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What’s Your Salary Really Worth?

It’s a paradox of human nature that it’s not difficult to find two people, both on similar salaries and both living similar lifestyles, who each have a different perspective on what their salaries are worth. One may feel reasonably comfortable with their level of income while the other is perpetually feeling short of the ready.

The truth is that there’s a very wide range in the worth you can get out of a fixed salary. Just as all of us have the same number of hours in the day yet make very different use of it, so one person can make £50,000 a year go a long way while another will always feel that it’s necessary to scrimp and save to make the same salary stretch to cover the month.

Of course a large part of it depends on what part of your salary is disposable. And this depends on what your fixed costs are. It may depend on factors as obvious as whether or not you own your own home or are paying rent, whether you use public transport or are paying the upkeep on a car and even such other factors as the kind of lifestyle you feel you deserve.

Even given these variations in fixed costs, there’s plenty of scope for making the same amount of disposable income either comfortably cover the whole month or run out completely by the end of the second week. If you’re resigned to living within your income and dedicated to doing so, you’ll probably be reasonably comfortable on whatever you have. On the other hand if, like many today, you live with the feeling that you should be able to enjoy whatever takes you fancy, and hope for an unexpected windfall to cover any problems that causes, you’re going to be living a stressful life in the permanent grip of the feeling that you’re more or less broke.

There are all kinds of economic formulae for calculating exactly what your salary is worth in terms of buying power or share in the net wealth of the community, but the truth is that the benefit you get from the money you earn is very largely subjective. We all know the feeling of managing to avoid incurring some expected expense, the way it makes us feel to have a little extra unexpected cash. In fact, with a little financial discipline it’s possible to feel like that every day, just by cutting back on unnecessary expenses.

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We’ve grown accustomed to having the latest and the best of everything, when we can actually get by very well on much less. Do you really need a new computer every year? Do you really need to drive a Volvo? Of course many of these choices are lifestyle and self-image driven. A little self-examination may help us to choose between the essential and the merely satisfying.

How much is your salary worth. The bottom line is probably that it’s worth just as much as you want to make of it.