4 Things You Must Do With Every Paycheck If You Haven’t Had a Raise in 2 Years
Written by
Jake Safane
Edited by
Carly Brashears
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Climbing the corporate ladder typically coincides with getting regular raises, such as during your annual performance review. Even if you’re not getting a promotion, employees often get an annual increase of around 3% to at least keep up with the cost of living. And in this inflationary period, the average U.S. company increased its budget for raises by 4.4% in 2023, according to The Conference Board.
But what if you’re in a situation where you haven’t gotten a raise in a while? How long is too long to continue at the same salary?
“Anything over one year would be something that gave me pause, unless it was expressly indicated in advance that the frequency of evaluation would be more than annually,” said Matt Willer, managing director and partner at Phoenix Capital Group.
Some people take a little bit longer of a view. Raises depend on factors like company performance and your line of work, said Paul Bramson, CEO of The Paul Bramson Companies. “Generally speaking, though, over two years without a raise seems like that would be pushing it.”
So, to some extent, deciding what to do if you haven’t gotten a raise in a while can vary based on your perspective. But if you feel like it’s been too long, you might consider steps like having a conversation with your supervisor or looking for a new job.
“If you have not gotten a raise in over a year, it’s worth approaching your employer to ask about their compensation planning. It doesn’t mean you should walk away if you like your job and see opportunity within the organization, but it does warrant a conversation with your employer about when that raise might come,” said Jill Chapman, a director of early talent programs with Insperity.
“If another year passes and you are once again told you’re not getting a raise, then it could be time to think more seriously about whether your employer is capable right now of investing in your professional future,” she added.
Since the time between taking these steps and getting a raise or finding a higher-paying position can be a while, in the meantime, you might try to make the most of your current paycheck by taking the following steps.
Build Up Your Emergency Fund
In any circumstance, it’s generally recommended to build up an emergency fund so that you can endure periods like a job loss. And if you haven’t gotten a raise in a while, that can be even more of an incentive to make sure your emergency fund can last a few months, as perhaps the lack of raise signals that your company could be facing financial difficulties.
“Check your current spending and prepare a budget within which you have to live. Look for areas where you could cut some of your discretionary expenditures and channel them into savings. Then, build an emergency fund that offers some financial buffer against unexpected expenditures or loss of employment,” said Bramson.
Increase Retirement Contributions
Another change to consider making with your paycheck if you haven’t gotten a raise in a while is to increase your retirement contributions. While that would leave you with less spending money, it can be an important way to give your future self a raise. Otherwise, you might not be able to retire with as much money as you’d like.
“To the degree it doesn’t detrimentally impact your standard of living, I’m definitely going to advise to max out retirement funds because, in the future, that will be the best ROI,” said Willer.
Review Tax Withholdings/Allowances
If your salary has stalled, you might be able to increase your paychecks by reviewing your tax withholding allowances. What you first filled out on your W-4 might no longer apply, for instance.
“Oftentimes people complete the form, don’t think about it again, then file to claim a refund every year,” said Willer. “I’d suggest increasing the number of allowances so that you aren’t having excessive withholdings sent to the state and federal government.”
“You waiting around 12 to 15 months to get that money back means you have given Uncle Sam an interest free loan. Don’t do that. That money can be invested throughout the year, generating yield, and giving you the additional resources a raise would not. As with anything tax related, consult a professional, but this is a quick and easy lever to evaluate as well.”
Invest in Professional Development
Lastly, saving more of your paycheck might be helpful in order to then invest in your professional development so you can get a promotion or find a new, higher-paying job.
“Enroll in online courses and workshops, or try to earn certifications related to your field of interest,” said Bramson. “This will open new doors in the career front and increase your earning potential, and this could also broaden your network, leading to new roles or freelance work.
“This is an important time to become obsessed with building on your professional network, as this will assist in career advancement and go a long way. Go to industry events, think about belonging to professional societies and groups — in person and online, including LinkedIn and other platforms — and continue building networks with colleagues, both within your team and outside of it.”
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