When people assess a prospective employer, often the only thing they look at when it comes to compensation is their hourly wages or yearly salaries. However, the cold hard cash that is paid to you is only a fraction of the total compensation package that your employer is providing.
The truth is that your compensation includes your paycheck as well as your health insurance, your vacation days, the 50% discount on your local gym, even free pizza on Fridays or a desk near a window. If you have a job with a good salary, but no health insurance or a disappointing work environment, you're actually getting paid less than you would if you had a job with a slightly smaller salary but fantastic health insurance or a gorgeous corner office.
What do you need to know to figure out how much you're getting paid? Here are some of the more obvious items to consider:
Easy. It's the number that shows up on your paycheck.
As you know, many Americans don't get any vacation or sick days at all; others get a bank of days but are encouraged by supervisors not to use them. Don't try to calculate the monetary value of your time off (especially if you get paid time off -- those numbers will simply show up on your paycheck); instead, add an emotional value in proportion to the amount of time you'll be able to visit Disney World or stay home with the flu.
Insurance is a huge deal right now. Even if your workplace offers insurance, you likely pay high premiums and copays for your coverage. Sometimes these premiums are already subtracted from your paycheck; other times you'll have to subtract them yourself.
If your job doesn't offer insurance, subtract the cost of insurance on the open market, since you'll be paying for it out of pocket. (If you don't plan to have health insurance, just subtract everything in your savings account. That's how much it will cost if you or a loved one becomes seriously ill or injured.)
These include any employer sponsored retirement plans such as 401(k) or 403(b) plans, individual retirement accounts (IRAs), pension plans, etc. Calculate this by combining the annual employee contributions and any employer contributions.
One thing to remember about retirement benefits is that you are not always restricted to employer sponsored retirement plans. If your employer offers a 401(k) plan, then you may have the option of converting some or all of your retirement funds into an alternate IRA plan, such as a property IRA. If this is the route you choose, then Sunwest Trust, a custodian for self directed plans, highly recommends forming a knowledgeable due diligence team to assist you with your self-directed investment efforts. Don't choose a Roth IRA simply because that's the only IRA you've ever heard of.
Additional Fringe Benefits
Don't let the word "fringe" fool you. These benefits often make the difference between a happy and unhappy work environment. This is where you get benefits like flexible telecommuting, the discounted gym membership, the discounted parking spot or public transportation pass, even the free donuts and coffee every morning.
You can add up the cost of every donut you eat or figure out how much you would spend on parking without the employee discount. Or, if you prefer, you can give your fringe benefits an emotional rating. The important thing here is to understand exactly how much your employer is offering you in exchange for your hard work.
So. What's your total? How much are you actually getting paid? These calculations are not only useful for your current job, but also for any jobs you might have in the future. Don't ever accept a job just because it offers a high base salary; instead, make sure you have fully calculated exactly how much the job is paying.