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Q: How do you calculate gross income from a W-2 form?

Gross wages cannot always be found on a W-2 form, due to various pre-tax deductions. Instead, look at the gross amount listed on the employee’s final paycheck for the year.

Jun

2024

How to Calculate Gross Monthly Income From Biweekly Pay Stub

By Laurel Tincher | Financial Independence, Life & Career, relay | Comments Off

Gross income is the amount of money earned before any payroll deductions for taxes, insurance, retirement contributions, and such. To calculate gross monthly income from a biweekly paycheck, find the gross amount listed on the pay stub (usually the starting number). Multiply that figure by 26 (the number of paychecks received in a year), then divide by 12 (months in a year).

The calculation for gross monthly income can differ depending on paycheck frequency. Below we’ll show you how to calculate your gross pay for different payroll schedules.

Table of Contents

How to Calculate Monthly Pay From Biweekly Pay
How Many Bi-Weeks in a Year
The Different Types of Payment Periods
Pros and Cons of Biweekly vs Semimonthly Pay
The Takeaway

Key Points

• Gross monthly income is calculated by adding up all sources of income before deductions.

• It includes wages, salaries, tips, bonuses, commissions, rental income, and other forms of income.

• To calculate gross monthly income, add up the amounts earned from each income source.

• Gross monthly income is important for budgeting, loan applications, and determining affordability.

• It is essential to accurately calculate gross monthly income to make informed financial decisions.

How to Calculate Monthly Pay From Biweekly Pay

There are two different monthly pay figures to understand, gross and net. Each is useful in different situations. When you’re applying for a loan, most lenders use gross monthly income to determine your debt-to-income ratio (DTI). However, many people find it easier to budget based on net or take-home pay. A budget planner app can help you decide the best approach for your situation.

As we spelled out above, if you’re paid biweekly (every two weeks), the formula for gross monthly income is:

(Gross pay amount × 26) ÷ 12

Hourly workers can also use this next formula if they work a consistent number of hours per week:

(Hourly salary × weekly hours worked × 52) ÷ 12

To find net monthly pay, substitute the actual amount of your paycheck for the gross amount in the first formula.

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How Many Bi-Weeks in a Year

There are 26 biweekly pay periods in a year. Employees who get paid biweekly will receive 26 paychecks from January to December.

It’s important to note that receiving pay biweekly differs from receiving pay twice a month on the same dates. Workers who receive biweekly checks can’t just multiply one paycheck by two to find their monthly salary.

Employees who get paid twice a month — for instance, on the 15th and 30th — can find their monthly gross income simply by adding together the gross figures on their two monthly paychecks.

The Different Types of Payment Periods

The most common pay periods for employees are:

• Biweekly: Paid every other week, or 26 paychecks per year.

• Semimonthly: Paid twice a month on the same dates, or 24 checks per year.

• Weekly: Paid once a week, or 52 checks per year.

• Monthly: Paid once a month, or 12 checks per year.

Employees who receive biweekly pay get two checks or direct deposits each month, except for two months of the year when they receive three paychecks. Employees who are paid biweekly might get a paycheck every other Wednesday or Friday, or whatever day their employer chooses.

With semimonthly pay, an employee might get paid on the 15th and 30th of every month. There are always two paydays, for a total of 24 per year instead of 26.

An employee who gets paid twice a week is on a semiweekly schedule. This would entail eight paychecks each month.

Pros and Cons of Biweekly vs Semimonthly Pay

For employees, there are pros and cons to biweekly pay. Depending on their expenses and savings strategy, someone might prefer a biweekly or semimonthly schedule.

For most workers, the main pro to biweekly pay is the third “bonus” check they receive two months out of the year. By budgeting for two paychecks every month, workers can designate the occasional third check for special line items like vacations, holiday gifts, paying off debt, or boosting savings.

For others, biweekly checks just make budgeting and managing expenses more challenging. Semimonthly pay is preferable because it offers an accurate reflection of real monthly income.

Also, each semimonthly check can be dedicated to particular expenses. For example, the second check of the month can go to rent, utilities, and other housing costs, which are often due the first of the month.

Compared to weekly paychecks, both biweekly and semiweekly checks require better cash management on a weekly basis. For someone who lives paycheck to paycheck, biweekly pay periods might mean they run out of money before the next check arrives.

The Takeaway

To calculate gross monthly income from a biweekly paycheck, find the gross amount listed on the pay stub, multiply by 26, then divide by 12. (Do not use this formula if you’re paid twice a month on the same dates, rather than the same days of the week.) For your monthly net pay, substitute your net or take-home pay for the gross amount in the same calculation.

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FAQ

How do you convert biweekly pay to monthly income?

To calculate gross monthly income from a biweekly paycheck, find the gross amount listed on the pay stub (usually the starting number). Multiply that figure by 26 (the number of paychecks received in a year), then divide by 12 (months in a year).

How do I calculate my gross monthly income?

Gross monthly income is the total of all paychecks and income received in a month, including any side hustles, rental income, etc., but before taxes and other deductions.

How do you calculate gross income from a W-2 form?

Gross wages cannot always be found on a W-2 form due to various pre-tax deductions. Instead, look at the gross amount listed on the employee’s final paycheck for the year.

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Jun

2024

Tips for Overcoming Bad Financial Decisions

By Ashley Kilroy | Financial Independence, Life & Career, money | Comments Off

While bad financial decisions can set you back, it’s important to remember that mistakes can also be an opportunity to learn and grow. While you can’t go back and undo the things you’ve done or didn’t do (if only!), you can acknowledge where you went wrong and change your behavior moving forward.

