CTC And Take Home Salaries

The early days of your business are likely to be pretty lean ones money-wise.At the time,if you get discouraged by all the great salaries your contemporaries are raking in and are thinking of giving up,find out if people around you are talking of CTC or take home salaries.Then consider how much they keep post-tax,and then compare it with what you manage to keep for yourself and then decide.

CTC or cost to company is what a company spends on an employee. If something is an “Expense” for a company because of an employee, its part of his/her CTC,

So,companies often add their contribution to the EPF,gratuity(which is payable 5 years from the date of joining),superannuation,leave encashments etc. to the CTC. If employees leave the company after a short while they may never see these incomes.

CTCs often include joining bonuses.This is like saying you had more inflow in a given month because your business sold some scrap.Remember this when you hear someone bragging about their pay package.

The value of stock options also bump up the CTC. These could make your contemporaries rich,if they manage to get a share of a business greater than yours.But this gain is by no means certain.The stock market could play spoilsport and make these options worthless.

The CTC also includes the cost of transport facilities,food coupons and insurance etc.Now you as a scrappy bootstrapper know that you can work out great deals for these things without paying top prices. Salarymen don’t have this option.

CTCs might have a large variable component,so depending on the fate of the industry,and the company,along with their ability,effort and the work environment a person might be able to collect varying amounts of the projected variable income.

After considering the above points,if you’d still like to give up,do so.Striking out on your own is not for everybody.