Personal planner: Signing bonus at the cost of lower salary?

I am about to complete a college course in Dubai. I have secured a new job and am in the process of negotiating my employment contract. The company wants to give me a signing bonus but says that it will be at the cost of a lower-base salary. I already have three years of work experience. From a financial perspective, what should I do — take the golden hello or hold out for the higher salary?

In the current economic climate you have done well to secure yourself a job before you have even graduated from college. However, you are now being asked to forgo a higher rate salary for a golden hello and wisely want to know the advantages and disadvantages of this proposition.

Signing bonuses or golden hellos are often given as a way of making a compensation package more attractive to a new employee. It also lowers the risk to the company when hiring new people, as a one-off payment saves the company from being committed to a higher salary if the employee does not meet expectations.

This can be a good idea and a beneficial way to start your career. It lessens the likelihood that you need to use your own savings, take out a bank loan, or sign up for a credit card to be able to live while you find your feet.

A lump sum such as this could help you clear debts incurred during your studies, be used as a deposit for rent on an apartment, or as a down payment on a car which you may need for your new job.

But this is not money for nothing, and although the lure of a lump sum can be hard to resist, you must remember that it is coming off your expected salary, leaving you with a lower monthly sum for the remainder of your time at the company.

It may in fact be wiser, if you are able to remain fin-ancially stable in the first few months of your new job, to waive the signing bonus. If it dramatically reduces your salary then forgoing the bonus for the higher salary figure will assist you in planning for a more secure financial future.

It is also important for you to consider that the lower your starting salary, the harder it will be to rise in the salary scale when it comes to negotiating future pay rises, either through promotion or when you move to a new company.

The extra money you take home each month can be invested for further fin-ancial security, such as in a pension plan, life insurance, or for your children's education. An independent financial adviser will be able to assist you in how best to save or invest this money, depending on your circumstances.

 (The writer is Business Development Director at Nexus Insurance Brokers LLC. Opinion expressed here is that of the writer and do not necessarily reflect the view of Gulf News. If you have any questions, please e-mail advice@gulfnews.com)