Starting salaries have not kept up with the cost of living over the past few years and it is Millennials like myself who bear the brunt of this.
An older friend shared with me that back in Year 2000, his wife and him had a combined income of $5,000 but could afford a 5-room resale flat and a car comfortably. As millennials in Singapore, few of us have such a privilege.
Thus, it is no surprise that having sufficient income is the number one concern of millennials in Singapore, according to a survey by Blackrock in 2019.
The desire to increase our take-home salary is after all due to our numerous competing financial goals, which included providing for ageing parents, saving for retirement, buying a home, starting a family and making more money to improve our immediate quality of life.
The good news is that we are at the time of our lives where we can increase our salary the most.
Looking at the blue segment of this graph: The ages of 25-34 years old is where your income really achieves the highest growth. These findings are consistent among other developed countries where one’s income growth generally stagnates after the first 10 years of a career.
While you can also have significant growth between 35-39 years old, I would really encourage you to focus on building wealth and increasing your income from work before then.
At 35, it is too close to 40 years old. From that point onwards, your risk of retrenchment increases significantly. You also have heavier financial obligations such as elderly parents to support, children and other bills to pay. Health issues also begin to set in and may result in unexpected expenses. Specifically, men who are graduates, PMETs, aged 40 and above form the largest proportion of people who have been retrenched in Q3 2019.
In the past five years, I managed to grow my annual income significantly. This played a key role in helping me build up a good foundation of savings before 30 years old. To help my peers, I would like to share some tips which worked well for me. I hope that you will find my ideas useful.
*My experience may be more relevant for full-time employees who are degree holders and working in a PMET role. It may not apply to someone from a different background i.e. non-PMET role , freelancer or entrepreneur.
1. Perceive yourself as a business, not an employee
Career growth begins first with the mindset. The key is to manage your career as if it were a start-up business: a living, breathing, growing start-up of you.
In other words, do not see yourself as ‘Employee’ but your own one-man business who is selling time, skills and performance to a company.
This advice was shared by Reid Hoffman, Founder of LinkedIn in his book The Start-up of You: Adapt to the Future, Invest in Yourself, and Transform Your Career. While the book is written 8 years ago, I feel that it is highly relevant to us even till today.
Just like how a business thinks about Year-on-year growth, your focus should not only be on how you can help your company grow but more of how you can help yourself achieve salary growth year-on-year.
Start by track your Year-on-year salary growth in a spreadsheet (If you forgot, you can refer to IRAS website), set goals and hold yourself accountable. You can refer to the chart above to benchmark your growth with other Singaporeans but do not let gender be a limit to your potential.
Like how a company invests in assets and innovation, your focus can also be on investing in yourself by by building skills. Some examples include volunteer to do things which will help you pivot into your next play; Pick up learning after working hours and use your SkillsFuture credit to learn a new language.
Learning how to invest is an important skill but don’t neglect investing in your ‘human capital’ especially in your youth when your earned income from work tends to far exceed your income from investments for most people
Unfortunately, for far too many, focused learning ends at college graduation. They read about stocks and bonds instead of reading books that improve their mind. They compare their cash salary to their peers’ instead of comparing lessons learned. They invest in the stock market and neglect investing in themselves. They focus, in short, on hard assets instead of soft assets. This is a mistake.Reid Hoffman
2. Build valuable skills and join high growth companies
The best way to accelerate your income is to build a valuable set of skills which are short in supply.
The labour market works the same way as our economy does – Demand and supply. In high growth industries, generally, the demand for people with specific set of skills outweigh the supply available. Hence, companies tend to be more willing to provide high salaries and more benefits.
Sometimes, even in industries that are not growing fast, the pay can be decent as a result of demand exceeding supply of talent. For instance, some professions like entry-level Commercial Pilots pay well ($6,500 to $10,000) due to the shortage of pilots.
This view is also shared by Managing director of recruitment agency Robert Half Singapore, Matthieu Imbert-Bouchard who shared that pay raises were most often given to staff in specialised positions with low talent supply because “employers understand they need to offer above-average salaries and pay rises in order to secure and retain staff”
In contrast, he observed that for the rest of Singapore, obtaining a pay rise would be “challenging”, as employers were reluctant to meet salary requests given the negative economic forecast for the coming year.
In addition to building valuable skills, you can also look out for companies with consistently high growth.
In his book “Earn What You’re Really Worth“, author Brian Tracy also pointed out 20 percent of the companies in any industry make 80 percent of the profits. These companies have better leadership, better products and services, better technology, and a better future. These are the companies which you want to work.
This is true. When companies grow quickly, opportunities surface everywhere whether it is to get promoted or make a lateral move.
If you would not invest your money in a company with poor or negative growth, why join one in the first place? Furthermore, if a company cannot even grow 20 percent on their own, how can they comfortably afford to give you a 20 percent pay rise?
