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.
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