Hope you read the first part of my blog and found it useful, and probably for that reason you are here reading the second part. In this part I will take you through the typical journey of a corporate professional as far as salary growth is concerned and how by understanding this journey better, one can have a better shot at the Crore Club.
Let’s consider the starting point of this journey at a base salary level of INR 10 Lakhs and run through the typical increment cycle over a period of 10 years. For ease of calculation, let’s take a standard increment rate of 10% for all the years.
Year 0 – 10,00,000
Year 1 – 11,00,000
Year 2 – 12,10,000
Year 3 – 13,31,000
Year 4 – 14,64,100
Year 5 – 16,10,510
Year 6 – 17,71,561
Year 7 – 19,48,717
Year 8 – 21,43,589
Year 9 – 23,57,948
Year 10 – 25,93,742
As you can see, we are still almost 74 Lakhs away from an Eight Figure salary. However, we all understand that one’s journey in the corporate world is not so flat and over a period of time one can expect some promotions and few job changes where the standard 10% increment rule can be supplemented with an additional increase in salary as a result of a promotion or job change. Let’s apply these two salary boosters to our example and see how the equation changes.
Year 0 – 10,00,000
Year 1 – 11,00,000
Year 2 – 12,65,000 (5% additional increase because of Promotion)
Year 3 – 15,18,000 (20% increase because of Job Change)
Year 4 – 16,69,800
Year 5 – 19,20,270 (5% additional increase because of Promotion)
Year 6 – 24,00,338 (25% increase because of Job Change)
Year 7 – 26,40,371
Year 8 – 30,36,427 (5% additional increase because of Promotion)
Year 9 – 39,47,355 (30% increase because of Job Change)
Year 10 – 43,42,091
See how things have changed. While we are still almost 56.5 Lakhs away from our target, we have gained almost 17.5 Lakhs vis-à-vis the previous example. And this example is not just a mere calculation. It is very much a replica of how things happen in real life.
Let’s make it little more interesting by looking at the next 5 years and how things unfold there.
Year 11 – 52,10,509 (10% additional increase because of Promotion)
Year 12 – 57,31,559
Year 13 – 63,04,715
Year 14 – 75,65,659 (10% additional increase because of Promotion)
Year 15 – 1,02,13,639 (35% increase because of Job Change)
Voila!! We have hit the Crore Club in Year 15.
Now it can be a natural reaction from anyone reading this blog that all this looks good on paper. Does this happen in real life?
The answer is an emphatic YES – this is how it happens in real life. But it is not as simple as it looks on the paper. It requires certain skills and abilities in you to remain relevant continuously for a period of 15 years so that you can command those increases associated with promotions and job changes. We will deal with those core requirements in the next part of this blog.
The idea of this part of the blog it to lay out clearly the path towards an “Eight Figure” salary and show you the power of the compounding game towards the later part of this journey. What most of us get scared of is the enormity of the goal. It happens because most of us only look at the starting point and the first few years of our journey and start believing that it is almost impossible to reach there. We must look at the journey in totality and then start our preparation to reach the end goal.
In subsequent parts of this blog, we will start looking at the prerequisites for this journey, how to prepare oneself for the long haul and finally how we can compress this journey of 15 years to 10 year or at max 12 years.
Stay with me. It will become more interesting as we move forward.