Are you Happy with Your Salary

Most of us believe that we deserve higher salaries than what we currently make. But, few of us can answer "how much is enough?"

In this article, we will look at two objective yardsticks for you to assess your salary and then make recommendations on what to do next.

Let's start at the root Are you happy with your salary? is an eternal and all-encompassing question !

We can approach this question-practically or philosophically. For now, we shall focus on the 'practical' approach. The 'philosophical' approach is quite lengthy and will be addressed in my follow-up article!

The Biggest problem with "happy with salary" is that it is fuzzy, non-quantifiable, emotional and subjective. We need to break down this fuzzy hair-ball into smaller, measurable metric of "enough salary"

You could argue that 'enough ' means different things to each individual. But, to keep it simple, we can create the following two YES/NO yardsticks to assess 'enough salary':

1. Your average salary growth should stay ahead of Inflation

Instead of looking at each year's salary-increment in isolation, a more rounded approach is to check the annualized growth of your salary for say the last 5 or 10 years.

I am borrowing this approach from mutual funds--where we check their 10 year performance, rather than look at last 1 year's returns.

For this, you should be able to use tab#1 of my excel sheet here, to estimate the annualized growth of your salary over the past years.

You can then compare this annualized growth-rate to inflation in your country.

You can evaluate growth-rates for your 'top-line' (annual gross salary/CTC/base salary plus bonuses) and your 'bottom-line' (actual take-home monthly pay). 

As long as both of these growth-rates stay ahead of inflation, your 'earning potential' has grown in the real sense.

2. Your salary should enable you to meet all your current and future financial goals

Again, this varies for each person. But, on a broad level, some of the following are major financial goals:

Remember this calculator only tells you how much corpus you will need to meet only 2 of the goals mentioned above (monthly expenses during 35 years of post-retirement life & a retirement vacation once every 5 years)

If you'd like to make calculations for ALL goals listed above, then you will definitely need to hire a professional financial planner !

Some people take a short-cut or thumb-rule like "one needs 10 Crore rupees or $1 million USD to retire comfortably". Some people home-cook their own retirement calculators. (I am cooking one for myself currently)

What should you do if your salary is indeed enough?

? You should be grateful that you've made it in the top-10 percentile of salaried folks.

? You should share this wealth by giving some of it away to a worthy cause or non-profit.

? You should help other colleagues or younger friends in replicating your success. 

? You should make a 'Will' to ensure that your hard earned wealth is protected and passes on to your rightful heirs.

What should you do if your salary is NOT enough?

This is where most of us get it wrong. We start job-hopping to increase our monthly paychecks, but land up increasing our taxes.

You're better off listening to 'Rich Dad Poor Dad': For a salaried worker like us, this means we should develop an alternative source of income, for example: Stocks/Mutual Funds/Rental income.

Ideally, this passive income stream should be 50 to 70% of your salary income.

Prasant Rana

Age - 30

Current Job - NTPC Limited

Qualification - BTECH NIT TRICHY with a CGPA of 9.04 (mechanical engg)

Salary - 12.3 lpa CTC ( 58.2k inhand, free medical, laptop, mobile, bills, accomodation and the list goes on)

I am very much happy and satisfied that I chose NTPC out of (ntpc,iocl,bpcl and ongc). Reason being the kind of work culture, people around you and yeah a year long training program which is indeed alot of fun. I joined NTPC in sep 2016. I had my technical training at ntpc simhadri for 3.5 months which was power plant familiarisation. The classes started at 10 am and continued till 1 pm. Then lunch break for two hours and then again a two hour session and then you can go to gym, play tennis, go for swimming and what not. People working in ntpc are really happy and satisfied with their lives and job. Right now I am in Noida undergoing management module for 2.5 months. I went for Outborne training in TEHRI for a week which was fantabulous we did tree climbing,valley crossing, trekking, rafting etc etc. I love this company to the core and would have spent my life here if it was not for a UPSC job :-P.

After training we are posted to our locations where we are supposed to sit in an air conditioned control room and work from there. Only problem is that you have to work in shifts which changes in every two days. Two days morning shift(6–2) next two day afternoon(2–10) and post that night shift (10–6). Night shift being the most difficult,then you have a day off and then general shift where you do have to attend a meeting for an hour or so. So it is 6 days work and 2 days off (considering one hour general shift as off :P). You do have alot of holidays (30 earned leave, 12 casual leaves, 6 restricted holidays, 20 half paid leaves, 16 leaves for working on saturdays and plus 10 more leaves for the same purpose and is encashable). You have to work for 8 hours after that you are free to pursue your hobby. You do get a variable pay of around 1.2 lakhs per annum. You do get 60k for laptop, 40k for pc ,10 k for mobiles, briefcase allowance,spectacle allowance, free medical in hospitals like apollo and fortis, free accomodation in townships etc etc. If you enjoy city life more, then this company is not for you. As you will be posted in remotest location of the country where even flipkart delivery is not possible forget about malls, multiplex, dominos,pizza hut etc etc. But you can enjoy your life and your family can live a peaceful life.

Am i happy?

It is not as hectic as indian railways where you always need to be on your toes. You can take leaves easily. Iofs is a (8–6) job with two hour lunch break :P.

With more authorities comes more responsibilities. In railways you are heading more than 700 people at the very first posting and believe me handling people is very difficult. Handling machines is rather very easy. They won’t judge you,they wont talk behind your back. In IOFS I will be handling a staff of around 100–150 people which is good enough.

I would be posted as an Assistant director in ministry of defence. Sounds good right :-P. I would have my own cabin with IES written below my name. I will have a stenographer for doing the typing stuffs.

I will get military canteen facillities, will get a 2 BHK accomodation, will get all my bills reimbursed and a inhand salary of around 53–54k during training (15 months training :P) and around 62k after training though far less than ntpc (around 15–20k) but when you look at the bigger picture it doesn’t matter.

Yeah and here is the most beautiful thing, i will have a car with govt of india written on it,with the logo of ministry of defence :-P. And a red beacon when i become a general manager after 28 yrs.