Despite the fact that great wealth doesn’t guarantee happiness, I strongly believe having money is an advantage to making your dreams come true. That being the case, amassing enough wealth to enjoy a full life and ultimately retire becomes the end game. It drives us to pursue advanced degrees at school and climb the corporate ladder in the workforce. But not all work compensation is created equal, and the sooner you learn the facts better. These are facts I wish I knew when I started college.
Total Compensation is a total of much more than just salary. It takes into account retirement fund contribution (401K), company stock (such as options and/or rsu), corporate bonuses, and healthcare. Depending on your industry and job description, these may vary. I did not learn of this until my first real job search after my third of fourth year of college. Up until that point, I was interested in only the job that paid the most per hour (tip would have been a plus, but I never had a job I could earn tips).
After working professionally for more than 5 years, I now regard 401K and healthcare as a necessity, but not ways that increase my paycheck. Corporate bonuses are great at the end of the year, but not something I can count on since it depends on the performance of the company. Company stock (options or RSU) are the riskiest because they are tied directly to the performance of the company. A bad quarter means the stocks might dip and be worth less. If a company goes bankrupt, it will be worth nothing.
But I feel young (not quite 30), so I’ve kept most of the company stock I’ve been awarded. For a couple of years after I joined, the stock was flat and even underwater in some cases. Unlike some of my coworkers (peers) who sold to get an early payoff, I held onto stock that wasn’t worth much. Then suddenly in the course of six months, the stock suddenly took off and my stock was suddenly worth more than nothing. I attribute this to nothing more than luck, and every case of stocks is completely different. So evaluate your situation and proceed with caution. There are opposite stories where people invested and the company went bust (think Dot-com Bubble).
I understand that not everyone may be in the same situation in life, but it is important to know if you are chasing the right dream. In college, there were so many people with similar dreams, but in college majors that don’t position them to reach the goals. If you are in college, my suggestion is you research (within your target industry) not just the salary, but the Total Compensation. Not all professional companies offer stocks (though 401K and healthcare are pretty universal). Do your homework!