This is the first of two posts by Ryan Bonaparte on how to negotiate your salary.
Most pieces of advice about starting a career generally focus on the basics of putting together an awesome resume, utilizing your powerful network to get your foot in the door, and landing that critical interview to secure your dream position.
These steps are extremely important, both at the beginning and at any transition point during your career. Without them, you’re basically just throwing your resume into a void, never to get a call back.
What is often left out, however, is the incredible financial benefit of negotiating your first and subsequent salaries.
While it may not feel like it, especially when you receive your first job offer with seemingly little to offer to a prospective employer in return, you are in a position of power in the negotiation process to negotiate your salary. The employer has decided that above all other candidates, you are the best fit. Don’t forget that fact.
After (and only after) an offer has been presented, in nearly every case, a negotiation for a higher salary is expected. So much so, that often the first salary offered is reduced specifically to fall within the range that the company has decided for that position after a negotiation.
Start to negotiate your salary at 10%
If your counter-offer as you negotiate your salary is reasonable (except in extreme circumstances, I wouldn’t ask for more than 10 percent more than what was offered), the worst that will happen is your prospective employer will say they can’t meet that. After countless hours of recruiting, throwing out a perfectly good candidate because they asked for a little more money is extremely unlikely.
Following a negotiation, a few extra thousand dollars that year will feel great, but the true benefit of negotiating a higher salary really starts to appear as your career progresses.
Do the math
Let’s look at a little math and see how this truly plays out. If you were to start off with an annual salary of $45K and received 3 percent annual raises every year, and were promoted with a 5 percent raise on your fifth year, you would be making just under $60K by the end of your 10th year. Not too shabby.
However, if you negotiated a 5 percent higher salary to start, that first year salary would have been $47K and the final year would be up at almost $63K. Even better.
Here’s where things get interesting. Over the course of those 10 years, you would have made over $25K more from that first negotiation, than if you didn’t negotiate at all. On top of that, if you choose to move to a different company, your starting salary there will often be based on your previous salary. So when you negotiate that offer, you’ll see an even greater return.
For just a few minutes of your time, you could earn an additional $25K over 10 years. If you’re able to get more than 5 percent during your negotiation, that number grows very quickly.
I know it can be a little uncomfortable the first time you try to negotiate your salary with the potential boss/hiring manager/HR of a company that you don’t even work for. However, it really is a pretty standard practice, and you stand to leave a large amount of money on the table if you don’t. That's money that could kickstart a plan to save or to get out of debt.
Next week: The do's and don'ts of negotiating a salary.
Ryan Bonaparte is a long-time writer and author, delving into topics including personal finance, technology, and career pursuits. He lives in the Boston area with his wife and fiercely independent cat.