No matter where you’re working and how long you’ve been working, you need to ask yourself, “How much money should I be making?”
Having a personal finance strategy is a duty to follow. While there may be guidelines and cues to be followed, the application and end benefit are personal.
In the wake of economic meltdown and uncertainties, the idea of garnering as much money as you can is as true as it can be. Nevertheless, in this article, we’ll ponder on how much you should be making.
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 personal value, you need to assess your personal 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 now need to consider the standard of living, your possible salary, and your lifestyle.
Remember to also include benefits you may need such as health insurance or a student loan assistance program. All of this will help when you begin to research job comparisons and opportunities.
#2 Research on Typical Salaries
After taking a look at your personal values and needs, take your search to the Internet. There are several websites that can calculate salary, so finding one that fits what you are looking for is important. This can be done on Glassdoor, PayScale, Educate to career, LinkedIn salary, and a whole lot 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 performance of the organization, its future plans, the availability of talent, the importance of the role, the reputation of the organization, 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.
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. In some cases, 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 at the moment, don’t get frustrated. Saving something is better than nothing.
To achieve a financial stable life, you need a personal finance strategy.
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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, saving for college.
To make the most out of your income and savings, you need to be financially literate.
Why Do I Need A Personal Finance Strategy?
You need a personal finance strategy in order to reach your goals. The knowledge and application of the strategies create a pathway and gives you a deeper understanding of your short and long-term financial goals.
Now you’ve understood the reason 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 really pays off. Budgeting helps you clearly see and understand your financial situation.
#2 Understand your expenses
Understanding your expenses has to do with 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 taking a look 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’ll be able to 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 get the lowest rate achievable.
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.
#5 Cut down on unnecessary expenses
If you’re a big fan of everything luxury or you enjoy paying for services you can also get from your home, try and consider cutting the expenses.
This strategy is one that 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 the expenses and 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, it will be in your best interest to take off 10-15% of your income for retirement.
Having something saved up for retirement will give you some cash to hold on to when the white hairs and itchy backs start coming.
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#8 Use a personal finance tool
Managing your finance all by yourself from your fingertip is tedious and unsustainable. Through the use of 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 approach the issue objectively, build an evidence-based case for your desired salary and negotiate for this salary.
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, for Americans ages 25 to 34, the median salary 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 start to climb up the ladder. Also, this set includes many people who received professional degrees from graduate schools, further bringing up salaries.
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.