plonkee money an english-er's thoughts on personal finance

December 20, 2007

more compounding benefits

Filed under: education and career — Tags: , , — plonkee @ 12:00 pm

I have no life, so last Saturday night I was doing some filing I found that I’d kept all my salary award letters since I graduated from University.

I enjoy my job, but I’m unlikely to ever set the business world on fire. It took me quite a while to find my place at work. If you’d asked me a a couple of years ago whether I’d be still there now, I’d have said it was unlikely. It probably shouldn’t come as a surprise for you to know then, that I’ve been slightly on the slower side of average in getting promoted (although I’m planning on changing that), and my pay rises have been solid but not spectacular.

However, looking at a small chart of my salary compared to my initial starting salary over time I can see that I earn a lot more now than I used to:

Salary Chart

Actually, I now earn about a third more than I did 5 years ago, despite the fact that my pay rises have averaged at about 6% annually. This, I think, is another example of the benefits of compounding.

I’ve definitely inflated my lifestyle since I was a student. I live on my own in a house that’s probably a little bigger than I really need. I go out for drinks on a whim. I eat real food sometimes, and jet off for holidays to the States. But I’m still not doing badly at keeping what I make.

You’ll be pleased to note that I’ve been investing since I started at work – initially just in my money purchase pension (equivalent to 401(k)), but now in other tax-advantaged accounts as well. And I also have savings equal to about 3 months income. I can, and will, be doing more in the next year.

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