Frugality and cutting your expenses can certainly improve your finances, but sometimes you need to ask the $10,000 question instead of the $10 question. That’s where asking for a pay raise comes in…
Getting a raise is likely the quickest way you can increase your savings rate and financial position. If you aren’t don’t negotiate for a pay increase, you could be leaving a significant amount of money on the table that could considerably improve the quality of your life and help you to achieve your biggest money goals more quickly.
Plus, earning more can be a great way to improve your outlook on your job. Higher income earners are generally happier at work and feel more valued. And when you feel good about your job, you tend to work harder, putting you in line for even more career accolades.
But asking for a raise isn’t as simple as walking into work and demanding that your salary be doubled. Securing a raise takes research, nuance and a lot of confidence. That’s why we’ve compiled a list of tips and tricks to guide you through the entire process, from research to negotiations!
Why it’s important to ask for a raise
Asking for a raise isn’t just about the money (although that certainly makes a HUGE difference in your finances – see image below). It’s also about advocating for yourself and conquering awkward situations that help you grow as a person and an employee.
It’s definitely scary to ask for more money. But it’s important that we don’t let this fear prevent us from getting paid what we are worth. Here are just a few reasons why it’s important to ask for a raise, even if you’re a little bit intimidated…
Make More Money
Not to state the obvious, but asking for a raise can help you to make more money. If you’ve been living paycheck to paycheck or dealing with money anxiety, earning more at your current job could immediately fix those problems, so long as you keep lifestyle creep at bay.
Learn to Advocate For Yourself
Proactively asking for a pay bump is a great way to advocate for yourself in the workplace. I’d even go as far as saying that it is a form of self care! It shows that you believe in yourself enough to get out of your comfort zone and improve your finances.
It can also show your employer that you are fully invested in your job and want to stay there long term. Also, asking in advance and not waiting to be given a raise shows initiative. So even if your request isn’t granted, most employers hold you in higher regard just for asking.
Remember that your personal finances are personal. No one is going to look out for you quite like yourself, so push yourself to grow by adding negotiating to your skill set.
Be Happier At Work
If you’ve ever felt dissatisfied at your job, there’s a good chance it’s because you feel undervalued. According to a new Gartner survey, only 32% of workers feel like they are compensated fairly. That means that nearly 70% of the workforce feel they are underpaid!
Even though compensation doesn’t account for all of your work satisfaction, being paid more can go a long way in making you feel like you are being respected and not taken advantage of. When you feel more appreciated at work, your performance tends to reflect that. And you may even develop a healthier relationship with work itself.
Get Good At Having Difficult Conversations
Throughout your career, you’ll need to work with people you don’t get along with. You’ll also need to talk through topics you disagree on with many people in your life. The same is true for your relationships outside of the workplace too. Learning how to negotiate a raise helps develop the all-important skill of having difficult conversations.
Regular conversations about compensation can make you a better communicator in general, and leave you better able to handle life’s challenges with grace and confidence.
Show people you’re a leader
When you negotiate a raise, you have the opportunity to remind your higher-ups of the value that you bring to the workplace. By sharing your wins with others at work, you establish yourself as a leader within your industry.
Hedge against inflation
As inflation increases, our money loses some of its buying power. If you don’t get a raise and inflation increases by 3%, that means you are essentially making 3% less money this year as opposed to last year. Securing a pay raise ensures that you can protect yourself from inflation eating steadily at your dollars.
How to Negotiate A Pay Raise
Negotiating a pay raise can be a little intimidating, but if you adequately prepare you’ll be able to go into the conversation with confidence. So here is a step by step guide on how to negotiate a pay raise, so that you’ll be ready for your big talk.
1. Do Your Research
The first step in getting a pay raise is to take the time to research your position salary range commensurate with your experience. You can use Glassdoor to look up the average salaries for your profession, as well as peruse jobs on websites like Indeed and Linkedin.
Take a little while to analyze where you fall within that salary range. Are you being under compensated? If so, print out these figures to bring with you to your negotiation.
Remember that location is also a factor, so try to come up with figures accurate to your local market. The same job in New York City versus rural Kansas will probably differ by a significant amount.
Ask industry friends & coworkers
If you’re having trouble finding resources for your specific role, you could also try asking other people in your field about what they make. For example, if you have a friend you’re close with or a coworker you trust, you could see if they are interested in having a conversation about compensation with you.
You could also reach out to people you don’t know personally who are in your network on a site like Linkedin. Try and find someone you have something in common with. Maybe you are both alumni of the same school, or maybe you’ve worked at the same company in the past. Either way, ask them if they would be willing to chat about professional development with you.
