This One Career Mistake May Be Costing You Big Time
March 14, 2022
Interviewing for a new job or applying for a promotion is a nerve-wracking experience, no matter how confident you are that you’ll nail it. Once you finally get the good news you’ve been waiting for, saying “yes” to the offer just feels right.
Or does it?
Just because you interviewed for a new role doesn’t mean you have to say yes. Interviews are a two way street, and it’s wise to make sure the offer works for you.
One of the biggest mistakes some people can make is saying “yes” to a job offer before negotiating what they want, especially when it comes to salary. Not negotiating for a higher salary when you get a new job is one of the easiest ways to set back your financial progress.
Let’s take a look at some of the valid reasons for negotiating a higher salary and how to negotiate an offer.
Reasons for negotiating a higher salary
A survey by ZipRecruiter found that 64% of job seekers agreed to the first salary they were offered the last time they accepted a job offer. So how much money did those workers lose out on? Potentially more than $750,000.
How? Let’s say you’re offered a salary of $40,000, but negotiate up to $45,000. Assuming you’re given a 5% pay increase over the course of a 45-year career, you’ll earn $750,000 more than if you accepted that initial offer of $40,000. It’s easy to see how negotiating pay can quite literally pay off.
Here are some of the main reasons for negotiating a higher salary.
Raises and Bonuses
Every company has a different pay structure in place for how they determine raises and bonuses, but one common method is to base these financial rewards on a percentage of your salary. Many employers will base pay bumps and bonuses on a pre-set percentage.
Let’s say your employer agrees to a 5% raise and you currently make $100,0000. This would bump your pay up to $105,000. If you made $200,000 versus $100,000, you’d get a $10,000 raise instead. The same process often applies to annual bonuses. Basically, the higher your salary starts, the larger your salary increases and bonuses will be.
One common employee benefit is to gain access to an employer-sponsored 401(k) plan. Many times, employers will “match” employee retirement contributions up to a certain percent. Typically, this percentage is based on how much you make.
The most common level of employer match is half of up to 6% of your salary. That means, if you make $50,000 and contribute 6% of your pay to your 401(k) ($3,000) each year, you would receive $1,500 in employer matches. If you make $100,000 and contribute $6,000, you would receive $3,000 in employer matches. Again, you can see how asking for more from the get go helps you make even more money.
Next Promotion or Job Offer
In an ideal world, what you’re currently making wouldn’t have any impact on what you’ll make in your next role. Unfortunately, many companies take your current salary into consideration when determining promotions or job offers. Negotiating a higher salary now leaves room for you to get an even higher offer next time.
How to Negotiate a Higher Salary
At this point, it should be pretty clear what the benefits of negotiating a higher salary are, but figuring out how to counter a job offer or how to say a salary offer is too low is a little less obvious.
So how do you negotiate a salary to give yourself a bump? Here are a few tips that can help you make your next negotiation more successful.
Offer evidence for why you deserve more
During a salary negotiation, it’s not enough to just say you want more, you need to say why you deserve more. Being likeable and having a great resume or college degree can only get you so far.
When you ask for more money, explain your value:
Were you able to cut your department expenses by researching, proposing and implementing a task management system that made your team more productive? Tell them how much money you saved the company.
Did your marketing efforts increase your website traffic? Share those site visitor statistics.
As a manager, how many of the employees on your team have remained long term? Get specific here, now’s not the time to be humble.
Make it clear you’re worth more because you’re highly-skilled and effective at what you do.
Do your research
When determining how much you want to make while interviewing for a new job or applying for a promotion, it’s wise to come to the table backed with research.
Websites like Glassdoor can help you gain an idea of what similar roles are paying at other companies and what industry salary standards are. Having research to support your negotiations will make the number you propose feel less arbitrary.
Keep track of your successes
Even if you aren’t job searching or negotiating pay right now, you can start preparing for your next negotiation by keeping track of your successes. Each time you get a rave review from a happy client, surpass metrics you were supposed to meet or receive positive feedback from higher ups, write those moments down.
It’s easy to forget about the little moments of success throughout the year, but they add up. Being prepared to share them comes in handy when you want to illustrate your worth.
Now that you know how to get yourself a nice salary boost, why not put that extra money towards paying down your credit card debt with Tally?