I was recently promoted and got a salary bump, common I’m sure among people like me in their 20’s and getting into the workforce. What people sometimes fail to realize is that a large salary increase doesn’t necessarily have as large an impact as they would think. When I was promoted close friend politely asked me if I got a raise with the promotion and I told him I would be making $X more each month.
“Wow,” he said, “that’s great. If I made $X more every month…” and proceeded to list off things he would do.
Now, I’m not complaining about my promotion or my raise, I love my job. However, I would like people to be aware of things that have reduced my $X salary increase:
- Income taxes. That extra money is taxed at the highest bracket of all my income.
- Reduced deductions and credits. Because I’m making more now, I no longer qualify for a number of tax deductions and credits I did previously.
- Exercise. I used to swim every day. Now that I have more work and responsibilities, I need to be in the office working when I would have been swimming. I’ve had to join a gym that’s open at crazy hours to get my exercise in.
- Food. Healthy food and convenient food is expensive. With my reduced exercise and increased workload, I had to improve my eating habits to stay healthy.
- Entertainment. Now that I’m in management, when I go out with the other managers, we go to higher end places. Additionally, I still socialize with my team and go out with them on occasion.
- Travel. Now that more people are dependent on me, I can’t take vacation time whenever I want. When I go home for Christmas, it’ll be a last minute flight. I also work from home a lot less now, so I’m racking up the miles on my car and the gas bills.
These are specific to me, but I’m sure for many people, there are a lot of other things that require expenditures as well (maybe a new wardrobe, etc.). It can be expensive just to fit in and as superficial as it may be, from a career perspective, choosing to be the new promotion who does not “step up” into their new role can be unwise.
Edit: I should make it clear that I’m not complaining about my situation in any way. I’m completely happy with where I am and how I spend my money. This is more of an advisory for people like my friend who hear “new job with $X raise” and think “$X more in my wallet, time to go shopping!”
Edit 2: I in no way meant to imply that I am making less money or have less money than I did previously. My point is that the cost of maintaining the same standard of living I was previously enjoying increased due to increased job constraints. These and other factors can chip away at the seemingly large sum of extra money one receives as when their salary increases with a new job or promotion.