Below, take a look at some of the most common financial missteps people make, as well as what can be done to overcome them.

15 Bad Financial Decisions

Here’s a look at where things can go wrong, and how you set them right.

1. Not Paying Down Your Credit Card Debt

Just making the minimum payment on your credit cards each month can drain your pockets and damage your credit. The reason: When you carry a balance, interest keeps on building, making the total balance higher and even more challenging to pay off. Debt also shows up on your credit report and can have a negative effect on your scores.

To break the pattern, consider putting any extra money toward the card with the highest interest rate, while paying the minimum on the rest. When that card is paid off, you can tackle the next-highest interest debt, and so, until you’re out of debt.

2. Putting Important Financial Decisions off to the Side

Delaying important financial decisions, such as saving, investing, and paying off debt, can cost you money and put your goals further out of reach. A good way to stop the procrastination cycle is to break down your financial goals into small to-dos that feel manageable. You might want to set aside time once a month to check in on your finances and make one small change that can help you get closer to your goals.

3. Not Protecting Personal Financial Information From Fraud

Identity theft and financial fraud are all too common these days, and not taking a few steps to protect your personal and financial information can come back to haunt you. The financial damages caused by fraud can last for months or even years. What’s more, the recovery process usually isn’t easy, and may even involve working with the IRS or Social Security Administration to clear your name.

To protect your information, it can be smart to regularly check your credit reports (and report any suspicious activity immediately). You’ll also want to avoid sharing your personal data unless absolutely necessary and never over public wifi.

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4. Overspending so You Can’t Save

Overspending means you’re spending everything you earn (and not putting anything into savings) or, worse, you’re spending more than you’re bringing in. This can be a costly financial mistake that puts your goals further from your grasp. It means you may be living just paycheck to paycheck.

To change course, you may want to take a look at the last three months of financial statements and assess exactly how much you are spending each month and on what. This can be eye-opening, and you may immediately see some easy ways where you can cut back. Any money you free up can then become money saved, and little by little, it will add up.

5. Not Having Any Backup Options

A recent study found that not even 44% of Americans could not afford an unexpected expense of $1,000 from their savings. Without an emergency cushion, many Americans are at risk of going into high-interest debt should they face an unexpected bill or any loss of income.

It’s generally recommended to have enough cash set aside to cover all your living expenses for three to six months. In some situations, this amount should be as much as 12 months. To get there, you may want to put a percentage (10%, for example) of your monthly take-home income into a high-yield savings account or online bank account — online banks often offer higher interest rates than traditional banks. If that doesn’t seem doable, it’s fine to start smaller and gradually work up. Consistently saving a modest amount, such as $25 per paycheck, can be a good habit to start.

6. Paying High Amounts on Multiple Monthly Subscriptions

Subscription streaming services, box deliveries, and apps that bill on a monthly basis can add up to a significant sum. And, since these service providers typically bill automatically, you may not even be fully aware of what you are paying for each month, or that you may be overpaying for some of these services.

To cut your monthly bills, go through your statements and tally up everything you are currently paying for on a recurring basis. Can anything go? Could you get a better deal on some of these services? It never hurts to shop around or call up a service provider and ask for a lower price.

7. Not Investing Any of Your Money

You may think you have to be rich or an expert on stocks to start investing, but this is a common money misconception. And one that can leave you ill prepared for the future.

While investing can be intimidating (and does come with some risk), there are easy ways to get started. If you don’t want to do the work of picking and choosing investments, for example, you might start investing with a robo-advisor. These are digital platforms that provide automated investment services based on your goals and tolerance for risk. Robo-advisors are typically inexpensive and require low opening balances.

8. Not Planning for Retirement

When you don’t plan for retirement, you forgo the factor of time that is key to achieving your goals. Giving your investments a long time to grow is vital to having a nest egg you can retire on. If your employer puts any matching funds towards your retirement fund, that can be a valuable boost, too.

However, there is more to retiring than starting an IRA or contributing to a 401k. You’ll also want to consider when you want to retire, what kind of lifestyle you will want to lead, and how much money you will need. This can help you determine how much you should be putting away each month starting now.

9. Making Small but Unnecessary Purchases

An iced cappuccino here, a pay-per-view there. These little extras may not seem like a big deal, but they add up. Consider that spending just $50 a week eating out costs you $2,600 a year. That sum could go a long way toward paying off your credit card or car and help you take a big step toward achieving financial freedom.

To curb impulse buys and cut back on spending, you might want to set a weekly spending limit for “extras.” (Yes, you are earmarking some money for fun little splurges.) To keep to your limit, consider taking out that amount of cash at the beginning of the week and leaving your credit card at home. That way, when the money’s gone, you can’t spend any more.

10. Allowing Your Credit Score to Drop

A low credit score can keep you from obtaining competitive rates on loans and credit cards. It could block you from housing and employment opportunities. Poor credit can also be costly, since the financing options available to you will be more expensive.

To start building a better credit profile, you may want to put all your bills on autopay, so you never make a late payment. Paying down any credit card debt can also be helpful, since how much of your available credit you are using also factors into your score. If you have an old credit card you rarely use, it can be a good idea to still keep that account open, since the length of your credit history is another factor that impacts credit scores.

11. Not Making Budgeting an Important Priority in Your Life

Budget may sound like a bad word. But in truth, not tracking how much money you’re making versus how much you’re spending can be a bad financial decision with many repercussions, including never getting ahead and having constant money stress.

Making a budget, on the other hand, can mean the difference between staying in debt vs. getting out of it, remaining in your rental vs. becoming a homeowner, and working overtime vs. going on vacation. Convinced? You can start budgeting by assessing what’s currently coming in and out of your bank each month, and making a plan for how you want to allocate your income, making sure that some money goes to savings each month. There are multiple budget methods and apps; take some time to experiment until you find the right fit.

12. Financing Purchases Rather Than Saving for Them

While some purchases, such as a house, usually require financing, many others can be achieved through saving instead of going into debt. Whether you want a new laptop or a high-end refrigerator, financing can make a big purchase more expensive. Plus, the ease of buying on credit can make you think you can afford a lot more than your income allows.

A wiser strategy can be to determine what you want to buy, how much it will cost, and when you, ideally, want to get it. You can then start putting money aside each month and when you meet your goal, buy the item with cash.

13. Using Savings to Pay Off Debt

It may seem counterintuitive, but paying off debt with your savings is not always a good idea. Draining your bank account can leave you vulnerable to financial emergencies, causing you to plunge back into debt.

A better strategy can be to use a debt repayment method such as the snowball method. This involves putting extra money toward the smallest revolving debt balance each month, while continuing to make minimum monthly payments on your other debt. When the smallest balance is paid off, you can move on to the next smallest balance, and so on. This can help you start saving money right away and motivate you to keep going.

14. Withdrawing From Retirement Savings Early

It can be exciting to watch your retirement account grow throughout your career. And, it can be tempting to want to touch that money before you are officially “retired.” However, taking early distributions from your retirement account can be among the worst money mistakes you can make. For one reason, you will likely have to pay penalties and income tax on the amount you withdraw. For another, you will lose the opportunity to continue accruing gains on that money.

Remember: The main benefit of a retirement account is to let your money compound and grow over time. When you withdraw retirement funds early, you lose that opportunity to secure your future and take a big step backward.

15. Not Recognizing and Avoiding Scams

Yes, it’s getting harder to detect scams; they are becoming ever more sophisticated. And they prey upon both young and old consumers. To avoid scams, you’ll want to be suspicious of any text, email, or snail mail offer that seems too good to be true, and avoid clicking on any links in an email or text claiming to be from one of your financial institutions. If you receive this kind of message, a smart move is to call customer service or log onto your online accounts to see if the information in the email or text is correct.

Also beware of appeals with a sense of urgency; say, that you must pay a fee immediately to unlock your account or receive delivery of an important package.

Since scams are constantly evolving, it’s worth your time to search online every six months or a year to see what’s new and make sure you have your guard up as much as possible.

Tips for Recovering From Bad Financial Decisions

If you’ve made some poor financial decisions, you might feel embarrassed or scared. It can help to remember that one accident or blunder doesn’t spell doom for your finances forever. Here are some ways you can start turning things around.

Acknowledging Bad Financial Decisions and Taking Action

Even if you’ve made one of the worst money mistakes, a smart first step is to simply acknowledge your misstep, take a step back, and at first do nothing. A rash attempt to fix a problem can actually make it worse. Once you’ve accepted and assessed the damage, you can put a recovery plan into action.

Taking Steps One at a Time

Building your credit or paying off a mountain of credit card debt won’t happen overnight. And, if you set your sights too high, you might be tempted to give up before you even get started. A better bet is to break your larger goals into a series of small, achievable steps. Each time you accomplish one of these mini-goals, you’ll likely feel a sense of accomplishment. This can motivate you to save money and crush other goals, little by little.

Do Not Shame Yourself, but Forgive Yourself

Everyone makes mistakes. Even if you have been doing your best, it’s possible to have a credit card balance get out of hand or have your identity stolen after you accidentally click on a phishing text link.

Forgiving yourself is crucial to your emotional health and will help you take positive action to undo your mistake. A bad decision doesn’t have to define you; instead, it can be something you learn from and overcome. The mental energy spent beating yourself up can be better used to help address the problem.

Improving Your Money Mindset

If you have a positive money mindset, you will likely make better money decisions. Having a negative view, on the other hand, can keep you from setting goals and taking positive action. For example, if you think you will never get out of debt, you may not feel motivated to even try. However, putting a positive spin on the situation — that, with a plan, you will be able to one day be debt-free — can motivate you to start (and keep) attacking your debt.

The Takeaway

Though everyone tries to do their best with their money, mistakes happen all the time. No one likes losing money, but it’s vital to remember that one or even several financial slipups can be overcome by keeping a positive mindset and taking the recovery process one step at a time.

If you want to gain better control of your finances, help is available, starting with the right banking partner.

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FAQ

What are the consequences of poor financial decisions?

Poor financial decisions can lead to a low credit score, lack of savings, and overreliance on debt. It can also make you vulnerable to financial emergencies and limit your access to loans and credit cards with favorable rates and terms.

Do bad financial decisions lead to bad financial habits?

Yes, if left unaddressed, bad financial decisions can lead to bad financial habits. Not putting money aside for emergencies, for example, can cause you to rely on your credit card to cover a large, unexpected expense, and lead to a cycle of high interest debt that can be hard to get out of.

Can bad financial decisions be overcome?

Yes, you can overcome bad financial decisions by identifying where you went wrong and coming up with a realistic plan to address the problem moving forward. You can also likely benefit from budgeting and managing debt well.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Jun

2024

What Is Earned Income vs Unearned Income?

By Austin Kilham | Financial Independence, Life & Career, relay | Comments Off

There are two basic types of income: earned and unearned. Earned income is the money you make from working, and unearned income is money you receive that isn’t tied to a business or job.

The difference between these two types of income is very important when it comes to saving for retirement and paying your taxes. Here’s what you need to know about each of them, and how they affect your finances.

What Is Unearned Income?

Unearned income is a type of passive income. It’s money you make without working or performing some kind of professional service. For example, money you get from investing, such as dividends, interest, and capital gains is unearned income.

Other types of unearned income include:

• Retirement account distributions from a 401(k), pension, or annuity

• Money you received in unemployment benefits

• Taxable social security benefits

• Money received from the cancellation of debt (such as student loans that are forgiven)

• Distributions of any unearned income from a trust

• Alimony payments

• Gambling and lottery winnings

Dividends from investments in the stock market and interest are two of the most common forms of unearned income. Dividends are paid when a company shares a portion of its profits with stockholders. They may be paid on a monthly, quarterly, semi-annual, or annual basis.

Interest is usually generated from interest-bearing accounts, including savings accounts, checking accounts, money market accounts, and certificates of deposit (CDs).

How Is Earned Income Different From Unearned Income?

Earned income is the money you make from a job. Any money you earn from an employer — including wages, fees, and tips in which income taxes are withheld — counts as earned income.

If you’re part of the freelance economy and the companies you work for don’t withhold taxes, those wages still count as earned income. These could be wages earned by performing professional or creative services, driving a car for a ride share service, or running errands.

Money you make from self-employment — if you own your own business, for example — also counts as earned income, as does money you earn from a side hustle.

Other types of earned income include benefits from a union strike, disability benefits you receive before you reach full retirement age, and nontaxable combat pay. This guide can help you learn about all the different types of income there are.

You can keep tabs on all the types of income you have by tracking your checking, savings, investment, and retirement accounts in one place with an online money tracker. It allows you to organize your accounts on a single dashboard, as well as monitor your credit score and budget for financial goals.

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How Income Types Affect Taxes

All earned income is taxed at your usual income tax rate. Taxes on unearned income are more complicated and depend on what type of unearned income you have, including:

Interest

Interest, which is unearned income from things like bank accounts and CDs, is taxed the same as earned income that you work for.

Dividends

Dividends from investments fall into two categories: qualified and non-qualified. Generally speaking, qualified dividends are those paid to you by a company in the U.S. or a qualified foreign company, and are taxed at a lower rate. Non-qualified dividends don’t meet IRS requirements to qualify for the lower tax rate and are taxed at the same rate as ordinary income.

Capital Gains

Investments that are sold at a profit are subject to capital gains taxes. If you held the investment for less than a year, your profits are subject to short-term capital gains rates, which are equal to your normal income tax rate. If you kept the investment for a year or more, it’s subject to long-term capital gains rates, which means it will be taxed at 0%, 15% or 20%, depending on your taxable income and filing status. The higher your taxable income, the higher your rate.

Social Security

If your income is more than $25,000 a year for individuals or $32,000 a year for married couples filing jointly, you will pay federal income tax on a portion of your Social Security benefits. You’ll be taxed on up to 50% of your benefits if your income is between $25,000 and $34,000 for an individual, or $32,000 to $44,000 for a married couple. And you’ll be taxed on up to 85% of your benefit if your income is more than that.

Alimony

As a result of the Tax Cuts and Jobs Act of 2017, alimony payments that are part of divorce agreements made after January 1, 2019, are not taxable by the person who is paying the alimony, nor are they taxable for the person receiving the alimony.

Gambling Winnings

Money you earn from gambling — including winnings from casinos, lotteries, raffles, and horse races — are all fully taxable. This applies not only to cash, but also to prizes like vacations and cars, which are taxed at their fair market value.

Debt Cancellation

If you have a debt that is canceled or forgiven for less than the amount you were supposed to pay, then the amount of the canceled debt is subject to tax and you must report it on your tax return.

If you have debts to pay off, debt payoff planning can help you pay what you owe.

How Earned vs. Unearned Income Affects Retirement Savings

Retirement accounts, including 401(k)s, IRAs, and the Roth versions of both, provide tax advantages that help boost the amount that you are able to save.

For example, 401(k) contributions are made with pre-tax dollars, which can then be invested in the account. The investments are then allowed to grow tax deferred until withdrawals are made in retirement, and then they are subject to income tax. Contributions to Roth accounts are made with after-tax dollars. These grow tax free, and withdrawals made in retirement are not subject to income tax.

You must fund your retirement accounts with earned income. You cannot use unearned sources of income to make contributions.

There are certain exceptions to this rule. If you’re married and you file a joint return with your spouse and you don’t have taxable compensation, you may be able to contribute to an IRA as long as your spouse did have taxable compensation.

The Takeaway

The difference between earned income and unearned income is an important distinction to comprehend, especially when it comes to paying your taxes. Unearned income, which is income you make not from a job but through other means, such as investments, can be taxed at different rates, depending on what type of unearned income it is. Make sure you understand yours — and the tax implications. Doing so can have a big impact on how you save for your future.

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FAQ

Why do I need to know the difference between earned and unearned income?

It’s important to understand the difference between earned and unearned income because the two may be taxed differently. Also, in most cases, you must use earned income to fund your retirement accounts.

What is an example of unearned income?

Unearned income is money you receive without working for it. Interest, such as that from a bank account, and dividend payments are two of the most common types of unearned income.

