Cymen Vig

There are a number of topics related to the intersection of being a professional and finances. It is important to have a basic understanding of these ideas. At times, you may feel like you are asking for more money than you deserve however having a sound financial plan will make it easier to gain the fortitude to go outside of your comfort zone. You are a professional and you should spend the time to ensure your financial success.

Interviews

Apply for a couple of jobs a year. The point of doing this is to:

• verify your worth on the job market
• practice your interview skills
• learn what is out there on the market
• improve your negotiation skills
• potentially end up with a new job

It is important to approach this task with the mind set that if you are happy with the outcome of the meeting you might just take the job. It is also important to not divulge the reason for your interview; as a professional, you have an obligation to continue to grow and considering new prospects is an important part of your career.

Note that it is important to be discreet about this activity. The point is not to go out for an interview and then come back to your employer and try to use that offer to negotiate a raise. The point is to know your value on the market so that you are in a good position to negotiate the salary you want for the position you want. Remember that a position is more than just a salary; it comes with expectations for the numbers of hours worked per week and may have odious requirements that make work miserable. In other words, not all jobs are created equally and some well paid positions may not make sense for you. Focus on what you want.

Salary

Read the basic ideas behind salary negotiation and go out and try them. At first, you may be intimidated. But fear not! The worst that can happen is that someone says no. An interesting blog post on this topic is: Salary Negotiation: Make More Money, Be More Valued.

Raises

As with all aspects of a job, raises are negotiable. Your employer may offer you a fixed raise but it is completely within your right to negotiate your raise. It is important to think carefully about this though because you need sound reasons for why you deserve a bigger raise than your coworkers. If you do not have these reasons or feel it is a bad time to negotiate a raise, simply accept the offered raise and move on.

There is no set time for negotiating a raise. It may be easier for your employer to entertain your proposition if it is closer to the annual review time but if you contribute significantly to the bottom line 6 months before that review, why not ask for a raise now?

Work Ethic

Focus on getting things down that contribute positively over clocking in your hours. As a professional, it is important to do the tasks that you might find annoying like working on an outdated technology, entering hours and submitting expense reports in a timely fashion. The point is that you can make a difference for both yourself and the company and both of you are better off for it. This sets things up well for reviews and negotiations on raises.

Internal Projects: Know When to Pass Responsibility on

In many jobs, you may end up working on something to keep the office going well just because you happen to have a particular skill. This is a good thing to do as long as you can do it well. If you reach a point where things outside of your control cause frustration and you can not fix things, there is nothing wrong with passing responsibility on to someone else. Someone with a fresh set of eyes or just a different personal relationship with whomever is involved can get things back on track. Do not let your frustrations effect your work.

Retirement

A basic rule of thumb is that you want to have saved enough money so that you can live on 4% of it per year. In other words, estimate your yearly expenses (say $30,000) and divide that by 0.04 (so $30,000 / 0.04 = $750,000). You will arrive at a figure that is pretty damn overwhelming. However it is within your reach. The earlier you start, the less you will need to save per year if you plan on retiring at a set age (say 65).

There is an opposing viewpoint here: once you accumulate enough wealth to potentially retire, you are now free to do whatever you would like to do. Your expenses like rent and food can be taken from the investment returns on your retirement account. It would be a great time to sail around the world or start a business. One important issue to consider though is health insurance.

It is also important to be somewhat pessimistic when considering the total amount you need to retire. Both in terms of what you think your annual expenses will be and in terms of your target amount. A couple extra years of work can give you enough buffer to weather serious financial setbacks.

Emergency Fund

In life, you will have setbacks. These setbacks may be financial in nature such as a loss of a job, needing to suddenly buy a new vehicle or some other unexpected event. A good rule of thumb is to have roughly 6 months of income saved in an account that you can access within a day or two. You should be prepared to weather these setbacks without undue stress so that you can continue being a professional in your daily life.

Additional Resources

• Reddit r/personalfinance (note the sidebar with details on different types of retirement accounts)

Conclusion

There are many topics not covered here. It is important to understand your investment options. Research the difference between a pre-tax retirement account such as a 401k or Simple IRA and a post-tax retirement account such as a Roth IRA. Also note that I am not a financial advisor and the above is an outline of my understanding in some areas. While the 4% rule for retirement is widely known, some critique it as being too optimistic. As with all things, your experience may vary. However understanding these topics will set you on a path of financial success.