When thinking about what career to pursue, salary is understandably a factor to consider. But what exactly does that salary mean? What does it mean to make $50,000 a year? What would the lifestyle look like of someone making $20 per hour? Can someone live with an income of $35,000 per year?
Answers to these questions aren’t straightforward because everyone has a different approach to managing money. If a frugal person earns the same paycheck as someone who is more carefree with spending, their handling of that paycheck will be quite different from each other.
A person with little work experience won’t have the same perspective of a starting salary as someone who has been in the workforce for many years. Someone who is not paying living expenses will view salary figures differently than a person who has paid for their own food, rent or mortgage and utilities.
So at the end of the day, how do you know if the average salary of a career you’re considering is a “good” one? Here are some tips to consider:
Do your research. There’s no reason to guess what a salary is for careers you’re considering. Resources like Career Coach, CFNC, O*Net and the Occupational Outlook Handbook provide lots of career information including salary. Salary calculator helps you determine a salary based on geographic location, industry, years of work experience and education level.
Create a budget and learn about monthly expenditures. How much are monthly payments for utilities, internet, cable or satellite and food? Students who don’t pay these bills yet may be surprised to find out. If you live with family members who pay for these expenses, ask what their monthly payments are. Fast forward to when you will be making the payments. Create a budget based on salary figures to see how far your dollar goes.
Know what debts to anticipate. In addition to monthly bills, will you have student loans, car payments credit cards or other debts? Factor this information into your budgeting.
Have realistic lifestyle expectations or make adjustments accordingly. Owning a new car with all the bells and whistles sounds great, but could a used car work? Enjoying the latest tech gadgets is fun, but do you really need the latest smartphone or tablet versions? Are top of the line purchases a priority? If the answer is yes, what sacrifices are you going to make? If you want to live in a spacious apartment you may have to have a roommate. If your hobbies tend to be expensive, you’ll need to make sacrifices elsewhere.
Don’t count on credit cards. The average credit card debt per U.S. household is $6500. A person with this debt who makes a minimum payment of $20 per month won’t be debt-free for almost 28 years. Credit cards put off the inevitable task of paying for the items you purchase. Nothing is free.
Make a priorities list. Besides the paycheck, what else is important to you in a job? Completing a work values checklist can help answer this question. When you find career options that compliment your work values, learn the salary ranges for the careers. Does this salary fit your lifestyle? If not, what changes do you need to make?