--- title: LeBron James Just Took a Huge Pay Cut. Here's When You Should Do the Same description: Agreeing to make less money at a new job can be hard to stomach, but experts say taking a pay cut can sometimes benefit you. authors: - name: Julia Glum role: Managing Editor url: https://money.com/author/julia-glum/ bio: Julia Glum joined Money in 2018 and specializes in covering financial trends that affect everyday Americans' wallets. She also writes Dollar Scholar, a weekly newsletter that teaches young adults how to navigate the messy world of money. education: University of Florida at_money_since: 2018 articles: 453 covers: - Career Advice - Banking - Business - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - Newsweek - International Business Times - CBS News - Good Morning America - WUSA9 - Pix 11 - The New York Times - Mashable - The Washington Post - CNBC - Politico social: - https://x.com/superjulia - https://www.linkedin.com/in/julia-glum editors: - name: Katherine Peach role: Associate Editor url: https://money.com/author/katherine-peach/ bio: Katherine Peach is an associate editor with a focus on news and email at Money. She didn’t always intend to write about money. She’s a classically trained pianist who dreamed of becoming an archaeologist. However, in 2007 Katherine began working in financial publishing as an editor for Agora Inc. (Apparently, unearthing ideas about improving your personal finances isn’t such a bad career alternative!) Katherine’s writing and editing work has been featured in Investing Daily, Clever, Investor Junkie, The Palm Beach Letter, Truth & Plenty, Independence Monthly, NICHE, AmericanStyle, AntiqueWeek, Millennial Money, Money Done Right, TheStreet, Sure Dividend and many others. Katherine holds a Bachelor of Arts in Ancient Studies with concentrations in Archaeology and Ancient Languages and a minor in Literature from the University of Maryland, Baltimore County. She is a member of Phi Beta Kappa. education: University of Maryland, Baltimore County at_money_since: 2025 articles: 14 covers: - Career Advice - Banking - Credit - Credit Cards - Debt - Economy and Politics - Education - Federal Reserve Rate Cuts - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes published: '2026-07-28T12:30:54.000Z' section: Career Advice tags: - dollar scholar - News word_count: 867 canonical: https://money.com/when-to-take-pay-cut/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Cutting a dollar bill](https://img.money.com/2026/05/PayCut.jpg) Basketball icon LeBron James signed a two-year, $8 million contract last week with the Philadelphia 76ers — and in doing so, he took a pay cut that "is unquestionably the biggest in NBA history," [according to CBS Sports](https://www.cbssports.com/nba/news/lebron-james-76ers-contract-explained/). James' take-home pay for his 24th season will be $3.8 million, falling below even his rookie salary from 2003-04. James' case is highly unique, but it highlights a financial question that weighs on many everyday workers' minds: Is it OK to take a pay cut? It can be hard to stomach the idea of making less money than you currently are, but experts say there are instances when it *can* benefit you in the long run. Here's what to know. ## When should you take a pay cut? FlexJobs career expert Keith Spencer says that before agreeing to anything, the first step is to weigh your immediate financial needs against your long-term career. To do this, determine your budgetary floor, or the minimum compensation you'll need to reliably [cover expenses](https://money.com/wages-not-keeping-up-with-cost-of-living/) like food, rent and utilities while still contributing — at least a little bit — to your savings. "If a pay cut would force you to rely on credit to cover essentials, you risk accumulating high-interest debt that can create long-term financial strain," Spencer adds. (Needless to say, that's never a good thing.) Next, consider what you could get out of it. Ideally, a pay cut should be strategic, not desperate: a sacrifice now to get to where you want to go later, says Daniel Zhao, chief economist for Glassdoor. Of course, it's impossible to put a dollar figure on the perks of escaping a dead-end job, a toxic work environment, burnout or a bad boss. Those are ["psychic costs"](https://money.com/perfect-salary-to-be-happy/) only you can evaluate, Zhao adds. From a financial perspective, though, ask yourself: How much is avoiding a commute in favor of a remote role really worth to you? Can you tolerate the risk of betting big on a startup even though it might crash and burn in a few months? If you join Company X, will you learn highly marketable skills that will set you up for your next gig, which will ultimately land you at Company Y? There's no right answer for everyone. ## How to evaluate a potential pay cut Generally speaking, "a pay cut can make sense if it results in longer-term gains — \[like\] if you're trying to break into an industry that has better career prospects or better income growth opportunities," Zhao says. It can also make sense if you lost your job due to a layoff and are feeling desperate to land any role. Marc Butler, a financial planner and advisor at Anthony Petsis and Associates, says that a person who used to make $150,000 but has been out of work for months should probably entertain a gig that's offering $120,000. You could take the lower-paying job now, enjoy the paycheck and benefits, then hop to a better-paying job later if one comes along (or use that opportunity to negotiate a higher salary). But if a person truly thinks their value in the market is $150,000 and can afford to be choosy, they should wait out lowball offers. In these cases and others, Butler points out that it's crucial to evaluate the [total compensation package](https://money.com/dollar-scholar-equity-compensation/). Although the salary itself might not impress you, have you done the math on the benefits? For instance, working for a big company where your biweekly paycheck is lower than at your startup gig could actually be an advantage if the insurance premiums are lower. On the other hand, that startup might give you profit-sharing, which could boost your earnings if the company is successful. If you decide to take the leap to a lower-paying job, there's one last thing to do. Your final step before accepting a pay cut should be to drill down into what exactly the future looks like... and how guaranteed it is. "Do you think you're going to get a promotion and a raise two years down the line because that's what the recruiter or hiring manager is telling you? Are they just trying to sell you on the job?" Zhao asks. To that end, he suggests gathering as much inside information on a job as you can (such as from trusted friends and current employees) and evaluating it critically to understand how reliable these promises are. "It's very common for workers to feel bait-and-switched" when promised perks don't materialize, Zhao says, adding: "Be very explicit in understanding what this trade-off you're making is — and how it might change if the parameters of the job, or the company, change." In summary, a pay cut is not always a bad thing. It might not feel great, but it can make sense in situations where you need income, are feeling bad at your current workplace or think you can use the lower-paying gig as a stepping stone. "Pay cuts may sometimes be taken out of necessity, but they are increasingly viewed as short-term, strategic decisions rather than permanent setbacks," Spencer says. 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