Getting super clear on your personal budget adds crucial clarity to the question “Is this the right role for me?”
I’m talking all about money this month. Super taboo, right?? I’ve noticed that people just aren’t comfortable talking about finances. Let’s change that.
My hypothesis – money is super important and directly plays into professional engagement. It’s up there with the right role and the right manager – you want to be compensated well for the work you’re doing. Duh.
Clients who are comfortable talking about money often put the cart before the horse. They ask me questions like, “Is this what I should be making?” or “Am I being compensated appropriately for the role/title/company?” or “How does this salary compare to others in similar roles?” I think those questions are great (and relatively easy to answer).
Where I think folks miss the mark is the question that should come prior – do I know my foundational budget as a benchmark? Knowing the answer to this is crucial to any money-related inquiry. Here’s how I recommend clients think about budgeting before they even think about compensation – it’s actually pretty easy!
Are you super clear on the lifestyle you want? Do you know your priorities? Knowing HOW you want to live is really important (and an unknown for most folks). Love to travel? Thinking dinner out more often than cooking at home? Want to drive that German car? Don’t care about the expensive cable-TV package? Know what’s important to you and go get it.
Are you super clear on your net take-home pay? I have to admit, when I was in the corporate world, I really didn’t know my exact take-home pay. Yep, I didn’t track my income. Yikes – Boy have times changed owning my own business – now I know my take-home down to the penny! And I think that’s important for everyone. Clarity around take-home is important because it tells you what you’re working with each month and if it can support your lifestyle, expenses, and savings plan. It’s your foundation.
Are you super clear on your expenses? This is a biggie. From student loans to house payments to insurance to gas to food, getting this down on paper is one of the most important things you can do when building your budget. Just SEEING where your money is going is super eye-opening. Take a typical month and write down everything. Lots of cloud-based solutions exist to help you if needed – I love Quicken! Simple excel also works too!
Are you super clear on your savings plan for the future? The final piece of my budget recipe – planning for the future you want. This could be your personal savings plan or also could include college planning, home repair/remodels, emergency fund(s), and/or big events (think 50th birthday party, etc). Understanding where your money might go in the future (and saving for it) should be a part of your plan. Better safe than sorry here!
That’s it – it’s really not rocket science. It’s all about clarity/prioritization then money-in and money-out. Just knowing this will put you at such an advantage before you ask yourself, “Does this salary work for me??”
Your homework this week: You guessed it! Write down your lifestyle priorities then open up that blank excel document (or Quicken) and start building your budget. See how much money is coming-in and get a sense of what’s going-out (both now and potentially in the future). Just right? Then you know you need to look for a similar paying role in the future. Not enough? Then you know your target for the future. It’s really that simple!
Coming-up next week: Compensation packages are often full of tangible (salary) and non-tangible (ping pong tables!!!!) items. I’ll outline how I think about valuing these items so you know if you’re getting a “good deal” in your current (or future) role.
Here’s to your Engaged Pursuit!