Tips for Managing Through Salary Caps or Cuts
All around us talented people are still losing their jobs and as many, if not more, are having their salaries cut from or capped at where it is today. Merit-based compensation increases in 2009 will likely be non-existent other than for a few rare and fortunate companies. And yes, we are all looking for the turnaround and recovery and we are longing to get back to where things were not that long ago. We wistfully remember those conversations where we were getting a 3% increase and complaining about the small size. Now, we have to learn how to deal with a new environment.
Here are some thoughts on how to manage your salary through what could be the next 12, 24 or 36 months:
Plan financially on not making more. Whatever you make now, plan on it being the same in how you budget your household finances. This will be hard with potential inflation around the corner, but it can be done. Start now with looking at what will likely increase next year and the year after and create a ledger so you can see what you have to do to keep up with increased outflow with stagnant inflow. Create the balanced budget for next year now and stay ahead of the curve. Not only will you be glad you did, but you can also say that you are more responsible than many legislators.
Plan emotionally on not making more. In many ways this will be harder than the financial strain. What is going to happen is that your emotional memory is going to kick in and you are going to miss that feeling of matching your performance with your “raise”. When our salaries go up, it is a great thing. We feel good. We can tell our significant others and family that we are all going to have a little more and our emotional capital increases with those conversations. Take that away and next year you will likely be talking to yourself in the shower about how hard you are working and not making any more money, and you can’t believe you have to put up with this, yada, yada, yada. As best you can, prepare for that conversation so that if and when it happens it doesn’t bog you down. Let it go now and be prepared.
Give yourself the raise anyway. Somewhere in that budgeting process, put a little aside for that special thing that you would have done had you gotten a merit increase. Whenever I would get promoted or get a significant pay increase, my wife and I would go out to dinner to celebrate. It was nothing really more than any other dinner but it had significance to us and did make me feel proud. Find the time of the year when you would have normally received a merit increase and go treat yourself then raise a glass to having a job, keeping it all together and not letting this crazy time drag you down.