One of the most important components of a job search is salary. Everyone likes the big numbers. One of my favorite answers to the question, “What are your salary requirements?” was, “As much as possible!” The actual salary figure is best kept for the second or third interview. But you should know what your expectations and needs are before you spend your time and money applying for jobs that don’t measure up dollar-wise.
How do you calculate how much money you want to make? Or need to make? It depends on what kind of lifestyle you have, your financial plans and needs, debt load, family commitments, and other factors. Here are some things to consider when determining your salary requirements.
1. Check out salary ranges online. Knowledge is power in this instance. The Bureau of Labor Statistics (www.bls.gov) has lots of salary information available by occupation, geographical location, state and highest paying industry. Other websites have salary information by position and location, some drilling down to state and city. This will give you an idea of how the salary for a prospective job measures up to others in your area, and how much negotiating room you have.
2. What are your housing needs? If you would like to refinance your house, you’ll need to calculate how high your salary needs to be to satisfy your current or new lender. Debt to earnings ratios varies, but some lenders require your expenses be no more than 25-30 percent of your monthly income. So, if you’re carrying $2,000 of monthly debt, you’re monthly income has to be about $8,000, or $96,000 per year. All of a sudden, the great job for $60,000 isn’t as attractive.
3. Not worried about debt? How about daycare? There are lots of jobs that offer flexibility, part-time schedules and discounts that can save a lot of money. Working for a major retailer like Sears or Wal-Mart can add money to your pocket just by using an employee discount. But if taking a lower-wage job means paying for daycare, work the numbers. Daycare can be expensive, and you could find yourself working hard just to pay the babysitter. Calculate your hourly wage after daycare expenses to come up with your “must have” hourly wage.
4. Travel expenses. I interviewed for a great job with lots of advancement potential, but it was in another city about an 80-mile round trip from home. With gas prices about $3.50 a gallon and my car’s 22 mpg, it would cost me about $13 per day just in gas. Add regular wear and tear and occasional maintenance costs and the mid $40’s salary range wasn’t as attractive.
5. Future expenses. Will you be making enough to start saving for the kids’ college expenses or that dream trip to Australia? Having another baby? Can you afford the higher insurance deductibles that have to come out-of-pocket for health care or an unexpected injury or hospital stay? Do you have monthly expenses for medications? Need to build up a down payment to finally buy a house for your growing family? Make a list of future needs and factor the monthly allotment to come up with a monthly and annual salary range.
Getting a job is important. Getting the right job that can meet your financial needs is critical. Be realistic. After making a list, categorize each item as a “must have” or “nice to have.” If your current education level doesn’t qualify you for the higher-paying jobs in your field, factor in some money for classes to get you to the next level. Knowing what you need improves your negotiating skill and confidence as well.