CAREER RESEARCH

RESEARCH YOUR CAREER CHOICES

So far, your research has been focused on various careers and how they complement your work personality and fit your vision for how many years after high school you'd like to invest in training and education. Also, how you like to learn is a strong consideration.  

At Youthentity, we feel an essential part of career planning is looking at your future earnings in addition to your future expenses such as the cost of the education needed to pursue the career, and the lifestyle this career can provide you. This will help you understand the real costs of living on your own as a young professional. 

Why? It is important to have a look into the future to avoid unpleasant surprises such as not being able to pay off your student debt. An unreasonable amount of student debt can impact your ability to make future life decisions, such as starting a family or buying a house, when you would like to. Most importantly having more debt than you can reasonably handle can create stress in your life, impacting your happiness, health, and mental well-being. 

Conversely, you may find it is a good decision to take on some student debt to achieve your career goal which may afford you a better salary and standard of living.  There isn’t a right or wrong answer. Only you can determine what is best for you and your personal goals.  But we’re here to help you look at how your career choices, the education provider you choose, and other factors will contribute to your financial well-being. 

CONDUCTING YOUR CAREER RESEARCH

Now that you have selected five careers you are interested in, it’s time to develop your career and financial plan. Many factors contribute to your financial outlook for your career choices. But don’t worry, we will step you through all of them.

  • Using your list of careers in your career plan, select a career that has the most interest to you.

    Re enter your career codes from your career plan into the O*Net profile below, click on the career of interest.

    The career information will open in a new tab through a website called My Next Move. You will copy and paste information from this page.

  • Identify key tasks on the job responsibilities

    Example

  • Your projected earnings for your career are a combination of your starting salary and how much your earnings will grow year after year

    On the same page, scroll down to JOB OUTLOOK.

    Click on the Local Salary Info button. From the dropdown button, select Colorado or the state you want to work in and press the Go button.

    Here you can see what the bottom 10% of earners make, the median salary of all earners, and what the top 10% of earners make. As someone who will be new to their career, it would be a good idea to pick a salary below the median. The median salary means half of the workers earn more than this amount and half of the workers earn less than this amount.

  • How much your salary will grow each year depends on a few factors such as:

    • your performance at work

    • frequency of promotions

    • inflation (how much the price of goods and services increases or decreases each year expressed in a percentage)

    • your employer

    • the supply and demand for your particular career

    • the industry you work in

    ACTION: Since this is a difficult number to determine, we suggest you put in 2, 3, or 4% in your career form.

HOW TO EVALUATE YOUR TOTAL COMPENSATION

What Is My Pay?

Although it is considered a rude question if someone were to ask a person “How much do you make?”, that person would likely answer with their wage or salary. Also, as a young healthy person entering the workforce, healthcare costs and saving for retirement may be the last thing on your mind. When you get a job offer, it's a good idea to look at your total compensation. Your total compensation is the combined value of your wage or salary and the benefits your employer is offering.

Here are some examples of benefits that may be offered to you:

  • Medical, dental, vision, and life insurance. Insurance is expensive and even more so if you have to go out and buy it on your own. Some employers can secure better pricing on insurance because they are purchasing for a group of employees which reduces the cost. Some employers go a step further and pay for all or part of the insurance.

  • Company car. Some employees that have reached a higher level in the organization are provided company cars. You do not own the vehicle but it is yours for you to use on the job and you take it home on evenings and weekends. This would eliminate the need for you to provide your own vehicle. The company also pays for the gas, maintenance, and insurance on the vehicle. Company cars may also be offered to new employees in certain career fields such as sales.

  • 401K Plan. A 401K plan or another similar plan is a way for you to save for retirement. Monies are taken out of your paycheck and put into a retirement account. Since the monies are taken out of your paycheck as a deduction, you do not pay taxes on this part of your income. Some employers will match your contribution to your retirement fund. For example, let's say you decide to put 4% of your paycheck into your retirement account. The employer might match that and also put 4% into your retirement account to a total of 8%. Social security is also intended to cover 50% or less of your living expenses in retirement.

  • Paid Time Off. Vacation days give you the ability to take days off from your job. You are paid for these days even though you are not at work.

  • Education Assistance. Some employers offer a tuition reimbursement program. This allows employees to continue their education while working. Usually, the employee pays the tuition bill and upon successful completion of the course, their employer will reimburse them for the tuition. The employer might require a certain letter grade and even require you to stay with the company for so many years after you graduate.

