You can budget, resist the urge to splurge, and make savvy financial decisions, but when it comes to financial health, giving some attention to your earnings can be just as crucial as your spending. Whether you’re covering your expenses or building toward a dream, negotiating a higher starting salary or earning a pay raise can impact your financial picture.
Amid the Great Resignation, employees are in demand. That means you’re in the driver’s seat for wage negotiations. However, many employees don’t take advantage of this position. More than 70% of U.S. employers expect employees to negotiate an initial job offer. However, 55% of prospective employees don’t try to negotiate. They’re leaving money on the table. So that you can bring home a bigger paycheck, here’s how to negotiate a salary or raise.
How to Negotiate a Salary
1. Build your case.
It’s not enough to simply counter with a higher proposed salary. You need to justify the raise. Your argument may involve asking your potential employer to match industry salary trends based on your experience level and position, or you may ask them to match a competing offer. (Only do the latter if the alternative offer is real.)
2. Make a reasonable request.
Experts recommend asking for no more than 10% to 20% above the proposed salary when starting a new job. This is also true when you’re negotiating a pay raise.
3. Practice your delivery.
When making your case, you may need practice the negotiation conversation (if you plan to have it in person or over the phone), or have a friend or colleague read a draft email if you plan to present your case that way. You’ll want to ensure that your justification is sound and that you’re presenting your case clearly. Make your argument thoughtfully so you don’t come across as arrogant or difficult to your future bosses.
4. Understand your employer’s perspective.
Most reasonable employers won’t withdraw an offer simply because you’ve asked to revise it. However, they may also be constrained by factors outside their control, such as salary caps. Continuing to press the issue may sour your relationship with the company. If the company can’t meet your needs, respectfully withdraw your application, and focus your efforts elsewhere. Or you can discuss other benefits with them.
How to Negotiate a Raise
1. Introduce the idea slowly.
Business coach Carol Hagh warns against surprising your boss with an unexpected request. Rather, she suggests bringing up the conversation gradually, preparing your manager to discuss it, and scheduling dedicated time for a one-on-one conversation.
2. Research your salary.
To best make your case, you’ll need to know your worth. Research typical salaries for your current job title, duties, years of experience, and location to best understand the pay range applicable to you.
3. Make a list of your accomplishments.
To make the case that you’ve earned a wage increase, you need to demonstrate your value. Make a list of your accomplishments. These accomplishments may include great customer or manager feedback you’ve received, sales goals you’ve met or exceeded, or other honors. Employers are especially interested in additional job duties you’ve taken on, particularly if those responsibilities have been self-led. It may be easier to remember your accomplishments if you note them as they happen rather than trying to remember everything is a brainstorming session after the fact.
4. Remember your boss may not be the only decision maker.
Keep in mind that depending on your company’s organizational structure, your direct manager may not be the only one deciding your salary. She/he may also have to report to and get approvals from individuals in human resources and/or other executives. Thus, your negotiation may take more time than you expect, and the results may depend on circumstances that have nothing to do with your job performance. It’s important to maintain a positive outlook and be respectful in your approach.
Consider Your Other Benefits
If your employer says they can’t increase your initial salary or offer a raise, consider other benefits. These days, employers may be able to offer items beyond health insurance and retirement. Your benefit package may include options for work-from-home, flexible scheduling, paid time off, child-care and elder-care assistance, financial planning, mental-health services, and fitness and wellness resources — all of which could save you money, improve your quality of life, and cut back on your expenses.
We hope these tips help you earn more as you strive for financial stability or making a dream, like buying a new car or owning a home, come true. Wherever you are in your financial journey, we’re here for you.