« GM’s Dumb Commercial | Main | 4 Important Questions to Ask Your Parents »
10 Ways to Get the Most Pay Out of Your Job
By JLP | September 18, 2006
Today’s Wall Street Journal has an extra section called Your Money Matters. The cover story for the section is an article by Perri Capell titled Ten Ways to Get the Most Pay Out of Your Job ($). Here’s some of the highlights from the article:
1) LISTEN TO YOUR BOSS
The best performers received raises averaging 9.9% in 2005, compared with 3.6% for average performers and 1.3% for poor performers, according to a survey by Hewitt Associates, a consulting firm in Lincolnshire, Ill. Thanks to compounding, those differences translate into a lot of money over time.
Hewitt offers the example of three hypothetical employees, each hired in 2001 at a salary of $50,000. They then received salary increases related to their performance. After five years, the poor performer earns $52,807, the average performer makes $57,821, and the top performer earns $72,078. (Hewitt calculated the final salaries based on actual increases for the three types of performance since 2001.)
2) BET ON YOURSELF
Having a bonus tied to performance goals and hitting them can get you more money annually. More than 95% of companies offer a chance to earn annual bonuses to executives, while 80% offer them to managers, 68% have plans for professionals and 54% award them to clerical and technical workers, according to Mercer HR.
Target bonus awards vary by industry and company type, but a typical bonus for an employee earning $50,000 might be 10% of salary, while someone earning $75,000 in salary might have a 15% target bonus and a $100,000-a-year employee might have a 20% target, Hewitt reports.
3) SEEK FINANCIAL ADVICE
The article talks about how most executives know little about managing their own money. Therefore, they should either learn the concepts themselves or seek out financial advice. One mistake like not knowing how to deal with stock options could have significant negative consequences.
One little-known Internal Revenue Service regulation allows executives to pay tax on the value of restricted stock when they receive their grants. This may help lower capital-gains taxes when you sell the stock.
4) LEARN ABOUT SPECIAL COMMISSIONS OR AWARDS
It never hurts to ask about special awards. My wife has earned a few of these awards in the past.
5) CHANGE YOUR TAX WITHHOLDING
I wrote about this a few months ago. You might want to read that post. Having too much withheld out of your paycheck is the same thing as giving Uncle Sam an interest-free loan.
6) TAKE THE FREE MONEY
At the VERY LEAST, put enough money into your 401(k) to get the FULL company match. Once you get used to it, you won’t miss the money. You would be surprised at how much you can save in a lifetime.
7) PAY FOR AS MUCH AS YOU CAN WITH TAX-FREE INCOME
Take advantage of Section 125 plans (cafeteria plans or flexible-spending accounts) for paying for medical expenses and daycare. During the enrollment (usually in October), figure out your annual out of pocket expenses for things like medical deductibles, eye care, prescriptions, and daycare. If you figure it is $6,000 per year for all of those expenses, you can opt to have your company take that much out of your paycheck pretax. You have to pay for the expenses upfront and file for a reimbursement. Be aware that any money left in the account at the end of the year is lost so be conservative on your estimates.
ASK FOR A PAY RE-EVALUATION
The author suggests taking on more responsibility or consider moving to a department that gets paid more. Or, if you are a valued worker and the market heats up for people with your skills, the company may give you a raise just to keep you from leaving. It can really pay to stay on top of that information.
9) TURN DOWN BENEFITS THAT COST THE COMPANY
Health insurance is expensive. If you already covered by your spouse’s health insurance, consider approaching the company and asking them to bump up your pay if you opt out of their insurance program. Just be sure that your spouse’s job isn’t in danger of being lost.
10) DON’T FORGET THE SMALL STUFF
The article suggests reading through the employee manual to find out if there are any additional benefits you might have missed. Don’t forget about tuition-reimbursement.
That’s the gist of the article. I thought it was pretty good information. If I missed anything, please feel free to comment.
Topics: Financial Planning, How to..., Personal Growth | 2 Comments »
September 18th, 2006 at 3:31 pm
Awesome list, I like the first point the most.
August 31st, 2010 at 1:06 am
when you are always on the computer, you should also focus on Eye Care and take some rest”,: