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Komal
19 November, 2024
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A decent understanding is important wherever money is involved. Especially in professional setups. When you finish your studies and start working, salary is one of your priorities. But wait? Do you know what your company pays you: salary or stipend? It is crucial to know the difference between stipends and salaries. Both offer financial support but serve distinct purposes and apply in different scenarios. Knowing which applies to you can impact your financial planning and career growth.
The stipend is generally a fixed amount. It is mostly given when you do internships, research, or apprenticeships. It’s typically less than a salary and often given to cover living or learning expenses. Salaries are tied to hourly or monthly work. But stipends are paid in contacts and nature and work based. A salary is a regular payment for full-time employment. It’s based on your experience, role, and skill level. Salaries come with benefits, taxes, and, in many cases, opportunities for bonuses. Read the blog further to know in detail the difference between stipends and salaries.
A stipend is given to support learning or training opportunities. If you are fresher or pursuing studies, it is likely that you receive a stipend. It is a fixed, regular payment. Generally, the stipend is a financial assistance and not a direct exchange for work. There are many organisations that give stipends to workers. The intent is to provide students, interns, or trainees with a basic income. There are 2 benefits of this, students get experience and are paid for their work.
Receiving a stipend does not mean that you are paid for every hour of your work. It basically explains the need and nature of your work. The stipend is always less than your salary. It is paid to you so that you can cover your living expenses.
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Fixed, Regular Payment: Stipends provide a fixed amount over a set period. It can be for 6 months or more. You are paid according to your contract details.
Not Linked to Hours Worked: Unlike salaries, stipends aren’t based on the time you spend. Stipends are basically fixed and non-negotiable.
Learning-Focused: Stipends are given in roles where major learning is involved. You may receive a stipend for your internships and contractual roles in which you want to gain experience and learn new skills.
Expense Coverage: Stipends are given to cover your essentials like travel, food, and supplies so that you can afford a comfortable living.
Not Always Taxable: Some stipends may be tax-exempt, depending on local laws. But most are non-taxable because they are less than salaries and are also given for a short period of time.
Stipends are commonly associated with positions that are more about learning than earning. You will often find them in roles like internships, fellowships, or apprenticeships. Here are some examples:
Internships: Most internships give stipends as they do not offer a salary. This is because the internship is learning rather than just working. Internships are mostly done by students in their final year or during summer.
Apprenticeships and Traineeships: If you are not fully qualified, then you work as an apprentice. So you will be given a stipend in your training period.
Research Positions: A stipend is also given to students who have just graduated and opt for research positions. This is given to support their studies and research.
Non-Profit Roles: You may receive a stipend for various non-profit or charity roles. It is due to the fact that experience or skill-building is more valuable.
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Obviously, the stipend is as valuable as a salary. It offers you advantages, especially when you are in your early days of career.
Educational Opportunities: Stipends are connected with prominent learning roles that boost your CV.
Work-Life Balance: There are fewer working hours. Even the hours are flexible. You have the advantage of work-life balance.
Lower Taxation: Many stipends have tax benefits, which means you might keep more of your income. The majority of stipends have no taxes.
Skill Development: Positions with stipends often focus on skill-building. They are ideal for long-term growth.
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While stipends offer great benefits, they also come with some limitations. Stipends may not suit everyone.
Limited Income: Stipends usually provide only basic living support. You will not get perks and allowances that you get in cost-to-company compensation.
Fewer Benefits: Unlike salaried roles, stipends rarely come with benefits like healthcare. You also do not get insurance facilities. Some companies also do not offer leave policies.
No Pay for Overtime: Since you’re not being paid hourly, additional work may go unpaid.
Less Job Security: Stipend roles are often temporary and come with limited job protection. You may get terminated at any time by the employer.
A salary is a fixed payment. You receive it regularly or monthly in India. You may have a fixed cost-to-company compensation. Salaries are paid to employees in exchange for their skills, time, and work. Salaries are often offered in full-time or part-time professional roles. An employee is expected to deliver consistent work and productivity. When you are given a salary, you are paid for your role and designation. You are not paid for hourly work.
Fixed Payment on a Schedule: Salaries are set amounts paid on a regular schedule. In India, you are paid at the start of the month. But in many other countries like the US, Australia, salaries are paid weekly.
Job-Based Payment: The salary you are given defines your role, skills, and experience level.
Benefits Package: Salaried positions often come with benefits like health care or retirement plans. You may also get insurance for your family. There are maternity, paternity, and casual leaves included when you receive a salary.
Job Security: Salaried roles often offer more security and structure. You have a fixed and relevant notice period.
Taxable Income: Salaries are taxable and include deductions for benefits and taxes. You have to pay taxes every year and file ITRs.
Salaries apply to many professional and corporate roles, especially where consistent productivity is required. Here’s when salaries are most commonly used:
Professional Jobs: Many jobs in fields like finance, marketing, and engineering offer salaries. You are paid well enough when you do a conventional job.
Management Positions: Supervisory or management roles offer salaries only. These roles often require great roles and responsibilities.
Skilled Roles: Salaries are given in roles that offer specific skills or qualifications. After graduation, you look for full-time job roles. That role offers you a fixed salary. The salary is also given according to your qualifications and skills.