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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q224-1921188-V1

Jun

2024

What Is Competitive Pay and How to Negotiate For It

What Competitive Pay Is and How to Negotiate for It

By Anil Sharma | Financial Independence, Life & Career, relay | Comments Off

“Competitive pay” is a term commonly used among employers looking to attract qualified candidates to their business. Offering competitive pay means providing a compensation level that is equal to or above the market rate for a given position, geography, or industry.

Competitive pay typically includes base salary as well as additional employment benefits such as a signing bonus, health insurance, retirement benefits, or stock options offered to an employee.

Why Is Competitive Pay Important?

In highly competitive job fields, or when there is a shortage of talent, offering competitive pay can be a powerful lever for employers to attract and retain highly qualified employees. At the same time, employees who are in high demand might choose to seek out competitive pay in order to earn more than their counterparts at other companies.

Competitive pay is ultimately a measure of an employee or job candidate’s value to the business, and is something that can be offered by an employer or negotiated by an employee or candidate.

But whatever your take-home pay is, a money tracker can help you monitor your spending and provide valuable financial insights.

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What Determines Competitive Pay?

Competitive pay rates can be determined by a variety of factors:

Location

Where you are physically located can greatly impact the competitiveness of the pay you are offered. For example, an employee in a metropolitan area like New York or San Francisco with a higher cost of living may be able to earn more than a counterpart in a more affordable geographical area. Certain states also have higher minimum wage standards, which can increase the average compensation for any job offered within that state.

Level of Education and Experience

Many jobs will offer competitive pay commensurate with a candidate’s education and experience. That means that a candidate with a college degree and 10 years of industry experience may be offered higher compensation than someone with no degree and fewer years of experience. Candidates with specialized degrees or certifications can sometimes use that to negotiate more-competitive pay.

Job Title and Industry

Most job titles and industries will have a baseline market pay rate that employers use to guide their job offerings and employee salaries. If you want to compare a job offer with the market, you can find market pay rates for most jobs on the Bureau of Labor of Statistics website or through websites like Indeed and Glassdoor.

Market Demand

One of the biggest drivers of competitive pay is the overall supply and demand for a job in the market. If a job is highly in demand, either due to a shortage of workers or a sudden increase in the number of available jobs, compensation for that role may become more competitive. Candidates can potentially use that to their advantage when applying to jobs and negotiating salaries with employers.

Competitor Salaries

Similarly, when multiple companies in the same or adjacent industries are competing for employees, they may offer more competitive compensation packages to try and win over prospective job candidates.

Minimum vs. Competitive Wages: How They’re Different

While competitive wages are offered at the discretion of employers, minimum wage is the minimum hourly pay rate under federal law. States can also establish and enforce minimum wage requirements for certain jobs or industries.

Like competitive pay, minimum wage typically takes into consideration living costs, geography, and job titles or industries. However, it tends not to change as often or dramatically as competitive wages. In fact, the current federal minimum wage of $7.25 per hour has not changed since 2009. Also, minimum wage only takes into consideration base salary, whereas competitive pay includes other benefits and forms of compensation, such as signing bonuses.

Examples of Competitive-Paying Jobs

Competitive pay rates are constantly shifting, especially as the market for talent becomes increasingly competitive. However, here are the some of the most competitive-paying jobs in 2023 — the most recent data available from the BLS:

Cardiologists

• Average annual salary: $423,250

Computer and Information Systems Managers

• Average annual salary: $180,720

Lawyers

• Average annual salary: $176,470

Financial Managers

• Average annual salary: $166,050

Physicists

• Average annual salary: $158,270

Recommended: The Highest-Paying Jobs by State

How to Negotiate for More Competitive Pay

Whether you’re applying for a new job or reconsidering your current employment situation, negotiating competitive pay is an important part of getting paid what you believe you are worth. There isn’t an exact formula for negotiating higher pay, and it’s important to take a methodical approach that considers both your needs and the perspective of your employer. Here are five strategies that can help you in the course of negotiating competitive pay:

1. Establish your priorities

Going into a pay negotiation, you should think about what you would need financially to consider joining or staying with a company. You’ll want to determine your needs, including any debt you may be paying off — a online budget planner can be a useful resource. Then once you have a number in mind, try to identify a compensation package that meets your financial requirements.

Competitive pay can also mean different things to different employees. For some, it may mean a higher base salary, while others may want other perks like assistance in paying off college tuition or student loan debt, greater workplace benefits, or better health coverage. Identifying exactly what you need is important for deciding when it makes sense to push back or walk away from a negotiation.

2. Build Your Case

Even in competitive markets, an employer may not be willing to meet your salary or benefits requirements. However, going into that conversation with evidence and clear reasoning for why you are asking for more competitive pay can help support your case.

You’ll want to clearly show why you believe your compensation isn’t as competitive as you’d like it to be, due to the fact that you’ve been working harder, delivering greater value to the business, or have incurred higher living costs.

3. Know Your Pay Rate in the Market

Before negotiating, it’s also important to research how the competitive rate for your specific job title or industry has changed. Or, if you’ve suddenly taken on additional responsibilities outside of your core job function, you may want to look at what similar employees in those roles are getting paid and factor that into your pay rate. All of that data will help you to know what you’re worth as an employee and be able to communicate it to your employer.

The Takeaway

“Competitive pay” is a term commonly used among employers to refer to a compensation level that is equal to or above the market rate for a given position, geography, or industry. Other factors that help determine competitive pay include a candidate’s education and experience, and market demand.

