Yay! You got a job offer! Look at you go, girl!

👀 6minute read

📷: Giphy

Time to celebrate! – Wait. What are all of these words? And what do they mean?

If you had to cut your living room dance party short to look up job offer definitions online, look no further.

At Penny, we’re all about making complicated lingo… Un-complicated. 

Your job offer is like a formal handshake, on paper. It outlines important benefits and details about your new job like your vacation time (gotta love this!) and opportunities for a “company match” from your employer (AKA free money! We cover this in more detail below).

Plus, we tell you which areas you might want to consider negotiating before you sign off. Whoever said women can’t negotiate better job benefits? *wink*

Base 

AKA Your salary

This is what you’ll get paid, no matter what. The only time this number changes is when you negotiate a pay raise – or get a promotion. 

But be warned! This is NOT cash money in the bank!!! (yet)

Taxes will be withheld from this base amount. So, don’t go crazy when you see this number and go rent an apartment that is over-budget. We don’t want you to accidentally over-commit to something you can’t bank yet. 

First: Look at the tax brackets to figure out how much will be taken out. If this is unclear on your letter (it shouldn’t be, but job offer letters come in all shapes and sizes), we’ll make it easy:

Get your Base (or gross) amount.
Subtract 30%.
Yup. A third, gone. That’s taxes for ya. 

Do you know what goes into your taxes? How to read your paystub

Gross

AKA Your money before taxes

If they tell you your sign-on bonus is gross $5,000 - it's not. Sad to break this news, but you are not getting $5,000 cash money. It could be HALF of that. Why? Yep, taxes, baby. Ya, ew, gross.

What tax bracket are you in? [Link to Blog Post: How to read your paystub]

Easy way to calculate your tax bracket:

Get your Gross (or base) amount.
Subtract 30%.
Yup. A third, gone. That’s taxes for ya. 

Don’t do what I did and go spend $5K, because A) you’re not actually getting the full $5K after tax, and B) it’s really not that much when you start to add it all up. Gross housing package, Gross sign-on bonus, Gross relocation bonus, Gross base pay. 

Don’t get fooled by gross numbers. 

*Confused between Gross vs Base pay?*

Your Gross pay amount might be a little different (and a little higher) from your Base pay. Sometimes it includes additional benefits or expected bonuses, and it may seem exciting at first. But trust us on the taxes – you gotta watch out for that *first* before you spend it all. 

Voluntary Resignation

AKA You quit!

This section is especially important. It lists all the nitty-gritty terms of what may happen if you decide to quit on your own. 

Not only will you stop getting paid, but your ex-company can come after you for benefits you received. Think tuition reimbursement, stock options.  

Skipping this is like skimming the fine print on an awesome sales deal, only to find out you gotta pay the full amount – plus change. *And* with all the bad break-up feels. No, thank you. 

Read carefully. 

Incentive plan or discretionary compensation

AKA Your company’s bonus structure 

This is that crazy mystery draw on a prize roulette game. You have no idea how much this can be (unless you have *really* good insider intel… But even then, this could change!)

It outlines the extra perks you may or may not get at your job – and you are eligible for that bonus whenever they feel like giving it to you. 

Sucks to not know a real number, but who doesn’t like bonuses?

Eligibility for Participation in Benefits 

AKA When you get the perks (aka are allowed to “cash in”)

This is when your benefits really kick in and you can enjoy them to your heart’s content. Usually, they start after 1 year of employment, or after your probationary or trial period is over. 

Supplemental Contributions 

AKA Your company retirement match, aka FREE MONEY!!!

When you add money to a retirement account (like the 401k) companies often match your contribution amount. This is literally free money, above and beyond your salary, and a great place to negotiate for more. 

It’s so amazing, they often hide it under some brain-buster puzzle like “up to 4% of your contribution or 6k, whichever is lower” – so read this part carefully!

Look for language that says things like: 

• “employee sponsored retirement plan” 
• “firm matching / supplemental contributions”

When do you become eligible? What do they match? 

For example, your offer letter might say something like:

• “100% immediate vesting for firm matching/supplemental contributions, after meeting 1 year of service eligibility” 

Translation: Your company will match your 401k contributions after you work there for 1 year. 

Mark your calendar!

Wanna see a real life example? Watch this.

Accrued Vacation 

AKA when you can plan that Europe trip

Combination of paid vacation, sick or personal days. “Accrued” just means it’s the hours you added up by working there (and haven’t used yet). 

You know how most companies have extra vacation days or time off as a bonus for employees that have worked with them a long time? This is it! Time to count down the days to your favorite getaway. 

Dollar-for-dollar

AKA 100%

If your company tells you they offer “401(k) dollar-for-dollar matching contributions”, you have full permission to jump up and down – that’s literally FREE money!!! 

Look for the section that says “UP TO X% or $X” and see if you can swing putting away that entire amount towards your 401k, so you can max out this benefit. 

PS. Sometimes companies will offer “additional supplemental contribution up to X” – that is MORE THAN dollar-for-dollar. That’s extra, extra cash to help you out. Full party mode, ON!

Confused about 401k matches and contributions? Read this. 

Pro-rated 

AKA a portion of something

Let’s say you see something like “pro-rated vacation entitlement” on your offer. And you start your new job in July (which is 6 months into the year). Pro-rated vacay means that instead of getting a full 4 weeks of vacation, you’ll get only 2 weeks for this calendar year. 

Your time off is cut back to a portion of what is *really* included in your full benefits package, had you been working there for a full 365 days. 

Chances are, you weren’t gonna take a full month off anyway, (probably not a smart move for a new job) but it’s good to know what you are working with.

Probationary Period 

AKA a trial period

This could be for 3 months, 6 months or up to 1 year. When you first get a job, your company wants to have an opportunity to suss you out. A probationary period gives them a chance to see if this new relationship will work out or not, and give them (and you) a free pass to call it quits if it isn’t. No hard feelings. 

Next time you get a new job offer, you’ll know exactly what you’re signing up for, money-wise. 

What are some other money terms or definitions you’ve been curious to know? 

Ask us! support@penny-finance.com

Want more help making future money moves? Take our money quiz to see how much more you'll be banking in your new job.

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• money advice