We live in some pretty wild times for aviation professionals. Never before have numbers like what we're seeing today been thrown around. Only a few years ago, a first year regional airline first officer was being paid something like $20 an hour which checks out to roughly $20,000 a year. When I got started, this number had increased to between $35k-$55k (thereabouts) a year depending on the airline. Obviously a much more livable wage. Most recently though, we are seeing record high pay rates of between $90 and $100 an hour for first year first officers. Generally speaking, adding three zeroes to the end of those hourly wage numbers is a good way to get an idea of what you'd make in a year. So, a brand new first officer could potentially be making just about six figures a year starting out.
This is wicked awesome for anyone looking into flying as a career. We are in demand, and the numbers reflect that. It makes all of the work required to get to this level that much more worth it. After moving from the regional level to the major airline level, the pay only goes up and the retirement contribution from those companies gets quite generous. Flying for airlines has truly become a very well-paying career choice. Recently, I was chatting with another first officer about these pay raises and he was talking about nice houses and Teslas. It got me thinking about how I'm going to handle such a pay raise. I've come to a few points about it.
Address the Mindset
You've heard this one before! It all starts with mindset. When the money starts rolling in, it's easy to take more liberties and go out to eat more, or buy a new car, and so on so forth. There's absolutely no reason not to celebrate, but excessive spending is the worst thing to do when income goes up. The wealthiest people in the world didn't achieve their status by spending more money when they started making more money. While many of those people most likely made their money by building businesses, they maintain their net worth through investments and by putting their money in places that will work for them. I'm no expert, but everything I've read suggests that when the majority of the population receives raises, they raise their standard of living to meet their pay increases. This just keeps everyone living paycheck to paycheck. In other words, everyone likes to spend money first and invests the rest later, if they invest anything at all. 1%ers invest their money first, and then allow themselves to enjoy the leftovers. It may be hard to imagine someone making six - or even seven - figures per year living paycheck to paycheck, but it's 100% a thing. So, when the pay increases, it's time to address that mindset.
Still Have (Flight) School Debt?
This doesn't have to apply to just us pilots; it can apply to anyone who's just received a big raise at work and has outstanding debt. Keep attacking the debt because the longer it takes you to pay it off, the more you end up paying in the long run in interest. The second I see the pay go up for me, all I'm going to do is increase the amount that goes towards my debt so I can get rid of it faster. I live comfortably now, so there's no reason to change anything. Getting rid of that debt will leave me with more breathing room to start truly building my net worth. The younger you can do this, the more you'll reap the benefits in the long run. Especially with investing.
Think Long Term
What do you do when you finish paying off a load of debt? I always come back to Dave Ramsey's plan. Once the debt is gone, it's time to build up an emergency fund. This is where you save at least six months worth of money to meet your expenses in case anything happens to your job. For those of us in aviation, it may be prudent to increase that to more like a year's worth of savings because of how volatile the industry is. Once you've got that saved up, you can start looking at investments and house down payments and so on. The more you can automate this process, the better. It may seem like a good idea to be actively involved in the process, but that just gives you more chances to say I'll just start next month.
Try to Avoid New Cars
It's actually sorta wild how many people immediately go out and buy a brand new car when they get pay increases. The majority of the population has decided that car payments are just a thing that is acceptable, but in reality it's just more bad debt. The car loses half its value the second you drive it off the lot, and you're stuck with more monthly payments. The best approach is to look for a car that is a few years old and pay cash for it. It's already lost some of its value and you're not going into debt over it. I can totally understand sometimes needing to buy a car quickly if your current one is on its last leg, but you can still do it in a way that doesn't put you in $30k-$40k worth of debt.
Celebrate!
Again, there's no reason not to celebrate with a nice dinner out or something! You've worked hard for it, and everyone deserves to celebrate and enjoy a raise. I say just be smart about it and don't put yourself in a position you'll come to regret down the road.
Notes
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