  7. Employer Provided Services • Additional services provided • May include: • Gym membership • Flexible hours • Merchandise discounts • Child care

  8. Additional Perks • Relocation allowance • Company car • Repayment of education loans • Stock options

  9. Location and Environment • Is the job in a good location? • Commute time • Affordable housing • Low crime rate • Good school • Desired climate

  10. How Might Wants and Needs Influence a Decision? A mother may value having child care facilities instead of relocation options A single person may value having a gym membership instead of merchandise discounts

  11. Cost of Living • Cost of living includes: • Housing • Food • Transportation • Other everyday expenses • Cost of living may be lower in rural rather than urban communities

  12. Cost of Living • Cost of living is reported in index form on a scale with 100.00 being the average cost of living • A lower number means a lower cost of living • A higher number means a higher cost of living

  13. Sarah’s Two Job Offers $40,000 offer in Anchorage 123.1 105.1 $35,000 in Reno X = $40,994 (equivalent salary in Anchorage) This means a person earning $35,000 in Reno must earn $40,950 in Anchorage to have the same spending power. Therefore, the salary offer is Reno is better by $994 ($40,994-$40,000)

  14. Joe’s Two Job Offers $32,000 offer in Seattle 148.2 102.9 $24,000 in Denver X = $34,565 (equivalent salary in Seattle) This means a person earning $24,000 in Denver must earn $34,565 in Seattle to have the same spending power. Therefore, the salary offer is Denver is better by $2,565 ($34,565-32,000)

  15. Sarah’s Two Job Offers Plus Benefits $45,200 offer in Anchorage 123.1 105.1 $35,000 + 4,800 in benefits in Reno X = $46,616 (equivalent salary in Anchorage) (39,800) This means a person earning $39,800 in Reno must earn $46,616 in Anchorage to have the same spending power. Therefore, the salary offer is Reno is better by $1,416 ($46,616-45,200)

  16. Joe’s Two Job Offers Plus Benefits $38,000 offer in Seattle 148.2 102.9 $24,000 + 4,500 in benefits in Denver X = $41,047 (equivalent salary in Seattle) (28,500) This means a person earning $28,500 in Denver must earn $41,047 in Seattle to have the same spending power. Therefore, the salary offer is Denver is better by $3,047 ($41,047-38,000)

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