Yesterday a young and smart executive of a leading organization in the IT industry, based out of Chennai, India, talked to me. He has an offer on hand from a competing organization virtually offering him twice the existing compensation but he needs to relocate to a different city.
As a smart person, he was very clear about his priority for further academic pursuits and he declined the offer.
I showed a simple application of the basics of Personal Finance, which is a telltale of the unattractiveness of the new offer. This is based on the following facts:
- His current compensation at Chennai is Rs. 540,000 p.a. and the offer for the job at Bangalore is Rs. 1,000,000.
- On paper, the additional remuneration is Rs. 460,000 p.a.
- You can see from the following table of likely additional outflows, he may not be better off relocating to Bangalore with a higher salary:
| # | Particulars | Amount p.a.(Rs) |
| 1. | Additional Income Tax | 100,000 |
| 2. | Rent, Food and other expenses | 300,000 |
| 3. | Travel expenses to Chennai | 50,000 |
| 4. | Interest on Rent advance (approx.) | 30,000 |
| Total additional outflows | 4,80,000 |
Once you go through the calculations, it looks ridiculously simple, but I have seen many people, for some inexplicable reasons, don’t make such simple calculation. Also some seem to be totally ignorant of the income tax implication as well as the additional travel expenses. They have their realizations much later.
This is precisely the reason for having a Financial Mentor and counsel with him before taking such career shifts.
Add this page to your favorite Social Bookmarking websites