When you do talk to people, make sure all conversations around money are conducted in a professional and appropriate way. You don’t want to scare them off by asking “so, how much do you make?” right off the bat. Instead, try this:
“I’ve seen that the pay for your position is usually between $XX,XXX and $XX,XXX. Is that accurate given to your experience?”
Lastly, be sure to remember that salary isn’t everything. Pay attention to the total compensation packages included with these positions. We’ll talk more about this later…
2. Consider Switching Companies
Before you ask to have a meeting with your boss, it’s important to consider whether or not asking for a raise is even worth it. You might be able to greatly increase your compensation by applying for another position elsewhere. Switching companies might be your best bet.
In fact, switching companies will almost always result in a much higher pay increase. Research shows to the tune of over 14%! That’s compared to a typical 3-4% cost of living raise you could expect from your current employer. So it’s important to consider whether or not asking for a raise is the right move.
For example, if your company has been laying off 50% of its workforce, it’s unlikely that they will be able to give you a raise that’s competitive in the current marketplace.
Even if you ultimately decide you prefer to stay at your current job, it’s a good idea to keep your options and mind open. You never know what opportunities you might find by putting yourself out there! Especially after talking with some of your industry friends and hearing what other companies are offering.
Apply for a promotion, also.
If you do decide to try and switch companies, don’t limit your search to your current job position. You likely have a number of transferable skills, and may be able to pivot to a different sector where you can earn more and expand on your experience.
For example, if you are a teacher, you can consider applying to educational roles in other sectors, like technology! Switching from the public sector to private sector could be a lucrative move. Similar roles, but completely different company structure and compensation models.
Can You Return to the Office?
Managers are having a difficult time right now getting workers to return to office. And many companies are offering pay increases for employees that are willing to show up in person to the office..
Obviously you’ll want to weigh the costs or a daily commute, etc. But if working from home isn’t really your thing anyway, perhaps you can get a raise by going back to office work. It’s not for everyone, but definitely something to consider. Being on board with the companies priorities might put you in a better position to get a raise.
3. Reflect On Your Performance and Skills
Now it’s time to reflect on your own skills and experience and factor them into your planning. It’s important to be realistic, while also not undermining and discounting your experience. If you have 1 year of experience and no certifications, you probably can’t ask for the salary of someone in your position who has 10 years of experience.
When evaluating your performance and skills, it can be helpful to do a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunity and Threats. Think about how each of these factor into your career, and use them to inform your next moves.
For example, if you were working as a graphic designer, your SWOT analysis might look like this.
- Strengths: Photoshop Certification Course, Degree in graphic design, Creativity
- Weaknesses: Time management, InDesign, After Effects
- Opportunities: Break into corporate logo design
- Threats: AI Graphic Design Generators
Again, be as realistic as possible. While it might hurt to list your weaknesses and threats, don’t get down on yourself or dwell on them. In fact, knowing those problems are half the battle. The other half is working to improve them!
Start making improvements (ASAP)
Next, it’s time to take steps to start improving yourself. Learn new skills, earn new certifications, and work on your weaknesses to become invaluable to your employer and make yourself more attractive in the market.
The reason you’ll want to start this ASAP is that it gives you more ammunition when asking for a raise. Any display of initiative to improve yourself or get better at things shows that you are interested in boosting your worth to the company. The more you are worth in that role, the more reasonable your pay increase request is.
Self improvement doesn’t necessarily mean working more hours. It can mean working smarter to become more efficient and produce higher quality work. Consider taking on more responsibilities at work, or taking classes to expand your skill set.
Return to the office!?
A recent KPMG survey revealed that 9 out of 10 CEO’s would “hand out raises, promotions or assign better work” for those willing to commute back to an office!
Of course this isn’t for everyone and you’ll need to weigh the pros and cons of a daily commute. But if your company is having a hard time getting people to return to an office environment, being on board with those efforts can show that you are aligned with their priorities. It may make asking for a raise easier!
Free courses and training
You don’t always need to spend money to improve your skills either. Take advantage of free certification courses online. Or find courses you really think will help and ask your employer if they will foot the bill for additional training.
Coursera is an awesome place where you can find free courses from major universities like Stanford, Yale, or University of Michigan. Udemy also offers free courses depending on what you want to learn.
Another great way to get free experience is by taking on a mentor. Ideally someone within your current employer, this mentor can expose you to things “above your pay grade” and give you a peek into higher career levels. When it’s time to ask for a pay raise, you’ll have just that little bit more experience than other folks (and maybe even a higher-up friend to help reference).
Probably the ultimate and easiest way to improve yourself is to start giving your best at the workplace. With the rise of remote work, it can be more difficult to connect with the people you work with. Start making the extra effort to see people face to face if possible by participating at work place hangs, or by calling in to check on your coworkers.
4. Set Your Desired Salary Goal & Timeline
Now that you’ve dug into how much money is typical for your position, as well as evaluated your personal skill set and experience, it’s time to come up with a concrete plan for your salary negotiation.
