Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Monday, 13 October 2014

Where's my Pay Raise?

04:41 No comments

Ever wonder why is inflation almost always rising faster than my paycheck and why that stingy boss of mine who is earning so much is not raising my pay!

Everyone would always wish to earn faster than inflation, but this rarely happens, especially if you have been staying in the same post for a very long time!

*Inflation is the increasing of price of the things you buy

Reasons my pay grow slower than inflation:
  1.  Because in order to pay you higher wages, your boss first need to make the extra revenue. To make that extra revenue, your boss have to raise prices first. So prices go up before your pay goes up.
  2. Prices can go up for reasons other than your pay - such as raw materials, taxes etc. And most of the time there's a limit to how much prices can go up - I think no one wish to eat a cheese burger for $10. So what happens is your boss increase prices of the things he/she sell, but use the extra revenue to pay for everything else but your pay (because you will keep working until one day you cannot take it and quit but your boss's business will fail the minute he fails to pay the suppliers etc).
  1. Create 2nd or 3rd income stream while you can. When you start working, try to save and invest more to create your 2nd income stream and gradually a 3rd. You could start first by setting a small amount of money every month to buy index funds (good if you know nothing about investment and do not wish to know either). Next is by maybe finding a part-time freelance job like free-lance web designing or dance teacher, something that you can help others while making a income for yourself.
  2. Become the boss yourself if you think your boss is making way too much money. No one became a boss to pay their employees more than what the boss is earning (you could become one such boss if you like). If you like to earn more, take it to the next level and become a boss.
  3. Keep improving yourself! Keep learning new skills and keep upgrading your skills. The more skills you have, the more likely you will be able to perform better than others. As Warren Buffett (one of the world's richest person) says, "The best investment you can make is in yourself". As you improve yourself, you become more productive and have a higher chance of promoting, thus able to command a higher salary.

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