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MAKE IT MAKE ¢ENTS

Show Me the Money!
Exploring Types of Compensation

APEF: Solving the Financial Illiteracy Crisis

Hello again, money masters! During your lifetime of work, it’s likely that you’ll be paid in various ways. To maximize your future careers, it's vital that you understand all forms of compensation and their evolution over time. Join us as we embark on this financial adventure as we discover how paychecks have changed and the strategies that will shape your earnings.

Salary 
To kick things off, let's take a look at one of the classic compensation methods - salary. Salaried employees receive a fixed amount, typically monthly or biweekly, that serves as their pay providing financial security and predictability in return. Salaries are shown as an annual sum (ex: $50,000/year) and are most often used in career positions as opposed to more temporary jobs.

Wages
Hourly wages are the foundation of many part-time jobs and gigs. You get paid per hour you work - making this method a very straightforward way of earning as the more hours you put in, the bigger the paycheck! This can be a good option for those needing a more flexible schedule.

Freelancing
Freelancing has taken center stage in today's digital era, offering flexibility while you remain your own boss- but remember, that means no fixed income stream. Freelancers work on projects rather than hourly employment contracts and can be a good option to gain experience and develop your craft.

Commission
An attractive commission-based salary could be ideal for charismatic and persuasive professionals. Salespeople often receive a percentage of every sale they make, offering the potential for big bonuses.

Stock Options
The potential for gaining equity in a company is an exciting aspect of tech and startup employment. Employees get a chance to own part of the company, motivating them to work hard and make the company successful as that could lead to substantial financial returns to the employee over time.

Bonuses & Other Perks
Companies often recognize exceptional performance with bonuses. These can be in the form of annual or performance-based incentives or even profit-sharing programs. Bonuses offer companies another means of showing appreciation for outstanding work done. Some companies also offer extra perks, like covering your health insurance payments or reimbursing gym memberships. These are all things that need to be considered when you’re contemplating a job offer.

 

Compensation strategies are ever-evolving, and we’ve seen quite a few changes in the past few years thanks to Covid and the shifting priorities of younger generations. Let’s take a look at how things are changing and why: 

The Remote Revolution
Covid didn’t just change the way you went to class- remote work has revolutionized workplace culture. Many companies now offer remote work options, which has forced them to change their compensation strategies; workers in a remote position might receive different allowances or perks to compensate for what would have otherwise been traditional office benefits.

Focus on Work/Life Balance
Modern compensation strategies often emphasize employee wellbeing (you can thank a Millennial for this one). Flexible schedules, wellness programs and mental health support have become standard components of the compensation package as employees began highlighting their desire for these supports.

Customization Is Key
Companies recognize that not all employees need the same benefits and compensation packages, which is why custom tailored benefits and compensation packages have become increasingly prevalent, offering employees options tailored specifically to their lifestyle and priorities.

Emphasis on Skill Development
Technology is constantly updating the way that companies function and as a result, their job roles. Companies are investing in their employees' skills as the job market changes. Compensation strategies now incorporate opportunities for training, development programs, and education benefits, acknowledging the significance of ongoing learning.

 

As you embark on your future career, understanding all forms of compensation is important- you wouldn’t want to turn down one job that lists a slightly lower salary only to find later that commission opportunities could have launched you well over your current pay. Each method offers its own set of advantages and considerations, with your preferred option depending on your career goals and personal preferences. Dream big, explore all available avenues, and prepare to capitalize on all your hard work!

Bonus Tip:

When interviewing, understanding how companies structure compensation packages is the key to making informed decisions and negotiating effectively. Here are some things you can do before you head into that interview:

 

  • Talk with People: Seems like an obvious one, right? Get to know professionals in your field or industry and inquire about their compensation experiences; this can provide invaluable information on typical pay ranges, bonus structures, and negotiation techniques.

  • Follow industry trends: Stay current on compensation trends by reading industry reports, salary comparison websites, and financial news sources.

  • Ask questions: Don't be shy to inquire about compensation structures and benefits during job interviews - this shows your interest, prepares you for success, and helps give an understanding of the total value proposition.

  • Use Online Resources: There are online tools and websites that allow you to research salary ranges and benefits across a range of positions and industries; however, always make sure you’re using a credible source.

  • Learn the Language: You shouldknow common terms like base salary, bonus, stock options and benefits package in order to effectively decipher job postings and negotiate. Understanding these words will allow you to decode job advertisements more efficiently and negotiate effectively. Check out our glossary for ever financial term you’d ever want to learn!

a type of policy that you agree to have with a company. In exchange for paying monthly rates, the company agrees to pay for some or all of your health needs.

401k plans, and other retirement funds that are provided by the employer as an additional benefit to the wage or salary provided.

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