When you land a new job offer, we all have our “magic number” in our head. Financial Educator, Author, and Speaker Angel Radcliffe helps you land your perfect salary and balance your current one.
My first job after college put some serious rain on my parade when it came to meeting that number. While I was expecting a salary of $70-80,000 (unrealistic I know), my first job offer offered $40,000. While you may be disappointed by your first salary, don’t lose hope for finding your magic number. You will eventually reach your magic number and even exceed it later down the road. While you are waiting to move up the corporate ladder, practice making responsible financial moves now, so when you get your dream salary, you’ll be ready for it.
Finding the Perfect Salary
Before you seek or accept any job offer, it is important to understand your surroundings and local economic conditions.
When Accepting an Offer, Ask Yourself:
- What is the cost of living?
- What are your current and/or future bills?
- How long do you have to work before a promotion?
- What are the benefits (401k match, profit sharing, insurance cost, etc.)?
- Are there any bonuses?
While on your job search, be sure you know your worth! According to The Society for Human Resource Management (SHRM), when coming out of college, graduates are making more money than ever before. In 2017 entry-level salaries averaged around $50,000 a year.
When Negotiating a Salary, Consider:
- Your skills, experiences, and/or degree program.
- Degree trends and see what industries need your skill set.
- Economic trends (You can follow them on sites like SHRM, GlassDoor, or PayScale).
If negotiations go well, you’ll land your magic number in no time. If things don’t go as planned, keep your resume and LinkedIn updated. You never know when the next high-paying or part time gig will come your way.
Managing Your Salary
Even if you secure your ideal salary, stay on a tight budget. Don’t rely on credit to you afloat; it could bury you later down the line. Start by writing out a budget. Keep in mind, the salary you accept is NOT what you will bring home. Use a website like ADP.com to help you determine your net income, which is your actual take home pay.
Follow the 50/30/20 rule
No more than 50 percent of your income should go towards your NEEDS. No more than 30 percent should go towards WANTS, and you should SAVE at least 20 percent. You can always save more and spend less, but you definitely don’t want more to go towards the needs. If you are spending more than half of your check on rent and bills, consider cutting back. Cutting down on expenses will help you stretch your paycheck until you can level up.
As a new graduate it’s easy to get sucked into the reality of spending; Vacation, parties, shopping, etc. Even when you reach your magic number, this doesn’t mean you can ‘Ball until You Fall.” Just because you have the money, doesn’t mean you should spend it. Avoid developing the ‘It’s my money and I’ll spend it how I want” attitude. Prioritize saving and be sure you are investing in your retirement and have an emergency savings of at least six months of expenses.
Invest in Something
You don’t have to give up 50 percent of your pay, but it is always wise to start investing in your retirement sooner than later. For some it may be easier to save in a separate bank other than where you have your checking. Try not to transfer from savings to checking. Be sure you have a realistic budget, as learning to sacrifice is important.
The first few years after college is a learning process. Remember, there are no mistakes; just lessons to learn. Enjoy the little things while you can and be smart about your budget.
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