In the first of a 2-part series we are going to take a look at pay increases.
The average raise is three percent annually in the United States, according to consulting firm Korn Ferry. What if, instead of simply spending that money, you reinvested it in your career? You could potentially turn that three percent into 10 percent, 20 percent, or more.
According to the U.S. Census Bureau, median household income was $61,372 in 2017. With a three percent raise, that would be approximately $1,841. You could spend that money on a vacation, pay off debt, give more to charity, add to your emergency fund — or you could use that money to boost your career.
Deciding what to do with your raise — before you get it — will help put you in a better financial position in the future. Don’t forget to consider whether your raise will put you in a new tax bracket and adjust your tax withholding, if necessary, before deciding what to do with the extra money. That ensures you won’t find yourself short of cash at tax time next year.
Let’s start with a couple of questions:
Have you received a raise in the past 12 months? ___ Yes ___ No
How much was your most recent raise? $_______
What did you spend it on?_________________________________________________________
Are you happy with what you spent it on? ____________________________________________
Do you think you’ll get a raise in the next 12 months? ___ Yes ___ No
If you’re anticipating your next raise, it’s wise to start thinking about what you might do with that money — and how you can invest in yourself and increase the return on investment you get from your next raise. But remember: you won’t get the raise all at once, so don’t spend the money before you get it.
Here are some ideas for how to spend your raise:
If you’re looking to make a job change, spend that money on your job search:
For someone making in the $55,000 to $65,000 range (likely a mid-level professional), the average cost of a résumé written by a professional résumé writer is between $750–$1,200. Combine that with a LinkedIn profile update and some assistance developing your personal brand, or job interview preparation, and you’re looking at spending between $1,500-$2,000.
Jobseekers who work with a professional résumé writer find a new job faster, often negotiate a higher starting salary, and have more confidence in their skills and abilities as a result of interview-winning job search documents.
You may also want to invest in technology that will help in your job search. For example, upgrading to a Premium subscription on LinkedIn can help you by providing access to InMails (emails you can send to people who are not already connections) that you can use to communicate with recruiters and hiring managers.
With LinkedIn’s Premium Career service, you can also see who has viewed your profile over the last 90 days (great for knowing if a hiring manager or recruiter has checked you out!) and get access to more than 13,000 on-demand learning modules (video courses for skill development) with LinkedIn Learning. (You can also add completed courses to your LinkedIn profile.) The site’s “Applicant Insights” feature also analyzes your profile and directs you to open opportunities, including providing salary data when browsing jobs. LinkedIn Premium costs between $29.95 and $59.99 per month.
Speaking of salary research, while you can conduct a lot of information-gathering for free, you can also purchase more detailed, personalized salary data and reports from some sites. For example, Salary.com offers a personal salary report for prices ranging from $29.95 to $79.95, depending on what you choose to have included.
Also consider spending some of your raise money on new clothes that will help make a great first impression in the job interview. You could spend just a fraction of your raise amount and have an outfit that will help you look polished and professional. Don’t forget a fresh haircut (but don’t get it cut right before the interview!) and remember to pay attention to things like making sure your shoes are polished.
Not sure what direction you want to take with your career? Hire a career counselor or career coach to help you explore your interests. Consider taking online assessments, such as the DISC, to give you direction.
Lost, stuck, or feeling stressed? Consider working with a professional counselor, social worker, or psychologist. A few sessions can help reduce your anxiety and give you focus and direction.
Next week, I will provide more ideas on how to spend your new found wealth