Once upon a time, a now-defunct financial media company had a Twitter contest asking people to put a piece of financial advice into three words. My submission was:
Earn, Save, Invest
I didn’t win, but I still think that’s basically everything about personal finance. If I’m allowed a fourth word, I would throw in Insure and make it "Earn, Save, Insure, Invest."
First you earn the money. Then you save some of it, insure against accidents, invest your savings for the long-term, retire, and live happily ever after. Of course the devil is in the details: how to earn, save, insure, and invest. The details produce countless musings and strategies.
Among the four elements — earn, save, insure, and invest — I think earn is the most important. Income drives everything. It’s possible to save a lot on a modest income. Some people have a high income but spend it all. Still, a good income helps a lot. I won’t be surprised to see that as a group, people with a higher wealth had higher income.
You are going to work many years doing something. You might as well earn a good income while doing it. However, it’s difficult to find out how to earn more money from your work. I think for that reason it’s not covered as well as other topics in the personal financial circles.
I don’t have a good answer either.
How much people earn is a taboo subject. I have no idea whether I’m paid the same, more, or less than my colleagues. I have no idea whether people in other companies make more or less.
While doing my taxes, I looked at my wages in the last few years. 2008 was the high watermark. 2009 and 2010 were lower due to my employer skipping bonuses and holding off salary increases. We are done with bonus for 2010 and salary adjustment for 2011. My wages in 2011 will finally catch up with 2008.
The economy definitely contributed to the stall in my wages. Maybe I’m also reaching a plateau in a my career. Maybe it’s a sign I should look for a new job. The answer is probably all of the above.
What about you? How did your wages (salary plus bonus) change in these past several years?