3. Stay on top of your market rate
Early in my career, I learnt that a colleague was earning more than me despite graduating at the same time for the same role and same KPIs. I was upset to learn that I was underpaid and started looking out.
From there, I made it a point to always stay informed about the market rate so that I can maximize the value of every hour I spend on work.
To some, it may seem calculative. However, doing so also ensures you will not be shortchanged. For instance, there are many business development representative roles in the market but not all are made equal. Assuming the targets are similar, if one offers capped commissions at $1,500-$2,000 but the other one has uncapped commissions, why not explore the other position? Who is to say the pace, type of colleagues and workload will be any worse?
In this day and age, getting publicly available salary information is also quite easy.
For all the flaws of MyCareersFuture.sg, the website is a really good asset to Singaporeans in one critical way – most of their jobs have salary information tied to it. Simply search the company name or job title on the website and you will be able to find the list of jobs as well as the salary range they are offering for the role.
Besides public sources, you can also leverage recruiters on LinkedIn or sign up for mailing list of recruiters. I have peers who speak to recruiters even when they are not actively looking, just to get a sense of their market rate and stay on top of opportunities available.
The most accurate source will be your peers in the same industry. Unlike previous generations, millennials are generally more open about such information.
Many millennials believe that sharing allows them to hold their company accountable for fair pay practices and ensure they are getting paid what they are worth. If they are not a first, typically, people start sharing after a few drinks. 😉
In your pursuit of income increase, do watch out for those employers who use “passion” as a means to exploit you.
They may say things like “passion” is more important than money and use it as a reason to under pay you but make you put more effort. Or, glorify and award those who put in long hours. This is quite common especially among creative industries and some start-ups with ‘cult-like’ culture.
In many of these cases, “Doing what you love” has been co-opted by corporate interests, giving employers more power to exploit their workers.
In fact, researchers found that people consider it more legitimate to exploit passionate employees i.e. make them leave family to work on a weekend, work unpaid, and handle unrelated tasks that were not in the job description. After all, if you truly love what you do, pedestrian concerns about salary, health care, and retirement savings can take a back seat. Passion and devotion are what matter.
These ideas were shared by Miya Tokumitsu who has studied and written extensively about the cultural values that work holds in the twenty-first century in her book Do What You Love And Other Lies About Success and Happiness.
4. Pick a job where compensation is aligned to performance
One way to accelerate your earnings is to pick a job where bonuses are tied to actual performance.
The last thing you want is to have spent the entire year putting in extra hours, meeting KPIs and going the extra mile but only to be told Everyone in this company works hard and goes the extra mile” or “We can’t give you a pay raise because of *inconsequential flaw that you have*.”
Some companies also have rules like “Oh, everyone in their first year is going to get a B- grade. Otherwise, those who worked in the company for a long time will be angry!”
This simply means no matter how hard you work, your bonus will be the same as someone lazier. If your goal is to grow your income, this is may be something you want to avoid.
If you have a larger risk appetite, you may also opt for startups. Many high growth startups give good bonuses and even equity. This also ties in with the first point raised about joining high growth companies as they can generally give better bonuses.
Or, you can opt for sales roles where you have commissions though I understand this is not for everyone as many Singaporeans perceive this as ‘risky’.
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Super proud of my Sales Development Rep, HM, for being promoted within a year. 🎉 She really deserved it because of her good attitude and going the extra mile to support us. While it’s sad that we no longer work directly together, I care very much about her career growth and hope that she can keep progressing in her career and becoming more successful. ☺️
5. Performance is not everything – Relationships are
In my previous article, Important lessons I’ve learned in my first 5 years of work, I shared that when I first started work, I had the naive belief that my focus should be 100 percent on exceeding my KPIs. In the process, I completely neglected managing up and sideways.
In my early years of my career, I was way too vocal and transparent. I expressed frustration and anger without making much effort to conceal it. When I was unhappy about the way things were being done, I spoke up.
I had no idea how much superiors could impact on how much you get paid, how rapidly you get promoted, and how much you enjoy your work.
It was through experience that I learned that if a superior doesn’t like you, you can meet your KPIs every single month but they will still focus on your shortcomings. Had I learnt to manage up much sooner, I believe my career and income growth would have been a lot quicker.
Relationships with colleagues matter as well. In the recent years, I’ve learnt that “Good will is more important than glory”. While performance and relationships are not mutually exclusive, it is better to be 3rd place in performance and have strong relationships than 1st place but not have close relationships.
However, in our early years, income from work is one of the most important factors because it enables us to build capital
Let’s make the most out of our youth to earn as much as we can, save for our retirement, and leverage compound interest.
This would help us escape the rat race as soon as possible and lead a life of financial freedom and provide us more capacity for giving back to society and spending quality time with our loved ones.
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