Career Advice, Salaries, Salary Transparency

What Is a ‘Good Salary’? Do The Math

There’s a popular saying that contends, “If it doesn’t make dollars, it doesn’t make sense.” Sure, there’s the cheeky play on sense versus cents, but more importantly, it gets to crux of why many of us go to work every day: to earn a living. Therefore, it’s important to know what is (and isn’t) a good salary.

While some jobs do pay more than others, it’s important to take stock of what factors to consider when evaluating the base salary of a job offer. While you may have your own ideas of the salary you should receive, you should also think about industry norms and whether you’re being compensated fairly for the work you do.

To help you get to the bottom of this, here are 3 must-ask questions to ensure that your dollars make sense.

1. Can you afford your city’s cost of living?

Salaries vary for the same job all over the country because certain cities have a higher cost of living than others. A good salary will allow you to afford a particular lifestyle. Using the 50-30-20 rule can help you determine if you’re living within your means — 50% of your after-tax salary should go towards necessities (housing, healthcare, food, childcare and transportation), 30% of your after-tax salary is for discretionary spending and the remaining 20% goes towards savings. Look up how much your city pays for your position.

If you’re unable to make ends meet and are living paycheck-to-paycheck, consider cutting expenses or increasing your income. Remember, there’s a big difference between working to live and living to work.

[Related: See How Your Salary Stacks Up.]

2. Are you being paid for your effort?
What you’re expected to accomplish matters. For example, management positions have added responsibilities. If you have a sales role, figure out if your pay is fair for the amount of revenue that you produce. Were you rewarded for developing an innovative product? You want to be compensated for your accomplishments and the effort that goes along with these.

Also, consider a typical workday and the hours that you put in. Are you putting in too many hours given your salary?

[Related: 11 Jobs that Pay $100K Or More]

3. What’s the market rate for your skill set and experience?

Employers tend to pay a premium for workers with marketable skills and experience. You can determine what you’re “worth” and if you’ve got the right skill set to earn what you’d like. Keep in mind that salaries for the same job do vary by region to reflect the cost of living in a particular area. Certain positions and skills are more in demand than others too, and this is reflected in the high salaries and what companies are willing to pay. You can use Glassdoor to figure out what the average salary for your position is in your area.

Once you’ve done your research, you’ll know what skills you need to develop to get that salary you desire and whether you’re ready to negotiate.

 

DISCOVER: How does your salary compare to others in your profession?