SoFi helps you stay on top of your finances.

FAQ

Is competitive pay a red flag?

“Competitive pay” has become an industry buzzword used by many employers on their job postings and websites. While seeing “competitive pay” on a job posting isn’t a red flag, it’s still important to conduct your own research to ensure pay rates are competitive with similar industries, geographies, and employers.

Does competitive pay come with good benefits?

Competitive pay does not necessarily come with good benefits like 401(k) matching, health insurance, or paid time off. However, those benefits are becoming increasingly important for job seekers. When analyzing competitive pay, it’s important to look at an employer’s full compensation package (benefits and salary) to ensure it meets your needs.

Photo credit: iStock/insta_photos

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q224-1921242-V1

Jun

2024

25 High-Paying Trade Jobs in Demand

By Anil Sharma | Building Your Career, Life & Career, relay | Comments Off

With the cost of higher education out of reach for many, more young people are flocking to high-paying trade jobs that don’t require a bachelor’s degree. Many of these jobs not only pay well, but are typically in high demand through unpredictable job markets or economic conditions.

What Is a Trade Job?

A trade job is a profession that doesn’t require a college degree, but rather a specialized skill or skill set obtained through a trade school or on-the-job experience and training. Popular trade jobs include construction managers, technicians, dental hygienists, mechanics, commercial pilots, and real estate brokers.

Pros of a Skilled Trade Job

A skilled trade job can be an attractive career path for a couple of reasons:

Educational Requirements

Unlike careers that require a college degree, which can cost hundreds of thousands of dollars and take four years to complete, trade jobs can often be obtained with less than two years of specialized education and at a fraction of the cost. Some trade jobs do not require any supplemental education at all, allowing trade workers to earn a living without being saddled by any student loan debt.

Recommended: Is the Average College Tuition Rising?

Job Security

Many trade jobs are in high demand due to the specialized knowledge and skilled physical labor needed to perform them. They are also potentially at lower risk of outsourcing or automation because they require a physically present human.

Cons of a Skilled Trade Job

On the other hand, there are negative connotations with some trade jobs, including:

Physically Demanding

Trade jobs that involve a lot of labor, like HVAC technicians, construction workers, and mechanics, can take a physical toll over the course of a long career.

Potentially Dangerous

Certain trade jobs have high injury and mortality rates, particularly ones that involve the operation of heavy machinery or working in hazardous environments.

25 Trade Jobs That Make the Most Money

Despite conventional wisdom that a bachelor’s or master’s degree is required to earn a good salary, trade jobs can pay very well. In fact, some of the highest-paying jobs in certain states are skilled trades.

Here are 25 of the highest-paying trade jobs in 2023, according to data from the U.S. Bureau of Labor Statistics:

1. Transportation, Storage, and Distribution Manager

• 2023 Median Annual Salary: $99,200

• Requirements: High school diploma or equivalent; 5+ years of work experience

• Job Description: Supervising and coordinating the transportation, storage, testing, and shipping of materials or products in accordance with government regulations.

• Duties:

◦ Supervising workers involved in receiving or shipping

◦ Inspecting warehouse and equipment safety

◦ Analyzing logistics and collaborating with other departments

2. Elevator/Escalator Installers & Repairer

• 2023 Median Annual Salary: $102,420

• Requirements: High school diploma or equivalent; apprenticeship; license (certain states)

• Job Description: Assemble, install, maintain, and fix elevators, escalators, chairlifts and other moving walkways and equipment. In addition to understanding the mechanics and components of each system, they are typically involved in the physical repair or replacement of parts, as well as testing equipment to ensure it meets specifications.

• Duties:

◦ Assembling elevators, escalators, and similar units

◦ Conducting preventative maintenance and inspections

◦ Maintaining service records

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3. Nuclear Power Reactor Operator

• 2023 Median Annual Salary: $120,350

• Requirements: High school diploma or equivalent; long-term on-the-job training; U.S. Nuclear Regulatory Commission license

• Job Description: Responsible for controlling and maintaining the systems that generate and distribute power to businesses, homes, or factories. This can include electricity generated through gas, nuclear, hydroelectric, wind, or solar energy.

• Duties:

◦ Monitoring voltage and electricity grids

◦ Adjusting control rods and electricity output

◦ Recording systems data

4. Radiation Therapist

• 2023 Median Annual Salary: $98,300

• Requirements: Associate degree (preferred) or certificate; state and national license

• Job Description: Administer radiation therapy to patients with cancer and other illnesses.

• Duties:

◦ Explain treatment plans to patients

◦ Calibrate and operate radiation machinery

◦ Monitor patient and keep records of treatment

5. Subway and Streetcar Operator

• 2023 Median Annual Salary: $84,270

• Requirements: High school diploma or equivalent; moderate on-the-job training; local transit training program (varies by location)

• Job Description: Operate subways and aboveground street cars, ensuring passengers safely move from one location to another.

• Duties:

◦ Operate train controls

◦ Make announcements and provide verbal directions to passengers

◦ Ensure overall passenger safety

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6. Nuclear Medicine Technologist

• 2023 Median Annual Salary: $92,500

• Requirements: Associate degree from an accredited nuclear medicine technology program; state license; long-term on-the-job training

• Job Description: Prepare and administer radioactive drugs for imaging or treatment, typically within hospitals, medical labs, and care centers.

