How to make $1M during your career with one simple trick
*Originally published by Payscale.
If you want to get rich, waiting for your annual pay increase probably isn’t going to do it. A 2016 World at Work survey found that most employers planned to give a 3 per cent raise in 2017. It appears that they’ve stuck to that: The PayScale Index showed a 2.8 per cent year-over-year increase in wages for Q3 2017.
That would be a modest increase by most measures, but when you factor in inflation, the picture gets much worse. PayScale’s data show that real wages have declined 6.9 per cent since 2006, when inflation is taken into account.
But despite this tough economic environment, there is something you can do to boost your earnings:
Negotiate your starting salary every time you accept a new job.
“I tell my graduate students that by not negotiating their job at the beginning of their career, they’re leaving anywhere between $1 million and $1.5 million on the table in lost earnings over their lifetime,” economist Linda Babcock of Carnegie Mellon University tells NPR.
Even if the beginning of your career is far in the rear-view mirror, you can make a positive impact on your lifetime earnings by negotiating pay the next time you take a new job. (Which will be every four years or so, if you’re a typical worker.)
Convinced? Here are a few things to consider before you start negotiating.
1. There’s nothing to fear.
Only 43 per cent of respondents to the our survey reported that they’d ever negotiated salary in their field. Twenty-eight per cent of those who held back did so because they were uncomfortable negotiating. Eight per cent were afraid of losing their job.
If you’re afraid to negotiate, you’re not alone in your fear. But, your nerves are also probably not insurmountable: it’s unlikely that the 43 per cent of folks who asked did so because they felt confident and enthusiastic about asking for more money. They just decided to try to anyway. And it worked — 75 per cent of people who asked received some sort of raise.
In short, don’t wait to feel comfortable asking for what you’re worth. Do your research, make a plan, and make it happen.
2. Most hiring managers expect it.
A recent CareerBuilder survey showed that 53 per cent of employers were willing to negotiate starting salary for entry-level workers. Further, 52 per cent started off with a lower number, just in case they had to make a counter-offer.
That’s for people just starting out in their careers. If you have experience and in-demand skills that employers are willing to pay for, your odds are even better.
3. An employer that won’t counteroffer probably won’t give you decent raises.
Finally, you have to ask yourself how happy you’ll be working for an employer that either doesn’t have room in the budget for a counteroffer (provided, of course, that your request is reasonable and in line with the market) or doesn’t understand that negotiation is an accepted part of the interview process. You certainly won’t be able to count on much in the way of raises once you’re working there.
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