When coming up with a figure or package to ask for, it can be helpful to have a range in mind. Start with the lowest amount you would be willing to accept, and take it all the way to your dream number.
You should also make a list of benefits you would like to negotiate for, like more time off or a hybrid work from home schedule. Remember that benefits can be more valuable than compensation, because they improve your life in other ways. Think outside of the box here, because if your employer shuts down your pay raise request it’s helpful to have a few other non-monetary requests up your sleeve when negotiating.
Set a timeline
It can be a good idea to plan your negotiation a few months in advance. This gives you time to adequately prepare. For example, if you are planning on asking for a raise within the next three months, you can begin sharing your successes as they happen with your team, bringing more attention to those accomplishments.
It can also be a great idea to make a list or folder of your biggest work wins. So often we move past our accomplishments too quickly, and in the rush of things we can forget about them altogether. Keeping track of your wins can ensure that you have plenty of talking points during your negotiation. They’ll be helpful reminders to prove your case.
In setting your timeline, be specific. If you’re too general with a goal of “getting paid more before the end of the year” then your drive may fizzle out along the way. By setting very specific action steps with your timeline you’ll be able to track and measure your progress.
Here’s an example timeline:
- 1 week goal: Reach out to 5 LinkedIn contacts and ask about mentoring opportunities
- 30 days goal: Enroll and complete 6 hour free course for advanced Adobe XD training
- 60 day goal: Finish Q2 migration project, and make a report on all the things I did awesome at this year.
- 90 day goal: Set meeting with my boss to ask for a raise
5. Set a Meeting with your Boss/Manager
When the time is right, you’ll need to set a meeting with your boss or manager. Remember to be respectful when requesting this meeting. Don’t ask them on the busiest day of the year when they’re juggling 3 phone calls and a presentation. And definitely don’t try catching them off guard in the hallway for an impromptu compensation chat.
Instead, give them a chance to know what the meeting is about, and give them a proper heads up. Try a simple email saying something like this… “I’d like to get some time on your calendar to talk about my performance and compensation package. Are you open this Friday morning or early next week?”
At this point, you should feel fully prepared to explain to them why you deserve additional compensation, as well as have figures and examples to support your request. You should also have good records of your accomplishments, and a list of the ways in which your work has improved your company. Explain this during your meeting, and remember to always stay respectful during your negotiation regardless of the outcome.
Practice meetings will help A LOT. While you’ll probably never feel 100% prepared, you don’t want to walk in not feeling ready. We’ll cover more meeting tips below in the negotiation tips section.
Lastly, make sure to follow up with your boss after the meeting – in writing. If they say that they need time to run things by their higher ups, ask them when a good time to follow up will be, and then follow through and actually check back in. This will ensure you get your answer in a timely manner!
Tips for Better Negotiations
Like anything else in life, becoming a good negotiator is a skill that you must develop with practice, so here are 9 tips that will make you a better negotiator.
1. It’s not a battle…
Sometimes, in our heads we make pay negotiations out to be some sort of epic gladiator-style battle to the death. You vs. them! But when you go into a negotiation expecting the worst, it can not only affect the outcome of your talk, but also your relationship with management.
Instead of thinking of negotiating as a battle to be won, think of it as coming together with your team to come up with a creative solution that will benefit everyone at your company. Remember, if you’re happier and taking on more responsibility due to a pay raise, everyone wins! So be respectful, polite and optimistic during your meeting.
2. Start with a high figure
Now, we’re not recommending you ask for a million dollar salary if you’re currently making $30,000, but you should expect that your boss will probably try and talk you down from your original ask.
That’s why it’s important to start with a figure on the high end. At best, they’ll say yes to your original request and you’ll end up earning more money than you imagined, but most likely you’ll end up landing on a figure that’s closer to what you originally thought was appropriate.
A good way to come up with your initial figure is to ask for the highest amount that you feel like you can confidently justify given your expertise and experience. For example, if the salary range for your position with the same number of years of experience is $50,000-70,000, ask for $70,000 first.
3. Prep Ahead of Time
One thing you don’t want to happen while asking for a raise is to be caught off guard or underprepared. It’s important that you do your due diligence ahead of time to ensure that you’ve practiced your talking points. You should have evidence and examples to support them.
One thing you can do to prepare is to make a list of your biggest accomplishments as they happen throughout the year. That way, when it comes time to talk about compensation, you already have a list of examples of times you’ve helped to improve the company, or gotten positive feedback.
You can also talk about any upcoming projects during your negotiations, and tell them about how you plan on continuing bringing your awesome work ethic and creativity to the team.
Also be sure to bring up all those weaknesses you are trying to improve on. Letting them know that you are proactively trying to be a better employee gives them more reason to fight for you getting a raise.
