Salary Increases: Some people recommend changing jobs every few years solely for an increase in base pay. The benefits could make a difference of tens of thousands of dollars.
Most companies give pay raises of three percent. On the other hand, in changing jobs, you could see salary increases of 10 to 15 percent. Additionally, when you change jobs and move into a job with greater responsible, you could see even greater increases in your salary.
Immediate Gains of Salary Increases
Increases in salary have a compounding impact in your income. At 12% for each job change, your salary increases look like this example.
Current Salary: $50,000
First Job Change: $50,000 + 12% = $56,000
Second Job Change: $56,000 + 12% = $62,720
Third Job Change: $62,720 + 12% = $70,246
Longer-term Gains of Salary Increases
Another powerful reason for changing jobs for salary is that, as your salary grows, the amount of your pay raises increase. In other words, changing jobs for more money not only gives you a short-term boost in income; the change affects your long-term increases. Here are two examples for comparison. In both cases, I used 3% increases you might expect at your current employer.
Base Salary: $50,000 plus 3% pay raises
- Starting Salary: $50,000
- First Raise: $51,500
- Second Raise: $53,045
- Third Raise: $54,636
- Fourth Raise: $56,275
- ($50,000 + $51,500 + $53,045 + $54,636 + $56,275 = $265, 456)
However, with a salary of $70,246, your 3% annual increases would look like these examples.
- Starting Salary: $70,246
- First Raise: $72,353
- Second Raise: $74,524
- Third Raise: $76,760
- Fourth Raise: $79,063
- ($70,246 + $72,353 + $74,524 + $76,760 + $79,063 = $372,946 )
Negotiating higher starting salaries can also have a huge impact on your earnings.