Full-Time Employment: Most full-time positions offer salaries rather than stipends. If you are working in a company that offers you full-time employment, it means you will receive a fixed CTC.
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Receiving a salary provides numerous benefits for financial stability and career progression:
Stable Income: Salary ensures that you have a fixed income every month. Your annual income is stable. This offers you a lot of satisfaction.
Benefits and Perks: Various perks and allowances come with salary. You have proper leave policies and insurance for you and your family.
Paid Time Off: Salaried roles often include paid leave and holiday allowances. You also get paid holidays, and if not used, they are encashed.
Potential for Raises: Many salaried jobs offer performance reviews with opportunities for raises. Every year there is an appraisal meeting in every company. There you can get salary hikes.
Professional Growth: Salaried roles often have clear paths for career advancement. You can also switch roles for career growth and receive higher salary amounts.
Although salaries are appealing, they have some potential drawbacks:
Set Working Hours: There are proper set working hours in salaried jobs.
Higher Tax Obligations: Salaries are fully taxable, impacting your take-home pay. There are always deductions in your take-home salary.
Increased Responsibility: Salaried roles often come with more expectations and duties. You have different responsibilities for different roles. Your responsibilities also increase when you hold senior positions.
Limited Flexibility: Unlike stipend roles, salaried positions can have less flexible hours. There are fixed working hours and days.
Overtime Without Extra Pay: In some roles, extra hours don’t come with additional pay. If it’s urgent, then you have to do extra work outside working hours.
To summarise, let’s look at the main differences between stipends and salaries.
| Parameter | Stipend | Salary |
| Purpose | Supports learning and training | Payment for consistent work and expertise |
| Amount | Usually, a smaller, fixed amount | Big amount based on experience and skill |
| Payment Basis | Not linked to hours worked | Linked to job responsibilities, not time |
| Flexibility | More flexible in hours | Set working hours |
| Tax Implications | Often lower or tax-exempt | Fully-taxable |
| Perks | Few or none | Often includes healthcare, retirement, and other perks |
| Best For | Interns, apprentices, research assistants | Full-time professionals and management |
| Job Security | Generally temporary | Often more secure and long-term |
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Choosing a stipend over a salary depends on your current career stage, financial needs, and goals.
If You are Starting Your Career: A stipend provides a valuable way to gain experience without immediate pressure. So it is good at the beginning of your career.
When You are Focused on Learning: Stipends are perfect when the role offers critical skill-building. So in case you want to build skills and look for a new skill set, you may earn a stipend via internships or training.
If Flexibility Is Important: Stipend roles often come with fewer strict hours. So if you want to work and study at the same time, you can opt for part-time work that gives you a stipend.
When You are Considering Career Transition: Stipends can help you gain experience in a new field.
Choosing a salary over a stipend might suit you better if you want stability and growth.
If You Need Financial Security: Salaries provide predictable income and are best for stability. After graduation or post-graduation, you can apply for a job where you are given a salary.
When You Want Long-Term Employment: Salaried roles usually offer more permanent positions. Stipends are temporary for 3 or 6 months.
When You Seek Career Progression: Salaried jobs often come with paths for advancement.
If Benefits Matter: A salary usually comes with perks like healthcare and retirement plans. So if you plan to be stable in your life, then you can go for a salaried job.
Moving from a stipend to a salaried position is a common goal for many. Here’s how you can transition smoothly:
Leverage Experience: You can always make use of your skills learned during stipend roles. You can use this to get a salaried job that suits your interest.
Build Connections: Networking with colleagues can help you discover salaried opportunities. You can make connections with your peers and grow further.
Continue Learning: You need to continue upskilling yourself. Earn new certifications that increase your employability.
Highlight Your Achievements: When you are applying for salaried roles, you need to showcase your experience and accomplishments.
Apply Within Your Field: Look for entry-level salaried positions that match your stipend-based experience.
If you are searching for a remote job or a permanent position, you should consider a salary-based role. Stipends are usually more suitable for temporary or flexible roles. Both stipends and salaries can apply to remote jobs, but there are key distinctions:
Stipends: Many remote internships and freelance roles offer stipends, especially for training-based opportunities.
Salaries: Salaried remote jobs are common in industries like tech, marketing, and consulting.
In the future, stipends and salaries are expected to become more flexible, supporting hybrid compensation models. As the job market evolves, these are the key trends to watch:
Rise in Remote Stipends: Remote work is expanding, offering opportunities for virtual internships and stipend-based roles.
Flexible Salary Models: Some companies are adopting salaries with variable components based on performance, which may also apply to stipends in certain scenarios.
Increased Demand for Skill-Based Stipends: Companies are offering higher stipends for candidates with in-demand skill sets, particularly targeting students and early-career professionals.
Understanding the difference between stipends and salaries is crucial for effective career planning and financial stability. Stipends are ideal for early-career roles focused on learning, while salaries offer stability, benefits, and opportunities for long-term growth. By evaluating your personal and professional goals, you can make informed decisions about job offers, career direction, and financial planning. While stipends provide a strong foundation for learning, salaries are more suited to achieving financial independence and career advancement.