4. Practice, practice, practice!
Imagine you’re starring in a play. If you walk onto the stage without attending the dress rehearsal, you’re likely to fumble a few of your lines during the show, or miss an entrance or cue. The same can go for your negotiation!
Asking a friend to practice negotiating with you is a great way to make sure you “know your lines.” They might ask you questions you hadn’t thought to prepare for, or can give you additional feedback about your proposal. Even if you just start by practicing yourself in front of a mirror, practicing negotiation in a lower stakes situation can help you to enter the actual meeting with more confidence.
5. Start by Asking Questions
Another great negotiation tip is to make sure you’re asking questions. The goal is to understand the other person’s side more. For example, if your boss denies your request for a raise, don’t just accept it. Dig a little deeper by asking what you would need to do to make it possible for you to earn more at your company. That way, if it’s a simple fix, such as switching positions or getting a simple certification, you can take action and continue pursuing your raise.
Managers can sometimes also give vague answers to your questions. So make sure to ask questions to understand the entire story. You may learn that they are unable to give you a raise because they are anticipating layoffs. Or perhaps the company is looking to downsize in the future, which could indicate that now is a good time to start looking at positions elsewhere.
Another great topic to inquire about is timeline. If your boss says that they would love to give you a raise but can’t right now, ask them when they anticipate they will be able to.
6. Don’t talk over yourself
Here’s an easy (but powerful) negotiation tip to appear more confident in your meeting. Don’t talk over yourself! Become more comfortable with silence.
Sometimes, we hurt ourselves by continuing to talk and explain after we’ve already made our point, so don’t be afraid to pause for dramatic effect. You’d be surprised at how often this can prompt your higher ups to figure out a way to give you a pay raise.
Silent moments can feel really awkward. Like 3 seconds can feel like 3 hours. But just sit and let the awkwardness seep in. As cool as the other person seems, they are feeling just as awkward as you. The more rambling you do in a negotiation meeting, the more confusing your request sounds.
7. Negotiate for more than just salary
Your salary is only one piece of the puzzle when it comes to your workplace satisfaction. When negotiating a pay raise, it’s important to consider also asking for benefits outside of an increased paycheck.
For example, you could negotiate for better resources within your company that could help you to more effectively perform your tasks, like a higher marketing budget or software subscriptions. You could also negotiate for a more comprehensive healthcare package, continuing education opportunities, childcare or additional opportunities. Instead of being laser focused on the salary alone, take the total compensation package into consideration.
8. Put Yourself In Their Shoes
Before asking for anything (especially a raise!) try to put yourself in the shoes of your employer. Take the time to think through the problems they are currently facing, and their goals for the future. See if you can come up with some creative solutions for them.
To truly create a win/win, you must understand the pain points of the workplace and be willing to help fight for what they want to achieve. If you can demonstrate this in your negotiation, you’ll be seen as a more valuable part of the team, and they’ll be more likely to compensate you as such.
9. Stay Positive!
Lastly, make sure to stay positive throughout the entire experience. Sometimes, asking for a raise won’t go in your favor. Remember that even if you don’t get your desired outcome, having the conversation was still worth it for the experience you’ve gained alone.
Plus, if you aren’t able to get a raise, there are still plenty of other directions you can go in to maximize your income.
Could you get a bigger raise by working for yourself?
If you’re only offered a meager raise, or are unable to get one at all, it may be worth asking yourself if you could make more money by opting to work for yourself.
In 2022, 39% of workers worked in some type of freelance positions. That’s because starting your own business, or turning to freelance work can sometimes be the best way to earn more money.
Plus, you get to be in control of your own schedule and the direction you take the company in, because you’re the boss! Best of all, there are plenty of businesses you can start without spending a dime.
If you aren’t ready to quit your job in the pursuit of freelance work, you could instead choose to start up a side hustle. Over time, as you make more money and increase your customer base, you could eventually transition into going full time with it. Just make sure you choose a side hustle you can scale. Depending on a platform like Uber or Lyft gives you very little flexibility and growth opportunity.
The Bottom Line:
Negotiating a raise can be a little intimidating, but it’s an entirely worthy endeavor. In addition to increasing your skill set, you’ll enjoy increased earning potential for years to come. This means more flexibility in your everyday life, as well as expanding your ability to save and invest for your future.
Just remember to do your research, come prepared, and search for that win/win situation. If that’s not an option at your current employer, it might be time to find a new company that can pay you what you’re worth.
Best of luck. Go get that raise!!
More Resources:
- Get Paid What you’re Worth with Alex Carter – HTM #569
- Negotiation as an Everyday Winning Tactic
- Never Split the Difference (one of the BEST negotiation books by Chris Voss)