• Duties:

◦ Explain medical procedures to patients

◦ Prep and administer drugs to patients

◦ Maintain and operate imaging equipment

7. Gas Plant Operator

• 2023 Median Annual Salary: $82,560

• Requirements: High school diploma or equivalent; long-term on-the-job training

• Job Description: Oversee the day-to-day operations of industrial power plants used by utilities, oil and gas, and manufacturing companies.

• Duties:

◦ Maintaining equipment and machinery

◦ Ensuring compliance with safety and regulatory standards

◦ Supervising employees and contractors at the plant

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8. Dental Hygienist

• 2023 Median Annual Salary: $87,530

• Education Requirements: Associate degree; state license

• Job Description: Examine patients for oral diseases and provide preventative care and education about oral hygiene.

• Duties:

◦ Taking dental x-rays

◦ Assisting dentists in providing teeth cleaning and plaque removal

◦ Educating patients about oral hygiene techniques

9. Sonography Technician

• 2023 Median Annual Salary: $81,350

• Requirements: Associate degree; state license

• Job Description: Operate sonographs that produce images of the inside of a body in order to assess and diagnose medical conditions.

• Duties:

◦ Prepping and administering sonograph exams

◦ Reviewing images and test results for quality

◦ Analyzing diagnostic information and providing summaries for physicians

10. Electrical Line Installer and Repairer

• 2023 Median Annual Salary: $85,420

• Requirements: High school diploma or equivalent; long-term on-the-job training

• Job Description: Install and repair electrical power systems and telecommunications systems.

• Duties:

◦ Installing, inspecting, and testing power lines, and equipment

◦ Identifying defective devices, transformers, and switches

◦ Stringing power lines between buildings and structures

11. Construction Manager

• 2023 Median Annual Salary: $104,900

• Requirements: High school diploma or equivalent; 5+ years of experience

• Job Description: Supervise and coordinate the activities of construction workers.

• Duties:

◦ Overseeing construction projects from start to finish

◦ Scheduling and supervising on-site contractors

◦ Preparing and monitoring budgets

12. Aircraft Technician

• 2023 Median Annual Salary: $75,400

• Requirements: Certificate of completion from a Part 147 FAA-approved aviation maintenance technician school

• Job Description: Repair and perform maintenance on aircraft and aircraft equipment.

• Duties:

◦ Diagnosing mechanical and electrical issues

◦ Repairing aircraft components

◦ Testing aircraft parts with diagnostic equipment

13. Boilermaker

• 2023 Median Annual Salary: $71,140

• Requirements: High school diploma or equivalent; apprenticeship

• Job Description: Assemble, maintain, and repair boilers, vats, or other containers used to hold liquids and gas.

• Duties:

◦ Reading blueprints to determine where to position boiler parts

◦ Assembling boiler tankers using welding machines

◦ Cleaning boiling vats and replacing broken valves and pipes

14. Wellhead Pumper

• 2023 Median Annual Salary: $71,830

• Requirements: High school diploma or equivalent; moderate on-the-job training

• Job Description: Operate power pumps and equipment used to extract oil or gas from an oil field well.

• Duties:

◦ Assembling pumps and attach hoses to wellheads

◦ Operating pumps and monitoring flow

◦ Transferring oil to storage tank or truck

15. Electronic Engineering Technologist

• 2023 Median Annual Salary: $72,800

• Requirements: Associate degree (preferred); certificate from accredited program

• Job Description: Assist electrical engineers with the design and development of communications equipment, computers, medical devices, and other electric-powered equipment.

• Duties:

◦ Designing and assembling electrical systems

◦ Observing onsite systems placement and performance

◦ Performing quality control and identify issues

16. Real Estate Agents

• 2023 Median Annual Salary: $54,300

• Requirements: High school diploma or equivalent; licensing exam

• Job Description: Help clients buy, sell, or rent their properties.

• Duties:

◦ Generating lists of properties for sale or rent and showing them to clients

◦ Advising clients on prices, mortgages, and market conditions

◦ Facilitating buyer/seller negotiations and final purchase or rental agreements

17. Respiratory Therapist

• 2023 Median Annual Salary: $77,960

• Requirements: Associate degree

• Job Description: Provide care for patients having trouble breathing.

• Duties:

◦ Examining patients and recording symptoms and conditions

◦ Consulting with physicians on treatment

◦ Performing diagnostic tests

18. Building Inspector

• 2023 Median Annual Salary: $67,700

• Requirements: High school diploma or equivalent

• Job Description: Review building plans to ensure construction meets local and national regulations and ordinances.

• Duties:

◦ Monitoring construction to ensure compliance

◦ Inspecting electrical and plumbing systems to ensure they are up to code

◦ Issuing violations for non-compliant work

19. Millwright

• 2023 Median Annual Salary: $62,980

• Requirements: High school diploma or equivalent

• Job Description: Install, dismantle, repair, reassemble, and move machinery in factories, power plants, and construction sites.

• Duties:

◦ Repair or replace malfunctioning equipment

◦ Clean, adjust, and calibrate new machinery

◦ Move machinery and equipment

20. Electrician

• 2023 Median Annual Salary: $61,590

• Requirements: High school diploma or equivalent; apprenticeship

• Job Description: Install, maintain, and repair electrical power, communications, lighting, and control systems.

• Duties:

◦ Identify and repair electrical problems

◦ Install wiring and equipment for electrical systems

◦ Ensure compliance with National Electrical Code

21. Plumber

• 2023 Median Annual Salary: $61,550

• Requirements: High school diploma or equivalent; apprenticeship

• Job Description: Install and repair gas and water piping systems in homes, factories, and businesses.

