If you have been paying yourself this year regularly, the next question is, “Are you ready to give yourself a raise?”
This week is the last week of June and marks the end of the first half of the year. Be honest, have you really been writing yourself a check every time I send an Entre Pay Day newsletter? If so, congrats! You have written 12 paychecks so far! If you haven’t yet started to make your paydays a thing, put them on the calendar and start this week. Even a $10.00 to $25.00 paycheck feels great and is a tangible reward for all of your entrepreneurial hard work.
If you aren’t thinking about a raise yet right now, that’s fine, but let’s define what the conditions are for you to go ahead and boost your own paycheck. You need something a little more concrete than, “someday” or, “next year” or the elusive “when we make more.” The six-month mark is a great time to plan our next salary move.
First, what calculation did you use to determine your current check amount?
Think back to when you first wrote yourself a check this year. Did you figure your personal four walls (food, utilities, rent or mortgage and transportation) as your first goal? Or did you take a percentage of your “goal” salary, say 40% of your desired $1,000.00 per week? Note how you came up with your current paycheck amount.
Next, try a bump up a bit to a percentage that feels good and is sustainable.
Go ahead, let’s play with the numbers. What does 5% look like? How about 10%? If you write yourself a $500.00 net check every other week, what if you bump it up to $550? Remember to have a purpose for the money. So, take a moment and think about what you would be able to do with an additional $100.00 per month in this scenario? Hire a cleaner part time? Get a massage? How about that food order service you wanted to try? Or to pay a bigger chunk of the personal expenses if you still do the side hustle thing?
Don’t forget the bump in taxes.
Your business should be paying your taxes as well. In our example above of a $500.00 net check, the gross check that you write adds in the 25-30% that you deposit for self- employment taxes. If we add 25% to this example, the gross paycheck every other week is $625.00, with $125.00 for taxes and $500.00 for the next paycheck. Do a quick, back of the envelope calculation, and refigure the taxes and your new gross paycheck amount.
If You Don’t Start Now, Calendar your raise.
Maybe you aren’t quite ready to make this bump. But when will you be? Set a date on the calendar. Perhaps it is August 1st. Or maybe 4th Qtr. Whatever you decide, try not to let it go into next year. You want to relook your own compensation a few times a year as you are growing your business. Remember that as soon as you start writing that bigger check it is time to celebrate!
If you are struggling to pay yourself, or you are unsure if this is the right time for a raise, you may need to get more clear on your numbers and design a strong money strategy that encompasses the six pillars of business finance. The doors to Profit 101: The Creative’s Guide to Managing the Money are still open for our July 1st start. Visit https://entremoneycoach.com/profit-101 to get into the simple money management program creatives love.