There is one simple thing that anyone (especially college graduates) can do to change their financial life for the better for years to come. It only requires a little bit of work and a dash of confidence.
This one simple step can lead to thousands of dollars more in income, a higher net worth, and a gateway to paying off those pesky student loans.
Yet so many graduates or others changing jobs are neglecting this necessary step: negotiating on salary.
A recent study from NerdWallet and LookSharp found that a mere 38% of survey respondents negotiated with their employer when receiving a job offer. This information is even more striking when you consider the fact that the study also found that three-quarters of employers said they had room to negotiate and increase salaries five to ten percent.
For graduates looking at a starting salary of $40,000, that is an additional $2000 to $4000 each year. That amount of money could shave months off your student loan repayment timeline. Not only that, but if you were to invest that money over forty years, you’d set yourself up with a nice nest egg.
So, what is holding people back from negotiating for a higher salary? I’d venture to say it’s mostly fear or simply being happy with “just having a job.” I know when I got my first career job I did not negotiate my salary, because I was just happy to have a job in the first place.
Of course, it’s nice to be grateful. But this is your future we’re talking about—and this one step can change the course of your financial life and increase your earning power far more than if you never negotiated.
Here’s a step-by-step process on how to negotiate your salary.
Do Your Research
Before you even apply for a job, do your research on what typical salaries look like for your desired job in your area. Check out sites like Payscale and Glassdoor to get an idea of what people with similar jobs are making in your area.
You’ll want to empower yourself with information and not undercut yourself in the negotiation process. Conversely, you want to know the general range of what people are getting paid for your type of work. This can provide a strong foundation for your negotiations.
Know What You Are Worth
After doing research on typical salaries in your area, start taking an inventory of your skills and abilities so you truly understand what you are worth and ask for what you want. Consider the following:
- Do you have any specialized technical skills?
- Do you hold any certifications that can help you perform the job?
- Do you know another language that will help you perform the duties of your job, or that could help the organization as a whole? (Side note: one of my biggest regrets is not negotiating more for a job where I spoke Spanish every day and was asked to translate materials. This was a unique, specialized skill in the office and one that I have spent a lot of time and money mastering.)
- Do you have any other skills that could elevate the company’s growth?
These are important things to consider when determining your value. You want to be crystal clear about what you bring to the table and be able to confidently showcase your individual skills and abilities.
Negotiating is all about selling yourself and what you offer—yes, it can be uncomfortable and scary, but if you flip the script and think of it as commanding what you are worth, you can empower yourself and your finances to earn more money.
Many people are scared to negotiate. Perhaps they feel like they are asking too much, they are scared of rejection, or they are worried about coming off as ungrateful or aggressive.
It’s essential to put your personal feelings aside and remember that this is business. This is your life and your financial future at stake. The good news? According to the NerdWallet study, 76% of employers said that employees that negotiated appeared confident when doing so.
Put your fear to rest and start preparing. Negotiation is a delicate balance of asking for what you want while demonstrating, in a tactful way, why you are worth it.
One great tool to have in your repertoire is the Briefcase Technique, by finance expert Ramit Sethi.
The premise of the Briefcase Technique is that just as you are about to discuss salary, you bring out a proposal document that includes areas of the company that you’d like to improve and tactical solutions about how to do it. This accomplishes a few things:
- It shows you’ve done your homework on the company. (Always do research on the company. Check out their website, look at their staff on LinkedIn, etc.)
- It shows you are tenacious and proactive. Employers like go-getters who want to solve problems. The biggest mistake people make when applying for a job is talking too much about themselves. Employers don’t want to know why this is your dream job—they want to know how you can solve their problems and make their lives easier. Think of it from their perspective. They are looking for someone to solve problems and keep things moving. Using the Briefcase Technique, you can show in explicit detail that you’ve reviewed their company and know exactly how you plan on growing with the company.
- It sets you apart from the competition. In order to get the job and command a higher salary, you need to make yourself indispensable to the company—even before you start working there!
In addition to the Briefcase Technique, arm yourself with more tools and resources by checking out this comprehensive Salary Negotiation Guide.
Practice, Practice, Practice
The last step before you go for the gold is to practice, practice, practice. Negotiation is a learned skill.
Sure, it may come more naturally to some than to others, but it’s still a skill that can be learned by anyone with some practice.
Practice in the mirror. Practice with a friend. Record yourself on video and study it to find ways you can improve.
How to Have the Salary Negotiation Conversation
So, you’ve practiced and prepared. You’ve done your research and now it’s game time. Your prospective employer offers you the job and a starting salary. What do you do now?
Be firm, yet polite.
“I’m really excited about this opportunity and I know that I will bring a lot of value to this company. I appreciate the offer of $40,000, but given my experience and skill set, I was expecting $45,000. Can we look at a starting salary of $45,000 for this position?”
Appear confident, don’t fidget, and maintain eye contact. It’s their turn to say yes or no, or negotiate further.
Be clear on what you want and know your walking-away point. If you won’t work for less than $45,000, then don’t accept an offer for less.
You can also try to negotiate other aspects of the job if they are not flexible on salary. Consider negotiating for more vacation or personal time, or even a more flexible schedule. Remember, employment is a two-way street.
Once an employer is ready to make an offer, they’ve already decided that you are the best candidate, so it behooves you to learn how to negotiate your salary and get what you deserve.
Using these tips, you can master the art of negotiation and know exactly how to effectively negotiate your salary and increase your earning power right from the start of your career.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|