No matter where and how long you’ve been working, you must ask yourself, “How much money should I be making?”
Having a personal finance strategy is a duty to follow. While guidelines and cues may be followed, the application and end benefit are personal.
In the wake of economic meltdown and uncertainties, garnering as much money as possible is as true. Nevertheless, we’ll ponder how much you should make in this article.
Table of contents
- How Much Should I Be Making?
- What Determines My Salary?
- How Much Should I Save Every Month?
- What Is Personal Finance Strategy?
- Why Do I Need A Personal Finance Strategy?
- How To Stick To A Personal Finance Strategy
- How much should I Be Making? How To Negotiate Your Earnings?
- How Much Should I Be Making At 30?
- Final Thoughts
- References
- Learn More
How Much Should I Be Making?
If no one is talking about how much you should be making, where do you intend to start from?
To determine your potential monetary value, you need to do the following:
#1. Know your personal value
To ascertain your value, you must assess your background and preferences. At this point, you need to consider your educational level, job requirements, skills, and location.
When you gather this relevant information, you need to consider the standard of living, possible salary, and lifestyle.
Remember to include benefits you may need, such as health insurance or a student loan assistance program. All of this will help when you research job comparisons and opportunities.
#2. Research on Typical Salaries
After taking a look at your values and needs, take your search to the Internet.
Several websites can calculate salary, so finding one that fits your needs is important. This can be done on Glassdoor, PayScale, Educate to career, LinkedIn salary, and much more.
#3. Weigh Options
Once you’ve completed the salary research, look at your options and compare the different salaries to select the one that matches your lifestyle.
What Determines My Salary?
In deciding the compensation philosophy, many factors come into play, including the organization’s performance, its plans, the availability of talent, the importance of the role, the organization’s reputation, geography, available talent pool, experience and education, performance, etc.
For instance, if an organization is not planning to grow, it may not want to pay at the higher end of the pay range for a role. However, if the organization needs to hire a role that is critical in its stage of growth/decline, it may be willing to pay a premium for the right talent.
Benefits and variable pay are other components that organizations work with to get the total compensation to the desired level.
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How Much Should I Save Every Month?
Many sources recommend saving 20% of your income every month.
According to the popular 50/30/20 rule, 50% of your budget should be for essentials like rent and food, 30% for discretionary spending, and at least 20% for savings. (Credit for the 50/30/20 rule goes to Senator Elizabeth Warren, who reportedly used to teach it when she was a bankruptcy professor.)
We agree with the recommendation to save 20% of your monthly income. But it’s not always that simple to suggest the right percentage of income for you to save. Sometimes, let your income, financial goals, and personal finance strategy guide you.
If you’re a high earner, you’d be wise to keep your expenses low and save a much larger percentage of your income.
On the other hand, if saving 20% of your income seems implausible or even impossible, don’t get frustrated. Saving something is better than nothing.
To achieve a financially stable life, you need a personal finance strategy.
RELATED POST: How Much Of Your Paycheck Should You Save Immediately?
What Is Personal Finance Strategy?
Personal finance is a term that covers managing your money as well as saving and investing. It encompasses budgeting, banking, insurance, mortgages, investments, retirement planning, and tax and estate planning.
The term often refers to the entire industry that provides financial services to individuals and households and advises them about financial and investment opportunities.
Personal finance strategy borders around meeting your financial goals, whether it’s saving to buy a car, or saving for college.
You need to be financially literate to make the most of your income and savings.
Why Do I Need A Personal Finance Strategy?
You need a personal finance strategy to reach your goals. The knowledge and application of the strategies create a pathway and give you a deeper understanding of your short and long-term financial goals.
Now you’ve understood why you need a personal finance strategy, here’s how to stick to a personal finance strategy.
How To Stick To A Personal Finance Strategy
Here are the 8 fundamental steps to help you stick to a personal finance strategy:
#1 Create a budget
Creating a budget will help you outline your core needs and align them according to the order of priority.
Creating and sticking to a budget might seem tough to achieve at first, but it pays off. Budgeting helps you clearly see and understand your financial situation.
