Last week, I had started my “making a 6 figure income” series with the main source of income for most of us: our employers. Getting rich or making 6 figures doesn’t happen overnight. It requires a lot of hard work and more importantly, a consistent effort. Getting a good job and looking for promotions on an annual basis is the first step to obtaining a higher salary (this is when you can get in the very fast lane, if I was able to get 3 promotions in 4 years, anybody can do it, trust me on this!) .
However, your employer can offer you much more than a considerable base salary. He can open the doors to many other sources of income that will help you achieve the “magical” 6 figures.
Before I continue on that path, I wanted to share how my sources of income were distributed to make a little bit more than $100,000 in 2009:
As you can see, most of my income came from my base salary. However, there is also a big part from my bonus and other employee benefits. And this is the part I want to focus on today.
Selecting a position with Individual Performance Based Bonuses
The last 4 years, I had been working in a structure where our bonus was company performance based or also known as “Team bonus”. What I don’t like about this structure is that your bonus is being decreased by people on your team who don’t work very hard. Unfortunately, there are always a few lazy people concentrated on finding a good deal on Expedia for their next vacation than on actually doing the job! This is the main reason why I decided to switch to a job with individual performance based bonuses.
Optimizing other employee benefits
Sure you can dabble with insurance and dental care. However, this becomes too complicated for me to consider so I don’t take them into consideration in my overall income. However, I want to concentrate on other employee benefits such as the deferred profit sharing plan.
This is a very interesting part as the employer tends to put money in it too. I actually put the maximum I am allowed in my company’s stock (which is 8% of my base salary) and they add an additional 2% (so 25% of my contribution). In order to not be over exposed in my portfolio, I cash in my shares once a year. I still get more than a thousand dollar in my pocket through this method.
Another very interesting point is the rebate I get on my mortgage and line of credit since I work for a bank. This would make my decision much tougher if I ever wanted to quit. Along with the money I save, it’s also come down to a psychological effect.
Without making much noise, those benefits represent slightly over 4% of my 6 figure income. So it is definitely worthwhile spending a few minutes on what your employer has to offer in term of marginal benefits 😉
I know that most of you read this series to know about my alternative source of income and how I manage it despite my busy routine. This is why I will spend more time on those aspect in the coming weeks 😉 Stay tuned next week for the next post on the series 😉
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