What Is Basic and Projected Salary?

by W D Adkins
Your paycheck may include more than just basic salary.

Your salary is literally your bread and butter, as it’s what puts food on the table. That makes the size of your paycheck a major concern, whether you’re job-hunting or already working. For long-term financial planning, you need to understand how employers budget projected salaries. It also helps to know the difference between basic salary and total compensation.

Basic Salary

When you get a job, your employer quotes you a specific pay rate. For example, you might start at $36,000 per year, with two paydays each month. That works out to $1,500 each payday before taxes. This dollar figure is a basic salary, or base pay, and doesn’t include additional earnings such as commissions or bonuses. A base salary also doesn’t include the value of benefits such as health insurance, vacation pay or profit sharing.

Employer Salary Projections

Projected salary is a term used by human resources professionals when they develop budgets. Employers have to plan ahead to manage labor costs and determine future salary needs. An employer will estimate how much of a salary increase is required to attract and keep workers, weighing factors such as mandatory increases required by union contracts, the state of the economy and employee turnover. Suppose your employer budgets for a 3 percent overall increase. The 3 percent figure is an average and doesn’t mean you get 3 percent more, especially for pay raises based on performance. For instance, the best employees might get a 6 percent performance raise, average performers a 3 percent raise and those with poor records no raise at all.

Making Your Own Projection

You can plan for the future by projecting your own earnings. With a base salary, this may be fairly simple. Suppose you’ve started a job with a $36,000 base salary. You’ve been told to expect a 10 percent raise to $39,600 after a year if your work is satisfactory. By breaking this down into bi-monthly paychecks of $1,650 before taxes, you can figure on a couple of hundred extra each month after a year. This projection allows you to plan for large purchases or additional savings. Bonuses and commissions are trickier because they are variable. Ask your supervisor, co-workers or human resources department what you can expect. If the average extra pay for people in your job is $200 a month, don’t plan for $500. Plan based on the averages so your projections are realistic.

Base, Bonuses and Benefits

Monster.com says many people focus too much on base salary. It’s nice to be quoted a big salary, but it may not be the best deal for you. For example, suppose one company offers a starting salary of $40,000, but doesn’t offer much in the way of benefits. A second company has set a salary cap for a similar job at $35,000. However, the second firm offers a compensation package that includes full health and dental insurance, plus a bonus program that typically nets employees an extra $3,500 per year. The second job probably will be better for you financially, even though the quoted base salary is less. In short, look at the whole package, not just the base salary.

About the Author

Based in Atlanta, Georgia, W D Adkins has been writing professionally since 2008. He writes about business, personal finance and careers. Adkins holds master's degrees in history and sociology from Georgia State University. He became a member of the Society of Professional Journalists in 2009.

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