• Duties:

◦ Identify and repair plumbing problems

◦ Installing pipes and plumbing fixtures

◦ Clean drains, remove obstructions, and repair or replace broken pipes and fixtures

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22. Mining Roof Bolter

• 2023 Median Annual Salary: $66,660

• Requirements: High school diploma or equivalent; moderate on-the-job training

• Job Description: Operate machinery to install roof supporting bolts in underground mines.

• Duties:

◦ Drill bolt holes into roofs

◦ Perform safety checks on bolting equipments

◦ Extract loose rock from bolting support

23. Broadcast, Sound, and Video Technician

• 2023 Median Annual Salary: $54,160

• Requirements: High school diploma or equivalent; moderate on-the-job training

• Job Description: Operate and maintain electrical equipment used for television broadcast, radio programs, live concerts, and films.

• Duties:

◦ Setting up and operating equipment

◦ Monitoring and adjusting audio and visual quality

◦ Repairing equipment and fixing recording issues

24. HVACR Technician

• 2023 Median Annual Salary: $57,300

• Requirements: High school diploma or equivalent; 6 months to 2 years at a trade school or community college that offers heating, air conditioning, and registration programs.

• Job Description: Install and perform maintenance on heating, ventilation, cooling and registration systems for buildings and private residences.

• Duties:

◦ Installing, testing, and repairing HVACR systems

◦ Replacing or repairing defective parts

◦ Conducting overall system maintenance and performance improvements

25. Masonry Worker

• 2023 Median Annual Salary: $53,010

• Requirements: High school diploma or equivalent; apprenticeship or on-the-job training

• Job Description: Use brick, concrete, and natural and manmade stones to build structures, walls, or walkways.

• Duties:

◦ Design blueprints and calculate materials needed

◦ Break or resize materials into required shape

◦ Align, construct and polish finished structures

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The Takeaway

Many trade jobs can offer competitive pay and job security, without a significant upfront educational cost. Moreover, they provide an opportunity to help make a difference by solving real world problems.

Choosing the right career path is an important step toward achieving your financial goals. It’s just as important to practice smart financial habits, like setting spending limits, staying on top of your credit score, and establishing long-term goals.

See exactly how your money comes and goes at a glance.

FAQ

What skilled trades are in demand?

According to the Bureau of Labor Statistics, medical sonographers, respiratory therapists, industrial machinery mechanics, security and fire alarm installers are expected to experience the greatest job growth over the next ten years.

What are some of the best trades to learn that pay well?

Transportation managers, elevator installers, nuclear power reactor operators, and radiation therapists all earn a median salary above $80,000.

What are high paying trade jobs that require no degree?

HVAC technicians, real estate agents, subway operators, and plumbers all pay above-average salaries and require no formal degree.

Photo credit: iStock/dima_sidelnikov

SORL-Q224-1921116-V1

How to Calculate Gross Monthly Income From Biweekly Pay Stub

How to Calculate Monthly Pay From Biweekly Pay

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How Many Bi-Weeks in a Year

The Different Types of Payment Periods

Pros and Cons of Biweekly vs Semimonthly Pay

The Takeaway

FAQ

How do you convert biweekly pay to monthly income?

How do I calculate my gross monthly income?

How do you calculate gross income from a W-2 form?

Tips for Overcoming Bad Financial Decisions

15 Bad Financial Decisions

1. Not Paying Down Your Credit Card Debt

2. Putting Important Financial Decisions off to the Side

3. Not Protecting Personal Financial Information From Fraud

4. Overspending so You Can’t Save

5. Not Having Any Backup Options

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6. Paying High Amounts on Multiple Monthly Subscriptions

7. Not Investing Any of Your Money

8. Not Planning for Retirement

9. Making Small but Unnecessary Purchases

10. Allowing Your Credit Score to Drop

11. Not Making Budgeting an Important Priority in Your Life

12. Financing Purchases Rather Than Saving for Them

13. Using Savings to Pay Off Debt

14. Withdrawing From Retirement Savings Early

15. Not Recognizing and Avoiding Scams

Tips for Recovering From Bad Financial Decisions

Acknowledging Bad Financial Decisions and Taking Action

Taking Steps One at a Time

Do Not Shame Yourself, but Forgive Yourself

Improving Your Money Mindset

The Takeaway

FAQ

What are the consequences of poor financial decisions?

Do bad financial decisions lead to bad financial habits?

Can bad financial decisions be overcome?

What Is Earned Income vs Unearned Income?

What Is Unearned Income?

How Is Earned Income Different From Unearned Income?

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How Income Types Affect Taxes

Interest

Dividends

Capital Gains

Social Security

Alimony

Gambling Winnings

Debt Cancellation

How Earned vs. Unearned Income Affects Retirement Savings

The Takeaway

FAQ

Why do I need to know the difference between earned and unearned income?

What is an example of unearned income?

What Competitive Pay Is and How to Negotiate for It

Why Is Competitive Pay Important?

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What Determines Competitive Pay?

Location

Level of Education and Experience

Job Title and Industry

Market Demand

Competitor Salaries

Minimum vs. Competitive Wages: How They’re Different

Examples of Competitive-Paying Jobs

Cardiologists

Computer and Information Systems Managers

Lawyers

Financial Managers

Physicists

How to Negotiate for More Competitive Pay

1. Establish your priorities

2. Build Your Case

3. Know Your Pay Rate in the Market

The Takeaway

Student Loan
Refinancing

Personal
Loans

Online
Investments