How Banking Policies Affect Your Earnings: 7 Steps To Protect Yourself

Most people probably think about the implications of variable versus fixed hourly earnings, commission versus base pay, and hourly versus salary when taking a job. But there are more considerations that directly impact your earnings as an employee. There are certain policies in place at most companies that might not be directly related to how much you’ll make per hour or commission check. However, they can have a significant impact on how much money you take home each year. These policies include things like taxation, FICA contributions, and 401k/profit sharing programs. These policies may seem like common sense and not something we would overlook as employees. However, we often don’t stop to think about what impacts our earnings for the worse until it’s too late. Here are seven ways your bank policies can hurt your earnings:

Constant Rotating Shifts

One of the first things most new hires are required to do is sign a work schedule that is set in stone for a specified amount of time. Many people end up with a non-negotiable rotating weekly schedule that never varies until you quit or get fired. If your company requires you to work a specific schedule, you may have no choice when it comes to your days off. However, you should at least be allowed to choose which days and hours you work. Working on a rotating schedule makes it difficult for most people to hold down a second job, take classes toward a degree, or pursue other hobbies, interests, or activities that might not be easy to do while working full-time.

No Commissions During Month-end Deadlines

It’s not uncommon to work on a commission-based job and have the bulk of your monthly earnings during the last two weeks of the month. When you’re already strapped for cash near the end of the month, this can put your livelihood in jeopardy. While you should always plan ahead, there are times when things come up that can’t be anticipated. This can mean you have to borrow money from friends or family, or forgo necessities like food, gas, or rent to make ends meet. It’s not fair to demand employees work hard toward a monthly goal, only to have the bulk of their earnings withheld during the last two weeks of the month.

One-Time Signing Bonuses Instead of Ongoing Commissions

Most companies offer signing bonuses as a means to entice people to work for them. However, signing bonuses are awarded once and then are expected to be repaid or “eaten up” by ongoing earnings. If you take a job and receive a signing bonus, but don’t earn enough on a consistent basis to pay it back, you may lose your job. This is especially true if your job is commission-based, and you don’t earn enough to pay off your bonus before you quit or get fired. While you should be diligent to always earn as much as you can on a consistent basis, it’s never a good idea to completely rely on your earnings. You should always keep a little bit of money in your savings account, just in case.

Auto-Deducted Company Tax and FICA Contributions

For the most part, companies are required to withhold a certain amount of money from your paycheck for federal income tax and FICA tax payments. However, if your company doesn’t have enough money in their budget to cover the deductions, they have the option to delay payment of the taxes until a later date. Whether or not your company is disciplined enough to wait for the money to come in before making the tax payments is a different story. Most companies don’t have enough money in their budget to cover the deductions, so they make you responsible for paying the taxes. But they don’t put any money in your paycheck to account for the taxes. This means you’re taking home less money than you’re actually owed, while your company is delaying the payment of the taxes they owe the government.

Company Matching for 401k, Retirement and Profit Sharing Programs

Many companies offer matching contributions to 401k, profit sharing, and retirement accounts. This means they put money into your account to double your investment. The problem is, many companies wait until the end of the year to make their contributions. This can mean you don’t get access to your money until January or February, which can make it difficult to pay bills until then. This is especially true if you’re trying to start a new business, buy a house, or otherwise spend money until you get the money from your company.

Conclusion

Be aware of the policies your company has in place and how they can affect your bottom line. You may want to consider bringing up these issues to management or HR if you feel they are hurting you financially.

 

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