This going to sound odd that I am doing this calculation now after 5 years of working, yes 5 continuous years of working. I started to think about what is the right salary? all these years I thought from the point of view of how much work I do and the corresponding pay. From that view point my salary is more than sufficient, I update charts for a living!! Then I started thinking from a day to day point of view my expenses were ok, within my budget and I could save a little bit also. But now I am thinking from a longer term perspective, is my salary enough??
To begin figuring out this monumental, fundamental and cornerstone question, let see the big investment items that I would need to live after I retire -
A) A flat, 1BHK from a practical point of view, a small 650 sft flat will do in Mumbai. This will cost at current rates Rs 60 lacs minimum. Resulting in a monthly mortgage payment of Rs 40 thousand per month, assuming I get a loan of Rs 40 lacs.
B) A car. with the number of auto strikes and heavy rains and the fact that affordable housing can only be found in the suburb areas, which are located far away from business areas, hospitals etc. This will cost minimum Rs 5 Lac (including taxes). This will result in a monthly EMI of at least Rs 10 thousand.
C) Day to day living expenses. For a single person this would include clothing, food, electricity, mobile connection, electricity, shopping. At least Rs 20 thousand per month.
D) Insurance and investment. You need to save money and also spend on life insurance, medical expenses. Lets keep this at Rs 20 thousand per month.
So this leads to a grand total of Rs 90 thousand per month. This is bare minimum you should be earning if you have to support yourself long-term and only yourself. Everyone has family, that could easily expand your expenses by Rs 30 thousand per month. Hence for yourself and your family you need a salary of at least Rs 1.2 lacs per month!!!
This is what your company needs to pay you. or you have to find a job that does by the time you are in your mid-thirties.
The fact I am doing this calculation now, after working in the financial services industry for 5 years is well the reason why I am not earning this magical minimum figure. I cut myself a little slack by saying I work for an economics team, so I am most of the time lost in the world of ceteris paribus, with an infinite number of assumptions, so that the world in question resembles science fiction. I now understand why the guys in my office are so obsessed with their salaries. Why all coffee break discussions are revolving around figuring-out the other peoples salary and why people push themselves so hard to suck up to management. Why people go crazy over expensive courses which they don't remotely want to do but end-up doing. In the olden days, people were able to do all these things, buy a house, a car and have enough money saved. Maybe our needs have increased, but what I listed out is required for comfortable living standard. So this leads me to beg the question - Are OUR EMPLOYERS paying us LESS!!!
Image: courtesy Dancsblog
