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Calculating Your True Earnings


It was just a little over a week ago that I got offered a new job. While I wrote about the juicy details on my blog, this new job is a great opportunity. It offers a lot of room for advancement, while also being a job that is both interesting and fulfilling. Yet, it isn’t without its few downsides.

Even though I used the phrase, “perfect’ to describe this job, there are a couple aspects of the position that are not attractive. It is causing a lot of lifestyle changes that negatively affect my earnings. While I received a decent pay increase on paper, the actual difference in my salary between my new job and old job is a little bit less. If you are looking at applying for jobs, you need to make sure to calculate your true earnings. The salary may be flashy, but there are many other factors to take into consideration.

Factors that Affect Your Salary

There are many things that can both positively and negatively affect your salary. In order to make the most informed decision, don’t forget to consider all of these:


Is this new job located farther away from your home? Is it located in an area where public transportation is readily available? One of the new challenges that I faced with this new job is that it was both farther away from my home than my old job and in an area where public transportation is not accessible. While my wife and I had normally been a one-car family, we now had to buy a second car. I was able to minimize the damage by buying a used car, but it adds additional fees. While the gas is about the same cost as the train pass to my old job, I still have additional costs: insurance and maintenance for the car. Over a 1 year period, I estimate this to be an additional $1,000 in expenses.

Health Insurance

Another factor to consider is the health benefits. My new employer is in the process of acquiring health benefits for its employees, but for the time being I am forced to get on my wife’s plan. For us, that means an additional $100 per month just to add me to her plan. While it is probably rare to have an employer without any health benefits, it is very common for employers to reduce expenses by offering less attractive plans, so make sure to consider this as well.

Retirement Benefits

Another important factor when it comes to compensation is the retirement package. This was another huge impact on my compensation. My previous employer, despite lacking in other areas, offered a pretty generous retirement benefit, contributing 8% of my entire salary. From what I understand, this is a rare occurrence. Many employers will match up to a certain dollar amount each year. Make sure to take this into consideration, as this could also influence your total compensation package. My new employer does not currently offer any retirement benefits, so it will be up to me to save money for my retirement. Luckily, we can use my wife’s 403(b) in addition to our Roth IRA’s to save for retirement.

While my new employer does not offer as many benefits as my old employer, the increase in salary was more than enough to still offer a 10% raise in total compensation. Had I looked just at the starting salary, I would have over-estimated my raise. Instead, I had an accurate picture of how this change would affect my finances. Understanding all of the influences is the first step in being responsible with your life decisions.

What other factors do you include when calculating your true earnings?

This post was written by Corey, a staff writer from 20’s Finances.



My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. You definitely need to consider the whole package. My new job this year actually had better benefits except for number of vacation days so that made my choice even clearer for me. I am so glad I took the job.

    • I’m glad everything else looked more attractive. Not bad at all!

  2. Good points! Those are just the objective differences though. I look for growth in scope of job responsibilities, promotion opportunities, perhaps marquis value of having the company name on your resume and other subjective items. There is always more than money when it comes to your career.

    • That’s a great point. These are just how to calculate the true earnings, but you’re definitely right. Sometimes it’s not about how much you make, but how satisfying it is.

  3. Finding an interesting and same time fulfilling job is a great achievement today. But this is not enough of course, income is a really important with the unstable economy we have now. Unfortunately too many people do not pay too much attention to the calculations of their true earning and as a result they get so surprised when everything turns out not the way they wanted. We just need to remember to keep in mind all of the factors together, not separate them. So that there was no need to turn to payday lenders like CashAdvancesUS company when we retire

  4. TIME. How many hours in the workweek?

    GROWTH. What is the potential to grow your skill set and move “up the ladder” in the job.

    COLLEAGUES. What types of people will you be surrounded with? Will they push you to be better?

    Thanks for the post!

    • Time is a great one! A huge oversight. It makes a huge difference especially if you are getting paid salary.

  5. Excellent points. Too often I see people only concerned with the dollar value of the salary, when in reality there is so much more than that to think about!

  6. Interesting points! I agree with you, it’s really necessary to consider all the different factors when calculating your earning. One of the most important factor for me is the health insurance, because getting sick could really create a big dent on our earning.

    • Thanks Robert. Yeah, health insurance is important. If my wife didn’t have benefits, it would have affected my interest in the position.

  7. I think too many people only focus on the wage they earn and don’t take into account the benefits that a job offers. While the wage is important, some benefits are more valuable than others. It’s important to know what is important to you so you can compare job offers objectively.

    • I agree! Different people will value different parts of the compensation package.

  8. My husband was offered 2 different deals, one better than the other. If the one he took had offered less than the other I think he would have taken it, anyway. One was with state gov’t but he liked the attitude the other company had toward their customers.
    My son had two offers, I think if the one he took had offered less he would have taken it, also, for the same reason.
    Both of them mentioned that reason when they talked about the jobs but they both took the higher paying job and it was the same one. I wonder why?

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