In case you're wondering how to calculate a salary increase, the pay raise calculator will allow you to conveniently determine the pay rise amount, the raise percentage, and the new salary amount.
If your boss promised you a raise and you're speculating when you will be able to afford that beautiful Ferrari you're craving, this tool might be of help. Or maybe you're planning your budget and are wondering how much more you should earn and save to take a relaxing cash-bath once in a while? Continue reading to learn how to calculate a pay raise, when you can expect one, how much more you will have in your paycheck and... will it even matter?
If you're unsure what your net pay is, you can use the gross to net calculator.
Prefer watching over reading? Learn all you need in 90 seconds with this video we made for you:
How to calculate a salary increase using the calculator
Enter the number of hours you work per week. It is set to 40 by default.
Enter the pay before the raise into the calculator. You can choose whichever form is most convenient for you, be it the hourly, weekly, monthly, or annual rate, and the rest will be converted automatically.
Enter the raise percentage, raise amount, or new pay. Once you fill in one of those fields, the pay raise calculator will output all remaining variables.
Are you interested in other salary calculators? Our time and a half calculator may be just what you need.
An example of how to calculate a salary increase
Let's say you're thinking about switching jobs so you can save funds for your own business. Your current boss values your skills and offers you a pay raise of 10 % to convince you to stay in his company. The proposal sounds tempting, but you would like to know how much money that is and how it compares to the salary you would earn at the other job. You work 50 hours per week (some say a little bit too much) and currently earn $35,000 monthly. You enter the values into the pay raise calculator and see that after the raise, you would earn an additional $3,500, and your new monthly salary would be $38,500. At the interview for the other job, you were offered a salary of $50,000. After considering other factors like development perspectives, you decide to take the new job.
How do I calculate a pay raise on my own?
The formula the pay raise calculator uses is:
new salary = old salary + old salary × raise %
If you know the raise percentage and want to determine the new salary amount:
- Convert the percentage into decimal form.
- Multiply the old salary by this value.
- Add this new value to the old salary.
Using the example in the previous paragraph:
new salary = $35,000 + $35,000 × 0.1
new salary = $38,500
What about how to calculate the salary increase percentage if you know your new wage? Rearrange the equation from the beginning of this section, and you will get this one:
raise = (new salary − old salary) / old salary × 100%
Let's say you used to earn $25 per hour, and now you're making $30. How do you calculate the pay raise percentage you received?
raise = ($30 − $25) / $25 × 100%
raise = 20%
Your boss gave you a 20% pay raise.
🙋 You can also use our percentage increase calculator to find the last value!
When can you expect a pay raise
Depending on the company's strategy, a pay rise may be given based on:
- Length of service — some companies give raises to all employees annually or bi-annually;
- Employee's performance — usually assessed annually;
- Merit — contributions, gaining new skills and responsibilities, or being promoted;
- Inflation — if the cost of living rises, the paycheck should be adequately bigger (learn more about this at our salary inflation calculator); and
- Law — e.g., change in the national minimum wage.
Got a bigger paycheck. But can money buy happiness?
Well, yes, to some extent. According to the analysis of the survey of 450,000 US residents, high income improves evaluation of life but not emotional well-being. The more people earn, the more positively they think about their life, but emotional well-being (the quality of everyday experiences, how often you feel sad versus joyful, etc.) correlates with salary only up to a salary of $75,000 annually. Once you earn this amount, additional money doesn't have a significant influence on your happiness, at least statistically speaking.
However, if you're among the lucky ones who earn more, let me tell you something before you burn your money. Research also says that if you want to feel happier, you can spend money on others rather than on yourself and invest in experiences instead of on material things.
So next time you're staring at the IKEA catalog, wondering what kind of a dining set defines you as a person and thinking whether you should buy this little coffee table in a shape of yin yang, wait a moment. Take a deep breath and consider other options, like retiring early, satisfying the needs of your significant others, or investing in experiences. Maybe it's time to set off on that journey around the world you've always dreamed of?
FAQ
How do I calculate a 5% pay raise?
To calculate a 5% pay raise, you only have to multiply the percentage of the increase (in decimals) by your current salary and add your current salary. So, assuming your monthly salary is $1,000, a 5% increase will be 0.05 multiplied by $1,000 plus the current salary, resulting in $1,050.
Is a 10% annual raise the same as a 10% monthly raise?
Yes. Surprisingly, a 10% annual raise is the same as a 10% monthly, weekly, or hourly raise. Assuming your monthly salary is $1,000, a 10% monthly raise represents an extra $100 per month. Similarly, if your annual salary is $12,000, a 10% annual raise represents $1,200 a year or $100 a month (dividing your new $1,200 raise by the 12 months contained in a year).
What pay raise do I need to gain an extra month's salary?
To gain one extra month of salary, your company will have to give you an 8.33% pay raise. By the end of the first year, you will have made one extra month's salary of what you were paid before the raise. For example, if your monthly income is $1,000 and your boss gives you a generous 8.33% pay raise, your raise represents a total annual increase of $1,000.
