Want a Bigger Paycheck in 2021? Here’s How to Get It

As crazy as it has been, 2020 is finally drawing to a close. If the challenges from this year have put you a bit behind where you wanted to be in your financial plans, you might want to find a way to jump-start your finances in 2021 to get you back on track. A bigger paycheck can go a long way toward getting you there. If you want that bigger paycheck in 2021, here are 10 ideas on how to get it.

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Many employers will reward people who have relevant certifications that help them do their jobs better. It makes sense -- if you’re able to accomplish more work in the same amount of time or deliver your work with higher quality, then you’re adding more value to your boss. That makes it easier for your boss to reward you with more cash in your pocket.

Chances are that your boss recognizes both the additional value you bring with the certification and the fact that other employers would recognize the value as well. That’s why you might get an increase just from getting your certification, even before you’ve put that certification to work. Of course, once you’ve proven your worth, that may provide you with another path toward deserving an increase as well.

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The coronavirus pandemic has affected different companies in different ways. While many businesses were negatively affected, others have actually seen far increased demand for their services. If you’re at an employer that has struggled, now may be a great time to look for work at one of the ones that has seen its business grow.

After all, a growing business often needs additional help to manage that growth. Sometimes, it needs new labor to directly execute its business model. Other times, it needs help managing all the new people coming in to do that direct execution. Still other times, it recognizes that in its scramble to fill its expanding demand, it has prioritized on-time delivery over operating efficiency and now needs help becoming more efficient. Whatever the reason, a growing company may well offer you more cash.

If you’re paid by the hour, by the piece, or by the shift, be willing and able to put in the extra time and effort to earn some extra cash. Often, overtime work of some sort is the most straightforward way to earn some additional money. After all, people get sick, and demand suddenly surges unexpectedly, and companies often recognize that paying an existing employee a bit more is often a cheaper option than hiring and training a new person. That’s especially true if the need is expected to only be short term.

Whatever the reason, if your boss needs the help and you’re willing and able to give it, working extra hours can be a fairly straightforward way to put more money in your pocket. In addition, your hard work and dedication may provide your boss with a good reason to offer you a raise or promotion with more responsibilities attached.

If you benchmark your salary with others in the same company doing similar work or with people in other companies doing similar work, you might find you’re making less than others are. That can be a great bargaining point when it comes to asking your boss for a salary increase.

Alternatively, figure out how to tie your work directly to how your company generates revenue and profits and showcase how you’re doing a particularly strong job of driving that value. The more your boss recognizes the value of the work you’re delivering, the easier it is for that boss to justify offering you more money to continue to perform that job.

Either way, know your worth before asking for a raise. You’ll have a much stronger chance of reaching a successful outcome if you can show your boss why you deserve it. After all, unless you report directly to the company’s board of directors, chances are that your boss needs to answer to someone else when it comes to his or her budget. The better a justification you can share with your boss, the better your boss can defend you up the chain when needed.

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Most companies pay different salaries for people doing different jobs. Those companies often benchmark pay externally or set pay scales based on how much value the role adds to the job. That means you may be able to find an opportunity to get promoted within your company or transfer to a higher-paying function or organization without leaving the company overall.

Indeed, it might be easier to find another, higher-paying job inside your current employer than it would be to find a role outside it. After all, you’re a known contributor and have already passed any entrance tests or processes. If you’ve got what it takes and are willing to put in the extra effort that a more highly compensated role will likely require, then go for it. You just might turn your ambition into a larger paycheck for yourself.

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If looking elsewhere for a main job isn’t feasible and you’ve already tapped out or aren’t able to earn more by putting more time in there, now is a great time to consider a side hustle. As long as you’ve got skills that are in demand, chances are that you can find someone willing to pay you for them. You can look into freelancing sites, apply for contract roles, look for part-time work, or hang up a shingle on your own and work to attract clients.

If you do start a side hustle, make sure you’re following any rules your primary job has about use of company equipment or infrastructure, and be careful not to share any proprietary information. In most cases, your boss can’t stop you from working a side hustle, but you’ll still want to be careful to make sure you’re not breaking other rules that could get you in a heap of trouble.

Still, a side hustle can be a great way to earn some extra cash. Not only that, but it has the potential to evolve to either become your new full-time work or help you create more value at your primary job, either of which could also help you earn more cash.

According to the IRS, over 123 million taxpayers received refunds in 2020 through mid-October, with the average refund clocking in at nearly $2,500. In most cases, a refund is simply Uncle Sam paying the taxpayer back money that was overpaid throughout the year. If you’re in the position where you expect a refund of taxes you overpaid, you can adjust your withholdings to reduce the amount you’re overpaying.

That will immediately put more money in your pocket every paycheck throughout the year, but it will mean you won’t get as large a refund when you eventually do file and true up your taxes. The IRS only requires you to get close. You typically need to pay at least 90% of what you owe or have underpaid by less than $1,000 through withholdings or timely estimated payments and then true up by the tax deadline.

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If you are contributing to a Roth 401(k) or other similar after-tax retirement account through work, you might consider shifting your contributions to a traditional-style plan to put more cash in your pocket. Traditional-style qualified employer-sponsored retirement accounts come with an immediate tax deduction for your contribution, while Roth-style plans do not.

That means you can contribute the same amount to a traditional-style plan with less of a reduction to your take-home pay than you can to a Roth-style plan. That puts more of your money in your pocket today, while still allowing you to contribute the same amount toward your retirement.

Do recognize that withdrawals from traditional-style retirement plans are taxed as ordinary income in retirement, while qualified retirement withdrawals from Roth-style plans are completely tax-free. That may change your withdrawal strategy and/or the tax impacts of your withdrawals in retirement, but that’s the tradeoff you make when choosing traditional plans over Roth ones.

Thanks to the pandemic, many more people are working from home than had been previously. When it comes to taxes on your paycheck, both the location where you live and the location where you work may be interested in taxing your paycheck. If your standard work location has more onerous tax requirements than your home location does, you may be paying taxes now that you no longer owe if you’re working from home.

It’s certainly worth a call to your HR or payroll manager to see if you can reflect your home location as your work location for as long as the coronavirus crisis lasts. If it saves you a little bit of tax money, then that’s more in your paycheck every month.

If your employer offers a choice between a traditional medical plan and a high-deductible health insurance plan, be sure to run the numbers before signing up for your 2021 benefits. High-deductible plans typically offer lower premium costs than traditional medical insurance does. That puts more money in your pocket every payday, but it also likely means you pay more up front initially if you get sick or otherwise need care.

Depending on both the specifics of your employer’s plan and your own personal situation, you may find that the high-deductible plan is the cheaper overall option even if you wind up needing substantial care. If that’s the case, then it’s a no-brainer to make the switch, but be sure to put aside some of the money you’re saving in lower premiums to help pay for the healthcare you may need. After all, the downside with the high-deductible plan is the higher initial out-of-pocket costs for actual healthcare.

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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

All 10 of these options can potentially get you to a larger paycheck in 2021, but they all require some sort of work on your part. Some -- like changing your health insurance plan -- may only be possible during a certain window of time. Others -- like changing your tax withholdings to reduce your refund -- can be done at any time, but those are generally easier and smoother the earlier you get started.

As you figure out which ones may be a good fit for your plan to get a bigger paycheck in 2021, think about how you can start now to improve your chances of getting what you want. If you plan and execute well, you’ll be more likely to get that larger paycheck than if you just hope it comes your way.

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