Increasing take Home Pay

As prices rise and the recession continues to linger, more and more people are looking for creative ways to increase their bottom line by way of their paycheck. The current instability of the economy makes it tough for the average worker to seek employment elsewhere for the prospect of higher pay, especially if job security is sound. In addition, bluntly asking for a pay raise that is not accompanied by greater responsibility may be viewed unfavorably by management.  This has been the case even for unionized workers who tend to have more leverage with employers than others.  It would seem that one’s hands would be tied; however, that simply is not the case.

Hourly employees are fortunate in that if a boost to the paycheck is needed, working a few hours overtime or forgoing a day off to pick up an additional shift may do the trick. For those that are strictly salaried employees, those options to beef up a paycheck simply don’t exist, which means you must get more creative than your hourly counterparts. Included here are just a few of the ways that anyone, hourly or salaried, can do just that:

– The easiest method for increasing take-home pay is to adjust payroll withholding exemptions. Many of us have been taught over the years to claim either zero or one exemption to guarantee not owing the IRS come tax season. What that does for most workers is provide for a tax refund. There is simply no good logic for allowing the government to have an interest-free loan at your expense. Not to mention that same courtesy is not extended if taxes are owed.  Take a moment to calculate the proper withholding level according to IRS guidelines and go from there. Visit your company’s payroll department and ask for a Form W-4 to make this adjustment.

– Be sure your filing status is correct. This is especially important for newly married people. You’d be amazed at the difference in withholding for single versus married. The moment you get married, head to the payroll office and make that change on your Form W-4.

– Head back to school.  In many professions, simply having more education increases your salary.  Teachers, for instance, are not only paid according years of experience, but also education beyond their bachelor’s degree.  Those in technology and healthcare fields also see boosts in income with more education under their hats.

– Offer a way to save the company money. Here’s an idea: is there a current job vacancy that you know how to do? If you’re able to pick up the extra duties and you know you can handle it, why not ask for a pay increase or stipend to pick up the work? Doing so would allow the company to save on costs not only related to the salary of the other position, but benefits and training as well.

– Opt out to medical and dental benefits if you can. Some organizations allow you to sign a waiver opting out of benefit plans, which saves you the cost of your portion of the premium.  As an added bonus, your employer may also give you a cash incentive for doing so, which sweetens the deal for the lucky few who pay nothing out of pocket towards their employer-provided insurance.  With medical insurance costing upwards of $4,000 per year for single coverage, employees opting out add up to big corporate savings. If a spouse has coverage and you can agree that he or she cover the insurance, you’re golden. Also take a look at some of the discount medical and dental savings plans on the market as an alternative.

– Make contributions to your medical and dental benefits plans tax-sheltered if your company allows.  If you are not able to eliminate these employer-provided benefits, this is an alternative way to impact your bottom line.  This option will reduce your taxable income and increase your take-home pay.  

– Trim or discontinue 401(k) contributions. Keep in mind this will not increase your take home pay dollar for dollar because these contributions are tax sheltered. The actual increase will be determined by your filing status and the number of exemptions that you have.  This is not the most popular option because of the implications on your financial future, but if you’re in a pinch today, it just may be worth it to take this option.

– Buy back vacation time. If this is an option for you, these days should be paid at your true daily rate. Employers usually place a limit on the number of days eligible to be bought back, so check with your human resources department for all the rules.

– Negotiate those sick days. If you normally get twelve sick days a year and you use only 2 or 3, ask if you can forego a number of them for an increase in pay. Different from vacation days, sick days are usually paid a flat rate regardless of salary, say $50 per day.

The tips included here are not meant to be surefire hits for all, but everyone should find at least one that works for their situation. Be creative and stay focused on increasing that take home pay and you are sure to be a winner!