Other benefits that do not have a hard dollar value but may be very important to you might include flexible work hours, the ability to work from home, or bringing your pet to the office.

CASE STUDY: What is my pay?

Two friends, Leah Sanchez and Jesse Donaldson, grew up together in a suburb of Denver.  Both decided to go to Community College for two years.  Leah decided to become a dental hygienist and Jesse a marketing representative.  After graduation they both took jobs in their chosen profession.  Leah began working for a dental practice as a hygienist and Jesse took a position in sales for a large cosmetics company selling cosmetic products to beauty salons, local drug chains and large national drug chains’ buying offices in the Denver area.  

During their latest phone call, both were surprised to learn they each were being paid $36,000 per year.  They were paid monthly and received a gross salary of $3,000 monthly.  Very exciting.  Still living at home meant that they could spurge a little and go out for dinner or even a vacation. 

They decided to celebrate their first paychecks by having dinner together at a trendy local restaurant near their homes.  During dinner each pulled out their paycheck stubs to see how much was deposited in their newly created checking accounts.  Both were expecting to see $3,000.  To their surprise, the amount on their paychecks was significantly less.  Also, the amounts on Leah’s and Jesse’s paychecks were not the same.  This surprised them. 

Let’s see what happened. 

Social Security and Medicare Deductions 

First, they saw deductions for Social Security and Medicare.  For both of them, the deduction for social security was 6.2% of their gross pay and 1.45% for Medicare.  The total is 7.65%.  For Leah and Jesse this amounted to $229.50 which reduced their paycheck by this amount.   

Income Tax 

Next was withholding for income tax.  Employers estimate your annual income tax and pay it into a fund each pay period.  There are tables that show how much you are likely to owe at the end of the year.  We will make it simple.  Both would pay about 10% of their income for income taxes or $300 per month.    

Before continuing, Leah and Jesse have to pay $529.50 from their $3,000 and so before other deductions they now have $2,470.50 take-home pay. 

Medical Insurance 

Both Jesse and Leah had additional amounts deducted from their paychecks for medical insurance.  Because Leah worked for a small company, her premiums were much higher and in the range of $350 per month.  Jesse’s company paid most of her health care premiums and she only had to pay $150 per month.  Their take-home pay now diverges.  Jesse has $2,320.50 but Leah has $2120.50 left from the $3,000 per month. 

Automobile Expenses  

Jesse received a company car.  She could use it for personal purposes and her employer estimated that was approximately 20% of the total cost of the car expenses.  It was estimated to be around $200 per month.  The amount was deducted from her pay.  

Leah had to purchase a car.  She chose a used car costing $15,000.  Her fuel, insurance, maintenance and car payments added up to $550 per month.   However, it did not show up on her pay stub but it was a real expense for her.  Leah had $350 per month more in car expenses than did Jesse.  While Jesse has $200 deducted monthly from her pay check, Leah has to pay $550 per month just to own a car from what is left after deduction in the money deposited in her bank account.   

Retirement – 401k  

The last difference was payments into a 401K.  A 401K is a retirement fund that employers set up for their employees.  The good news is that is that Jesse’s firm contributes 5% of her pay and Jesse has to contribute 3%.  Leah does not have a retirement play and does not make a contribution.  

3% for Jesse is $90 per month and her employer contributes $150 for a total of $240 per month or $2,880 per year.   

Key Take Aways 

Let’s summarize where the two women are financially.  Jesse receives $2,030.50 each month and Leah receives $2,120.50.  Very similar.  Both are surprised that their take-home pay is much less than the $3,000 gross salary and that there are about $900 in deductions.  

However, even though both received about the same take-home pay of around $2,100  per month, Jesse is much better off.  First she has a car which only costs here $200 per month whereas Leah has to pay $550 per month which is not included in here $2,120.50 monthly take home pay. If we subtract the $550 per month from her take-home pay, she now has $1,570.50 to spend. 

Next Jesse also has a 401k plan that results in her saving $2,880 per year toward retirement.  While they are both young, the approximately $3,000 per year adds up over the more than 45 years of savings by the time she is 65.  

The Bottom Line 

What seems like comparable pay is not.  You must look at what your employer is providing you in health insurance payments, company car, and retirement benefits.  There may be other factors as well such as vacation days and sick days.  Also, does the employer provide maternity leave.  These are all questions you must learn about when analyzing your pay from prospective employers.