Negotiating Your Salary

With unemployment still sitting around 9%, many people who are offered a job take it without hesitation. My advice is when you are offered a job, make a counter-offer on the salary. Why? Because it is in your best interest. (This post show you how.)

Most all jobs have a range for salaries. It should not surprise you that most companies will start you off at the low end of that range. You are not proven to the new company yet. But this does not mean they will not pay you more than they are offer you at first. Do not be intimidated. The human resources representative deals with salary negotiations all of the time. The worst they can do is say no.

You may be asking, what is the real benefit of asking for more money? The benefit is more money. Much more money. Take a look at the graph below (clicking on it will enlarge it). It depicts two starting salaries: the red line is a starting salary of $35,000 per year. The blue line is a starting salary of $40,000 per year. As you follow the lines, the difference doesn’t seem that big. But here are the numbers: In 25 years, the person that started off making $35,000 per year is now making just over $71,000. Not bad. The person that started off making $40,000? They are currently making just over $81,000 per year. (Note: I am not accounting for inflation, just a 3% annual raise.)

The difference is $10,000. Big, but not earth shattering. If we look deeper though, you will see the larger issue: Over the course of the 25 years, the person that started off at $40,000 per year ended up making a total of over $182,000 more than the person that started out at $35,000.

By not counter-offering, you are giving up $182,000 over the course of 25 years. All you have to do is ask. Is it worth $182,000 to you to ask for more money? I hope you answered yes.

A few final points

• When counter-offering, you cannot simply make a number up out of thin air. You have to have an idea of the salary range for your position and a reason why you deserve more money. You can go online to get an idea of salary ranges for your position.
• What I tend to do is determine what my ideal number is. Then I make a counter-offer a little higher. The employer comes back usually somewhere in between, which is close to my ideal number.
• If you counter-offer and do not get what you want, ask to meet in the middle and then have a review of your performance in 6 months with the opportunity to get a raise then. (This worked for me)

Tagged as: Career, Personal Finance Basics