#2 Understand your expenses
Understanding your expenses involves having good knowledge about your income and knowing how it goes off by keeping a list.
You can track your expenses by keeping your receipts and looking at your bank statements.
Knowing how the money leaves will give you a clear picture of how to manage your expenses better in times to come.
#3 Understanding your income
Once you understand your income, you can carefully budget and allocate funds rightly.
Having a clear picture of your income and how it aligns with your expenses helps you understand how best to manage your money.
#4 Consolidate your debt
While no one likes debts, credits often come to save the day. The first thing to do once you are in debt is to work on getting rid of it. If you have credit card debts, student loan debts, and other debts, look to consolidate them and try as much as possible to achieve the lowest rate.
There are options out there that allow you to combine several unsecured debts, such as credit cards, personal loans, and payday loans, into one bill rather than pay them individually.
If you only have a single credit card debt and are on a tight budget, try paying at least the minimum amount as soon as you get the credit card bill. Then, if your finances permit it, and you come across some more money, try to make the same payment a few weeks later.
Try keeping this payment cycle going until your debt is fully paid off.
SEE ALSO: 17 Brilliant Ideas to Pay Off Debt Faster than Ever
#5 Cut down on unnecessary expenses
If you’re a big fan of everything luxury or enjoy paying for services you can also get from your home, try and consider cutting the expenses.
This strategy aligns your income with your expenditure and makes sure the expenditure doesn’t exceed the income.
When you cut down on unnecessary expenses, your savings increase, and you’ll have more money to invest.
#6 Create an emergency fund
Creating an emergency fund keeps you alive and prepares you for times unknown. The habit of having an emergency fund is a healthy personal finance strategy that helps you stay floating.
For instance, when your car accidentally breaks down, your emergency fund is meant to cater to expenses, not your savings, loans, or whatever.
#7 Save for retirement
Saving for retirement is the perfect reward you can give yourself. While times come and go, seasons fade off too. Once you start working, taking off 10-15% of your income for retirement will be in your best interest.
Having something saved up for retirement will give you some cash to hold on to when the white hairs and itchy backs start coming.
RELATED POST: How To Retire At 50 As A Millionaire! Retirement Dreams
#8 Use a personal finance tool
Managing your finance all by yourself from your fingertip is tedious and unsustainable. Using personal finance tools, you can automatically track your income, expenditure, investments and even create a budget.
How much should I Be Making? How To Negotiate Your Earnings?
Salary is usually the first thing you should negotiate when you are faced with a job opportunity. That sounds crazy, right?
No matter when the last time you negotiated for a better salary was, the time will come again when the value of work you do is not reflected in the compensation you receive for that work.
When this time comes, it’s important to objectively approach the issue, build an evidence-based case for your desired salary, and negotiate for it.
At the negotiation table, while you must understand the company’s earnings, policies or business model, the goal is to leave the table with what’s best for you. In negotiating for how much you should be making, you need to be prepared to;
- Build your case: You will need to prove that you are worth investing in, with specific examples of the value you’ve given to employers in your career.
- Face some resistance: Even air-tight cases for a salary increase can face resistance, so be prepared to answer questions, especially, “Why do you deserve this salary?”
- Strike a Balance Between Firm and Flexible: Your salary negotiations won’t go well if you refuse to give any ground or say “yes” to a minimal salary increase. Be prepared to go back-and-forth during negotiations and be sure that any compromise reached is acceptable.
How Much Should I Be Making At 30?
According to SmartAsset, the median salary for Americans ages 25 to 34 is $918 per week or $47,736 per year. That’s a big jump from the median salary for 20- to 24-year-olds.
Generally, earnings tend to rise in your 20s and 30s as you climb the ladder. Also, this set includes many people who received professional degrees from graduate schools, further bringing up salaries.
Final Thoughts
Before you ask the question how much should I be making, ensure to know your worth. Your worth is an estimated market value for the services you offer.
References
- investopedia.com – Personal Finance
- smartasset.com – The Average Salary by Age in the U.S.
Learn More
