The following is a staff writer post from MikeS. He is a married father of 2. So, with the cat, he ranks number 5 in the house. He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.
My annual performance review has come and gone this year. I always seem to be harder on myself than my boss. This is a good thing, as he thought I performed well over the past year. There were a couple of areas he thought I should work on and I don’t disagree with his assessment. Overall he liked my contributions to the team and hoped for more of the same in the coming year. In conjunction with the performance review is the compensation review. The money is tied to performance, so the better you perform, in theory the more money you can earn. This is all subject to the company’s overall performance. The money is broken into 2 pieces, salary and bonus. Naturally, I’m going to give you a peak into how much I received and what I am planning on doing with it.
In my opinion, I would almost always rather have a larger salary increase than a larger bonus in any given year. Why is that, you might ask? The reason is quite simply, that the salary increase is presumably forever, whereas a bonus might just be a one-time occurrence.
I was generally pleased with the increase this year as is it was just under a 3% increase. This was the largest raise I have seen in the last few years, absent a position change. The total dollar increase was $2,900. Now, I wish all $2,900 went straight into my bank account, but alas it does not. What is left over after my 401k contributions and taxes is actually about $1900 a year or about $160 a month. So, where’s it going? It is being divided amongst various spending categories in my budget. Call it lifestyle inflation if you will, or that my kids seem to be getting more expensive. 🙂
I have a general kid bucket that will be seeing an extra $25 a month. Also, our gifts bucket is also seeing a $25 a month boost. Our entertainment fund is also seeing the same $25 a month increase. The house bucket is also getting a $25 bump. The house maintenance seems to be a never ending task. That accounts for $100 of the $160. The remaining $60 is split between increased charitable giving ($25) and general expense increases (escrow payment and insurance increases).
As I said, I would prefer a larger salary increase to a larger bonus, but I still won’t turn down any bonus the company wants to give me. This year was a good year, not the best year I am ever had, that came in 2013 when I received a $20,000 bonus. My bonus for my 2015 performance was $15,000. That was up slightly from last year and was a little more than I was expecting in general. It was a good gross number, but by the time it ends up in my hands is quite a bit lower.
I contribute 8% of the bonus to my 401k and the company matches that contribution. So, once taxes and the 401k contributions were taken out of my bonus, the net amount to me was $8,250. The wife and I get a small piece of that, basically half of our normal monthly fun money amount. The remaining was distributed among 9 different categories I track. They are essentially buckets for various spending that will occur during the year.
Examples are trips, house, food, Disney and capital improvements. The Disney category is for a planned trip possibly next year. I had been planning on it for the 2018, but my wife likes to keep me on my toes. We have been diverting a portion of the bonus over the past 3 years targeting a total of $10,000 for the trip. I don’t have anything to point to for where I came up with the $10,000 figure. I just figured that should be enough to do the trip and not have to worry about spending while we are at the park. The general trip category saw the largest allocation at $1,750. I am running a marathon out of state this year, so I needed to save for the expected expenses. The rest of the allocations were for either planned expenses coming up or were to plug some shortfalls after unexpected expenses over the last 12 months. The unexpected expenses were more along the lines of over spending in our entertainment category or kids categories by a few hundred dollars each for the year.
It is certainly nice to be rewarded for a job well done. I do like that about large corporations. It helps me to keep my budget in tack and to pad the reserves when necessary. Bonuses certainly helped me dig out of my financial hole years ago. Back then, any unexpected cash infusions was almost entirely used to eliminate date. Nowadays, the family is able to enjoy the bonuses a bit more. Did you get a raise or a bonus this year?