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May 22, 2006


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Your point #3 is puzzling. What line of work permits such phenomenally large percentage raises *every* year? Most companies I know of have a pretty restricted latitude regarding annual raises, with the maximum raise seldom more than a few percent above cost-of-living. In my experience, the only time one is able to get a substantial (10s of percent) raise is when you change jobs.

That, of course, just makes the improvement in starting salary due to education all the more important.

- Eric

Eric --

These represent average amounts over the course of a career and take into account the combination of the following:

*Regular, annual increases - As you note, these are usually fairly low. If you rely on them only, it's likely you won't be able to achieve the higher rates I note.

*Promotions within the same company -- When people get promoted to new levels of responsibility, they often get pretty good bumps in pay. Companies I've been with provide 7-12% increases when a promotion occurs.

*Taking a new job with another company -- This is where you can really get a good increase. I've had up to 20% increase in one year by switching to another company.

Don't look at the increase percentages in the post as something you'd get EVERY year, but something you'll AVERAGE. For instance, the 10% numbers above don't mean that you'll get 10% increases every year, but some you may get 3%, some you may get 8%, others you may get 15%, and so on -- they'll average out to 10%.

And 10% is achievable -- I've done it. But you must actively manage your career, you can't sit back and just let it happen. That's the point of the post. If you do just sit back, you'll be in the lower end of the increase levels.

OK, I guess I got a bit confused when you said 'average' 10%. I was thinking like 'average yield', in which case you'd need a few 50%'s in the mix to compensate for all the other years of 4% raises.

Also, since most employment (I thought) was with smaller businesses, promotion possibilities are very limited (IIRC, I've only had one in nearly 15 years). If a company has less than 500 people, there's not much of a 'corporate ladder' to climb. Even in a larger company, the only people who get much in the way of promotions are those who are on some sort of management track.

Since most folks only change employers a handful of times in their career, I'm thinking your averages are somewhat overstated. But then, as I implied initially, that may just be a difference in my type of work.

- Eric.

I think the main point is that no matter where you work or at what level, managing your career actively can make a big difference in your finances.

For instance, if you're only able to earn 3% per year in your field/with your company if you do nothing but by working at it you can get up to 5%, then that's a big deal. It's worth doing so since you can earn much, much more over the course of your career.

aren't you forgetting something? like a salary cap? you won't be getting those annual salary increases after so many years.

Anon --

You will if you keep getting promoted regularly.

I have been running my own business for the last ten plus years and will be returning to College to start with a Asociates Degree in Bus Admin going for a marketing sub. I am 57 yrs old and would like to sell my business in five to ten years and would like to start a new career with my degree part time before selling my business, does this seeem like I am being realistic with my goals?

Mike --

When you change careers, it's likely that you'll start at or near the bottom of the pay/work scale which may be something you aren't willing to accept. That said, if you're ok with that and can afford it financially (you'll be nearing retirement, so keep that in mind), then any career change is you choice.

Check out this post for some more insights:

If you think about it, e- commerce has certainly picked up its pace for several years now. More and more people are actually discovering the convenience that comes with online shopping. With reliable Internet connection, people no longer have to leave the comforts of their own home, just to buy groceries or that particular shirt or bag on sale. This saves gas as well, with the price of oil incessantly rising over the last several years. Thus, if you are considering a business venture, then you should go over...

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