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What Are You Working Towards

What are you working towards? A new car? A vacation? Your first house? Maybe it’s the latest bag, a new boat or your 401k. Whatever it is, will your current job allow you to reach your goal?

Be honest with yourself, are your financial goals on track? Is your career helping you live comfortably or are you spending outside of your financial means?

Whether you want to admit it or not, compensation is important. No one works for the fun of it and we all have things we like to do, things we want to buy and dreams we’re working towards. Which is why it’s important for you to weigh compensation in your career.

It may sound stupid, but it's not uncommon for us to work with a coaching client who wants to make more money, but their comfort, job title or fear keeps them rooted in one place for far too long!

It's also not a secret that once the recession hit Americans started spending less and saving more. Maybe it was out of necessity for some, but for others it was the wake up call that you can't spend more than you make and expect to be solvent financially. However, the recession has passed and comfort has set back in. As a result the savings rate in the U.S. is currently at an all time low! Maybe the lesson didn't stick.

Even though the majority of people are back to spending as much as humanly possible, you don't have to join the masses. In fact, if you manage your career correctly, you can increase your earning potential long-term, while increasing your compensation today! It's not as hard as you may think.

How To Grow Your Compensation

If you're career minded, and also want to increase your compensation, the easiest way to do this is through external career changes. While job hopping isn’t recommended, making a career change every two years or so will grow your income potential much faster than staying dedicated to one employer.

Why?

Because when you stay in one place you'll receive yearly merit increases that typically are at, or even well below inflation rates. Ultimately, your pay check will say you're making slightly more each year, but those menial increase aren't large enough to make a huge dent in your savings.

But, if you make strategic career moves, you’ll not only broaden your base of knowledge and marketability, but also your compensation. Think of it as being paid to learn.

As you take on new roles with new companies you'll expand your skills and capabilities. As you develop professionally, you’ll be better positioned to take a step up in compensation and career level with each new opportunity you tackle. Don’t believe me? Keep reading.

What If You Stay Put

Imagine you stay with your current employer for the next four years. What will your base compensation look like at the end of that four-year term? Let’s figure it out!

Imagine your base is $70K. Considering most companies give yearly merit increases that range between 1-3% of base salary, you can anticipate how much your base compensation will increase each year.

For this experiment, we’ll use 3% as your yearly merit number because we all know you're a super star and you’ll crush your merit increase every year! So, here’s the breakdown for a four-year career path with a 3% merit increase each year:

  • Year one: $70,000.00 base salary plus 3% merit = $72,100.00 base
  • Year Two: $72,100.00 base salary plus 3% merit = $74,263.00 base
  • Year Three: $74,263.00 base salary plus 3% merit = $76, 491.00 base
  • Year Four: $76,491.00 base salary plus 3% merit = $78,786.00 base

What If You Leave

Clear your mind and let’s imagine a new scenario.

You’ve been in your role two years now. You’ve gathered new skills that are marketable. You can stay put and continue with your merit increases, as we’ve laid out above,  or you can venture out and find a new challenge.

In today’s job market the average individual can anticipate a 5% - 10% base increase to make a career change. In some instances, that number may go as high at 12% - 15%, but let’s use a grounded fair number for our example. Having said that, let’s use 7% for our calculations.

Now, let’s look at the exact same starting compensation number of $70k that we used above, but this time we’ll throw a job change in the mix:

  • Year One: $70,000.00 base salary plus 3% merit = $72,100.00 base
  • Year Two: $72,100.00 base salary plus 3% merit = $74,263.00 base
  • Year Three Career Change: current base $74,263.00 base plus a 7% bump to make a career change = $79, 461.41 and a year end merit increase of 3% = $81,845.25
  • Year Four At New Job: $81,845.25 base salary plus 3% merit = $84,300.60 base

What’s The Big Deal

Wow! Looking at my examples above, if you choose to work for the same employer for four years, you’ll have a base compensation $78,786.00 at the end of the four year window versus a base of $84,300.60  had you changed jobs after the first two years. That’s a difference of $5,514.00, using conservative increase numbers when factoring the job change.

While $5,514.00 isn’t a huge stack of cash, it adds up quickly! Not to mention, each time you increase your base salary, that number follows you wherever you go. Meaning, as you continue to grow professionally, the faster you increase your base salary, the faster your future income will increase as well.

Each new opportunity will only add to your salary. As the years pass, your base will grow exponentially if you're strategic and thoughtful about career moves versus simply sitting back and only collecting merit increases.

So, the next time you're dreaming of moving to the beach, buying a Mercedes or moving out of your studio apartment, update your resume and start looking for a new career opportunity.

Take time to target your resume and cover letter and put 100% effort into your job search. The more polished your resume is, and the better your performance when interviewing, the higher your job offer will be. This is why hiring a certified resume writer and career coach during your job search is a small price to pay. When you're confident in your resume and interviewing skills, you'll outperform other candidates in your search and ultimately land the job of your preference at a higher compensation level.

When it’s all said and done, it’s important for you to love what you do, but no one said you can’t love your job and make money doing it! Reach higher! If you need help making a career plan or getting your resume ready for a job search feel free to reach out to me or check out our bundled career packages to get the compensation you deserve! Until then – Be Amazing! – Jeanna

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About The Author

Recognized nationally as an industry leader in resume writing and career coaching, Jeanna McGinnis, CPRW is a Founding Board Member at ReResumeMe and AVP, Career Strategy at A Players Executive Search Group Inc. Leveraging more than 15 years of experience directing hiring practices for multiple Fortune 100 companies, Jeanna and her team are refreshing how busy professionals brand, market and drive their careers. Please connect with Jeanna on LinkedIn or the ReResumeMe team on Twitter to simplify your career with updates on careers, job search and resume best practices!

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