Want to increase your income? Focusing on 5 elements can help

2. Maximizing income

As you set goals for your career this year, one of them might be to increase your income. Maybe you took the time to invest in yourself by getting a new degree or certification. Perhaps you have taken on more responsibilities at work. By considering all these things, you may be able to increase your salary. In the next section, we’ll dive a little deeper into salary negotiations.

But maximizing your salary isn’t the only thing that goes into maximizing your income – it’s also about when and how you get paid. There are several components to maximizing revenue:

Deferral of income. It may sound counterintuitive, but one way to maximize your income is to defer some of it into the future, also called a nonqualified deferred compensation plan. This is a good option for you if you have a high salary and are in a higher tax bracket. If this is an option for you, weigh the risks and benefits.

One risk is that if your company goes out of business, you will not receive deferred income. But if your company is well established, the advantage is that you don’t have to pay tax on the total salary, but only on the part you are paid that year.

Advantages. Researching which company strengths you can leverage to maximize your income and earning potential is critical. As this year begins, reach out to your HR department to see what your company offers that you may not be using.

For example, my company offers our stakeholders wellness benefits where we are reimbursed up to $300 in gym memberships. We offer tuition reimbursement, professional development scholarships, and a matching gift program of up to $500 for donations to a favorite nonprofit organization. We also provide an additional $400 deposit into interested parties’ Health Savings Accounts (HSAs) if they receive an annual exam.

Make sure that if you have these benefits, you use them. Also, increase your 401(k) contributions to get a full match from your employer. Ask your human resources department if your company offers other benefits such as legal services, childcare benefits, or other types of benefits that you can use.

The capital. In some organizations, when an employee reaches a certain level, equity compensation is possible. It makes sense that as you advance in your career and move up the ranks, you should ask if equity compensation is an option for you. Your equity-based compensation will likely cost you less in taxes than ordinary income.

Work with your financial professional to ensure you maximize your income. They can provide guidance based on your specific situation.

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