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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 career, it's important that you understand the different forms of compensation and their advantages and disadvantages. Join me as we embark on this financial adventure to discover how paychecks can vary and the strategies that will shape your earnings. (Did I do it? Did I make it sound exciting?)

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 but can limit opportunities for additional earnings. Salary doesn’t usually reflect performance, meaning that even if you go over and above at your job, your paycheck generally remains the same. 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. For example, teachers, accountants, and engineers typically are salaried employees.

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, but remember that sometimes hours can be limited- if there are no available shifts to work, you don’t earn anything. However, if there are more shifts available than workers- you may score an overtime rate! Examples of industries that pay hourly wages include retail, food service, or construction.

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. However, no additional coworkers means that the required taxes, insurance, and other business elements are your responsibility. If you’re able to handle that, you might be looking at a career as a freelance graphic designer, web developer, or writer!

Sales 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- but if sales aren’t up, neither is your paycheck. If you’re comfortable with a potentially unpredictable income stream and love the idea of your paycheck reflecting your efforts- you might be interested in a job in real estate, insurance, or car sales.

Stock Options
The potential for gaining equity in a company is an exciting aspect of tech and startup employment (although publicly traded companies can also offer is as part of compensation). 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. However, the stock may actually lose value resulting in a loss.

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. These need to be considered when you’re contemplating a job offer, but remember- bonuses are not guaranteed so you shouldn’t make financial decisions on the assumption that you’ll receive one.

Some companies also offer extra perks, like PTO, covering your health insurance payments, or reimbursing gym memberships. While this might not be money that shows up on a paycheck, you might be getting something that you would have otherwise paid for yourself. Matching funds for retirement or tuition reimbursement can make a huge impact on your financial wellness, and can also contribute to your general well-being and job satisfaction. Benefits are most typically offered in full-time positions, especially in the education and government sectors. Some employers even offer benefits to part-time employees, but that’s not as common. Unfortunately, some benefits might not be available to every employer or might have to be earned over time so make sure to look into all the rules and requirements when learning about potential non-financial compensation.

I doubt you’d want to work a job that only paid a few dollars an hour, but you might- as long as you’d be receiving tips on top of that hourly wage. Tips are essentially additional payments given by customers for services rendered in industries such as food service, hospitality, and personal care. If you do a great job and provide excellent service, you’re likely to increase your tips (and therefore your overall earnings!). However, tipping is at the discretion of the customer and frankly, some people are just bad tippers no matter how good of a job you do. 
Non-financial Compensation
Money isn’t the only way a company can show appreciation for its employees. Non-financial compensation like recognition in the company newsletter, free lunches, highlighting an employee of the month, and company outings are all ways that an employer can reward hard work. While it may not be a big bump in pay, it certainly supports the mental well-being of employees and makes for a better company culture. Wouldn’t you rather work for a company that offers flexible options like working remotely or free professional development during work hours? Companies from Apple to Hilton Hotels recognize the importance of employee well-being and offer these types of perks.

Compensation strategies are ever-evolving, and we’ve seen quite a few changes in the past few years thanks to COVID-19 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 remote positions 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 well-being (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 lifestyles 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 should know 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 every 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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