4 Things to Consider When Getting a Pay Raise

Your boss calls you into his office. Your palms start to sweat. “Is this good or bad?” you think. He invites you to sit. Then he opens up his file…

“I think it’s about time we offered you a pay raise!” he says with a smile on his face. You breathe a sigh of relief. Then the realization of that extra money hits you. You start to smile too. But wait, there are things to consider here…

People covet a pay raise for so many reasons. They feel appreciated – Like all the extra time and effort they have put in have finally been recognized. Like they’re special. And yes, of course, all the extra cash they’ll be receiving. All the things they can buy, all the fun they can have! Life will be so different from now on!

A pay raise has many upsides but without wanting to sound like a killjoy it’s also only fair that you’re aware of some of the potential downsides before you sign your life away.

Now before we discuss the individual points below I’d like to make one thing crystal clear. These are only *potential* downsides. You might not experience them at all in your chosen career. Or you might even view them as upsides. They’re not set in stone by any means – just things worthy of consideration before you make a final decision.

A Pay Raise Brings Extra Responsibility

Sometimes we get a pay raise simply to reward us for a job well done. However more often a pay raise comes with strings attached. A heavier workload or greater responsibility. Maybe you’re being put in charge of a new project or your boss wants you to oversee some other team members.

This extra responsibility doesn’t necessarily have to be a bad thing, but extra responsibility can mean extra stress or more time spent at work rather than at home with your family.

A Pay Raise Can Result in a Changed Work Dynamic

Getting a pay raise can often involve a promotion – whether that is a formal promotion to a new grade or an informal promotion where you’re just asked to look after and support some other colleagues.

You need to be aware that when you go from being “one of the gang” to being one of the “gangmasters” the whole dynamic of your workday can change. You’re responsible for your colleagues doing their work. You may need to manage, convince and cajole them into doing the work. You may even need to tell them off.

This can not only be difficult for you, who now has to manage your friends you’ve made at work ,but also difficult for them as they see you getting promoted above them. Suddenly you’re no longer “one of them” and this can create friction. Is this something you’re ready for if it arises?

A Pay Raise May Change the Work You Love

Over the years I have heard numerous stories of people who go into a job because they love it. They work hard and do well because they are enjoying themselves so much and soon enough are offered a pay raise as well as greater responsibility. It all seems good – more money and the opportunity to contribute more.

But in some cases moving up the ladder poses the risk of taking you away from your “first love”. Suddenly you’re not speaking to customers all day long but are filling in forms to ensure everyone else is doing it right. Maybe you go from working with the team on that new website design to being the one creating the rotas and carrying out performance reviews.

Maybe you’ll enjoy this new aspect of your job. But for a quite a few people it can be a real disappointment to exchange the job you really love for one that is less enjoyable but better paid.

A Pay Raise Changes Your Personal Finances

Think a pay raise means more money for you and a more comfortable lifestyle for your family? It certainly can, but there are risks even here. I know of people whose pay raise actually pushed them into a new tax bracket, meaning they paid so much more tax that at the end of the month they were actually worse off than in their old position.

I know people who as a result of peer pressure were expected to dress a certain way or drive a certain car in their new role which also ate up plenty of their money.

Lastly, money has a nasty habit of disappearing and this is the most common issue of all. That $1,000 pay raise works out to less than $100 a month after taxes. This is the sort of money that can easily slip through your fingers thanks to the regular visits to Starbucks, an occasional newspaper and so on. It’s very easy for your lifestyle to expand to include that new pay raise in such a way that you still struggle to put money away for the future.

Smart people, no matter how boring it may seem, will try to live on their old salary and set up an agreement with their bank that this additional income will be swept away into a savings account or into debt repayments every payday so they’re not even tempted to touch it.

Take the time to carefully consider each of these with the pay raise you’ve been hoping for. Seek clarification from your boss or human resources department if necessary. Gather all the necessary facts and then – and only then – make your decision about whether the additional money you’re being offered really does sound like a fair deal to you and whether it honestly is likely to make you happier or not.

This is a guest post from Richard Adams, from DebtAssistanceGuru.com.

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