How I got 10% more of my pay
Recently, I discovered a way to get 10% more of my pay. Not to be confused with getting 10% more pay, I made a few simple changes over the last few months to get 10% more of what I already earn. Today I'd love to share with you how I did it, and how you can too.
It all started when I made a mindful habit of reading my payslips. One day, I realised that there was a large discrepancy between my gross income and my take-home (net) income - specificially that I was receiving about 74% of my salary in my weekly pay. To give you an idea, here's the same percentage based on different salaries:
If your salary is $52,000, making your gross weekly salary $1000, you would be receiving a net weekly salary of $740.
If your salary is $60,000, making your gross weekly salary $1154, you would be receiving a net weekly salary of $854.
If your salary is $45,000, making your gross weekly salary $865, you would be receiving a net weekly salary of $640.
Quite a difference, isn't there?
With some easy steps, I managed to close the gap and lessen the difference between what I 'earn' and what I receive. I'd like to make a small disclaimer and highlight that these were personal decisions. With that, here are the steps I took.
Figure out how much of your pay you are actually getting
You can simply divide your net pay by your gross pay, or if you want it laid out neatly and colourfully for you, you can use this PAYE calculator. Add and adjust settings as needed. You should now have your percentage. Happy with it? Congrats. Wish it was a little higher? Perhaps what I did may also help you..
Extra student loan repayments
I had a small student loan from a course I took last year. With student loan payments having gone out regularly, I had a feeling that it would nearly be paid off.. And I was right. Checking my balance online, I found that there was only a few hundred to go - a manageable amount that I could pay off even sooner by making extra repayments.
Most people treat their student loan repayments passively, letting their student loan repayments come out of their pay and waiting for it to be paid off by itself. I was no different, until I realised an active approach would boost my progress significantly. I started sending extra repayments whenever I could, and paid it off sooner than if I'd let it run its course. Success! The result: more of my own income, and no more student loan!
How to do this
Go to your online banking or mobile banking app.
Find IRD in the payee list. My bank has them listed as "IRD", yours might have them listed as "Inland Revenue". Save as payee.
Put in these references: your 8 or 9 digit IRD number, tax type (SLS) and period (the current financial year). It should look like this: 123-456-789 | SLS | 31032020
OR simply go to IRD's Make a Payment
Now all you have to do is send across extra repayments whenever you can. Even $50 every now and then makes a difference. Your future self will thank you when they check their student loan balance and keep seeing it go down, one step closer to being debt-free!
Remember that your payments won't show up straight away. Your student loan balance may not be up to date for a month (while it's also taking into account your regular repayments). Because mine took time to process, I actually made too many repayments, and after paying it all off, received my money back as a $200 refund. So if you are paying yours off and see your balance remain the same, don't worry - just give it time.
Pressing 'hold' on Kiwisaver contributions
Whether you're currently using 3%, 4%, 8%, or even the newest rates of 6% or 10%, your Kiwisaver is automatically deducted from each pay. When reading my payslip one day, I realised what a large dollar amount it was, and how saving this amount instead would be helpful in saving up for my wedding. So, I took a savings suspension.
Savings suspensions used to be called 'contributions holidays', before Jacinda Ardern took on board the recommendation of Retirement Commissioner and Head of Commission for Financial Capability (CFFC) Diane Maxwell and brilliantly changed the name to remove the positive connotation. She also reduced the maximum savings suspension from five years to one, further encouraging young people to save for a brighter future.
"Enough background, Sophia - what is it?" I hear you say. Okay, okay - I'll stop fangirling over Jacinda and get to it. A savings suspension allows you to temporarily stop making Kiwisaver contributions from your pay. You can take one if you have been a member for more than 12 months, so I definitely qualified as a member of 12 years. You can now choose to suspend your savings from anywhere between 3 to 12 months; I chose 6.
I'll note again that this is a personal decision, as I feel like 6 months of Kiwisaver contributions won't make a long-lasting impact for me. Personally, I am not very likely to need to withdraw money before I am 65, as I've already used my first home withdrawal, won't be moving overseas anytime soon, and sure hope I don't become seriously ill! My balance has also grown considerably faster ever since I switched my balanced fund for a growth fund, which I'm very happy with - but is also a personal decision.
How to do this
Go to the Kiwisaver website then 'Go on a savings suspension'. Log in.
Click on 'Request a savings suspension'. Complete.
Ta da! You are done.
Another good option is simply changing your contributions rate. If you are currently on 8%, try 6% now that it's available. If you are on 4%, try 3%. Change back to a higher rate once you are able to afford it (or, if you already can, why not go up to 10%?). You'll receive more of your income, while still seeing your Kiwisaver balance grow. Win-win.
Leaving a union
A few months ago, I was convinced, along with most of my colleagues, to join a union. They claimed to be campaigning for fairer pay for us; mostly for it to be matched to the other staff in our workplace. Fair enough, I thought. They even offered perks for joining: discounts and special offers at retailers. Yay! I signed up, knowing I could cancel if or when I wanted to.
At the time, the weekly fees were low, as it was based on income tiers. So when I got a pay rise soon after (from proving my competency, not as a result of their campaigning), my fees also increased.
This would be okay if the union had kept their word and provided us with updates and, perhaps, the membership pack promised that would disclose to us exactly what we signed up for (along with the perks, which I was curious about).
But months later, I had received nothing. Not a word. They'd taken my money and continued to do so without anything in return. I wrote to them and they told me I'd receive my membership pack within a week. Of course, I didn't. So, disappointed, I cancelled my membership altogether.
With weeks of union fees paid for nothing, I'm just relieved this has stopped. However, this got me talking to my partner, who shared that he'd been part of a union for years and had similarly gotten nothing out of it, so he cancelled his membership too. More savings for both of us!
Of course, my experience may be different to yours - if you're part of a union that is genuinely supportive and helpful, more power to you. However, if your experience is more like mine where you're paying for absolutely nothing, I'd encourage you to look into leaving, or other options to support you in your workplace. Not only may it save you hundreds of dollars over the years, you deserve to be part of a union that treats you with respect.
These three changes have made a noticeable difference. While my Kiwisaver change is only temporary, it feels good to have eliminated student loan and union fee deductions permanently. With PAYE being the only deduction (income tax + ACC), I've successfully increased my take-home pay from 74% of my gross pay to 84%!
Going back to my examples, here's the difference this makes:
If your salary is $52,000, making your gross weekly salary $1000, you would go from receiving a net weekly salary of $740 to $840.
If your salary is $60,000, making your gross weekly salary $1154, you would go from receiving a net weekly salary of $854 to $970.
If your salary is $45,000, making your gross weekly salary $865, you would go from receiving a net weekly salary of $640 to $726.
What unnecessary things are being deducted from your pay? Take the time to look at your payslip and check if you're happy with everything you see. If something is no longer aligned with your desires, values, or priorities, put your money to better use. Whether you save it, invest it, put it towards a lifelong dream, or use it to fund your own passion project or side business, let your money serve a more meaningful purpose aligned with what you want out of life.
I hope today's post has helped or inspired you to be mindful with money!
Love,
Sophia
