1. What is the Salary Growth Formula?

The salary growth formula calculates how an initial salary grows over time with regular annual raises. It uses compound growth mathematics to project future earnings based on a fixed annual percentage increase.

2. How Does the Calculator Work?

The calculator uses the compound growth formula:

Where:

• Initial salary — Current or starting salary amount
• Raise percentage — Expected annual raise as a decimal (e.g., 3% = 0.03)
• n — Number of years for projection

Explanation: The formula accounts for compound growth where each raise builds upon the previous year's increased salary.

3. Importance of Salary Projection

Details: Projecting salary growth helps with financial planning, career decisions, and understanding the long-term impact of raises. It demonstrates how small percentage differences can lead to significant disparities over time.

4. Using the Calculator

Tips: Enter your current salary, expected annual raise percentage, and number of years to project. The calculator will show your projected salary after compound raises.

5. Frequently Asked Questions (FAQ)

Q1: Does this account for inflation?
A: No, this calculates nominal salary growth. For real (inflation-adjusted) growth, you would need to subtract inflation from your raise percentage.

Q2: What if my raises vary each year?
A: This calculator assumes consistent annual raises. For variable raises, you would need a more complex calculation.

Q3: How accurate are these projections?
A: Projections are only as accurate as your raise assumptions. Actual results may vary based on economic conditions and career progression.

Q4: Can I calculate monthly instead of annual?
A: Yes, but you would need to adjust the raise percentage to monthly equivalents and use months instead of years.

Q5: What's the difference between simple and compound raises?
A: Simple raises apply to the original salary each year, while compound raises (used here) apply to each year's new salary.