How to Negotiate Salary in the Middle of Your CareerSubmitted by Castlebar Asset Management on June 21st, 2018
You might think knowing how to negotiate salary is a skill best used by entry-level workers who are just getting started in their careers. And you’re right -- being able to secure better pay when you start a job sets you up to make more over your working years.
Many professionals expect to command more as they move up through the ranks, take on more responsibility, and provide more value through their experience. You probably will see raises come over time, but the mistake is in thinking you no longer need to negotiate increases in your compensation.
In fact, it’s when you hit your stride in your 30s and 40s that knowing how to negotiate salary becomes critically important so you can earn top dollar -- because after the age of 50, your income growth will likely slow or even decrease.
The Peak Earning Years for Men and Women
Depending on your gender and your education level, you’ll likely hit a point in your career when your income stops growing -- and could even start dropping.
For men, that age is 48. Women see that peak come nearly a decade earlier, at the age of 39. Assuming you started your career after college around the age of 22, this gives people an average of 20 years to grow their incomes (though for many this window will be even smaller).
This makes it critically important to push for top dollar during that window, and take advantage of the years when you can make the most. The more you earn, the easier it will be to create the cash flow you need to both support your lifestyle now and contribute a significant amount to your savings and investments to secure your financial future.
That’s the importance of negotiating. Now, here’s how to do it and successfully start earning more.
How to Negotiate Salary Throughout Your Career
Before you even consider what you’ll say in a salary negotiation, you need to consider when you’ll say it. Timing can matter as much -- or even more than -- what you actually ask for.
The best time to earn higher pay is when you’re looking for a completely new job. “Job hopping” doesn't have the same stigma (or even definition) as it used to, and the time of working at a single company for 20 years or more is pretty much over.
If you want to significantly increase your earnings, consider looking for a new position. If that’s not an option (or you have other good reasons for staying with your current company), you still need to consider the timing of your negotiations.
Good times to have the conversation about raises or bonuses might be during your annual review or when you take on increased and ongoing responsibilities. Asking during extremely busy work cycles where stress might be running high isn’t the best idea -- nor is asking when things are exceptionally slow and profits might be lower for the quarter.
The ideal time to start negotiating depends on the nature of your company, how long you’ve been there, and the seasonality of your work (if applicable). Use these tips as guidelines, but at the end of the day, rely on your best judgment to gauge timing.
Here’s what you need to consider when it’s time to have the conversation:
Do Some Research
Understand where your manager or supervisor can be flexible in a salary negotiation -- and where they can’t. Are there salary caps? Other limitations? Areas where you know they have the power to make final decisions?
Knowing this can allow you to create an offer to bring to the table that someone can actually work with (instead of shutting you down immediately).
Have a Reason for Your Request
Don’t just walk into a negotiation to ask for more money. Be prepared with the number you want in mind -- and the facts to back up why you should earn that amount. That could include data, reports, or outcomes from recent projects or deliverables.
You want to be able to communicate your value, both through anecdotes and hard numbers. Ideally, you can show that your value to the company far exceeds even the increase in salary you request.
Negotiate -- But Don’t Haggle
You’re not at a market looking for the best deal on your grocery haul. This is your job, and your career -- so don’t start nitpicking the details and trying to negotiate every single thing about your new compensation.
Understand what is most important to you about the negotiation, and focus in on that. Be willing to meet your employer on their side of the fence on details that aren’t as valuable to you. It’s helpful to understand what they find most important, too, so you can address that directly and make an offer that appeals to them as much as it appeals to you.
Remember, Compensation Can Be More Than Salary
Depending on your position and the type of company you work for, you may want to ask for equity or stock options as part of your negotiations. These assets can help you build wealth much faster than saving a percentage of your salary -- and are often easier for companies to grant than more cash.
Think about other benefits that are easy for the company to offer and help you make the most of the salary you take home, too. Anything that can save you money out of your own pocket can mean freeing up more cash flow to invest on your own.
Even if a higher base pay isn’t an option, other types of compensation or benefits can still help you grow your wealth if they allow you to spend less and save more of that base salary.
Look Out for Your Own Bottom Line Throughout Your Career
Negotiating your salary isn’t something reserved for the fresh-faced looking for their first jobs. It’s something you should seek to do throughout your career.
You absolutely need to negotiate every time you switch jobs, as this is your biggest opportunity to earn more money. But you should make salary negotiation a regular part of your work life even if you stay at the same company, especially in your prime earning years in your 30s and 40s.
Disclaimer: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.