But what if your yearly increase was more negotiable?
What if you could choose benefits, such as more vacation time, over salary?
Would you do it?
The Plus Side Of Taking More Benefits
Very few people consider negotiating benefits when it comes time to discuss your annual increase, but it is something you should seriously consider. Why?
Some benefits can be more valuable than the tiny or even large raise you might be getting.
What are some benefits you can negotiate? You can negotiate educational opportunities, health benefits, retirement benefits or, my favorite benefit of all, vacation time.
Many of these benefits will continue to help you either financially or emotionally for the rest of your tenure with your current employer.
Extra vacation time, my favorite benefit to negotiate instead of a raise, is very important to me. You can find plenty of ways to make more money, but you can’t make more time in a year.
An extra week of vacation is almost 2% of a working year, so you could consider it very similar to a 2% raise. With an extra week of vacation, would you feel less constrained by the choices you make in order to make your time off last the whole year?
The extra week would give me just enough play room to where I would no longer feel like I have to save some of my vacation just in case something happens. Instead, the extra week would provide wiggle room. If nothing happens I can enjoy some time off at the end of the year.
Finally, it is important to note that extra vacation doesn’t cause you to pay more in taxes like a raise would. Since you’d still be earning the same salary, your taxes would remain the same. Luckily, you aren’t taxed on the number of weeks of vacation you get.
Benefit increases aren’t for everyone though. Here are some considerations for the raise side of compensation.
Why Everyone Loves Raises
Everyone loves raises and for good reason. A raise will show up in your paycheck each and every time until you either get another raise or find yourself in a different job. Even if you switch jobs, there is a good chance you’ll take your raise with you.
Raises are awesome because they show up as part of your salary. That means that your raises can compound themselves as you get more raises in the future. If you consistently get big raises, your salary will skyrocket in no time at all.
Another benefit of a raise is most employers ask for your most recent salary when you’re interviewing, but they rarely ask how much vacation time you used to get. You’re more likely to take a raise with you than extra vacation.
You should also consider that some of your other benefits, such as your 401(k) matching, are based off of your salary. Whenever you get a raise in your salary you get a raise in your 401(k) matching contribution as well.
It’d be a bummer to miss out on that by taking extra vacation.
Either way you go, if your total compensation is increasing you’re doing something right. The real question is, which way would you go? Would you go for some extra benefits, such as vacation time, or would you prefer to get the raise? Let me know in the comments below.
Lance Cothern, CPA holds a CPA license in Indiana. He’s a personal finance, debt and credit expert that writes professionally for top-tier publications including U.S. News & World Report, Forbes, Investopedia, Credit Karma, Business Insider and more.
Additionally, his expertise has been featured on Yahoo, MSN, USA Today, Reader’s Digest, The Huffington Post, Fast Company, Kiplinger, Reuters, CNBC and more.
Lance is the founder of Money Manifesto. He started writing about money and helping people solve their financial problems in 2012. You can read more about him and find links to his other work and media mentions here.