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Course: Careers > Unit 1
Lesson 3: Salary negotiationSalary negotiation: get paid what you're worth - by Better Money Habits®
Negotiating salary can be intimidating, especially if you're just getting started in your career. Learn the basic do's and don'ts of salary negotiation to set yourself up for success. This content is brought to you by our partner, Better Money Habits®.
What you earn in your 20s greatly shapes what you earn for the rest of your life, according to a 2017 report from researchers at the National Bureau of Economic Research. Big salary jumps are generally harder to come by later in your career, so here’s how you can start strong.
Research your earning potential
It’s easier than ever to find out how much jobs pay. You can check comparable positions and salaries on job-listing sites such as PayScale.com, Salary.com and Indeed.com. Other sites, like Glassdoor.com, review company culture as well as compensation.
You can use these data points to understand what someone with your résumé might earn. It’s also a good idea to supplement any online research by asking friends or acquaintances in the industry what type of salary you can expect.
Next, consider your talents and skills. Every work or educational experience—even that summer nanny job—leads to the development of certain expertise. When it’s time to talk salary, highlight what you learned from any retail gigs, internships or leadership roles (if it’s relevant to the current position). And don’t be shy about sharing personal details that may offer an edge.
Balance salary and benefits
Companies may want to discuss salary early on to ensure you’re both in the same ballpark, but you may have more success negotiating if you can avoid throwing out the first number.
According to Andrew Porter, director of behavioral finance at Merrill Lynch, once the employer has thrown out a number, the best tactic is to show you’ve heard them by anchoring your response on that number.
From there, use your research to negotiate. Justify your request with intel from previous jobs, your industry, or the firm itself. Once you lay out your reasoning, ask something like: “Would you be able to pay X?” Name a number that is higher, but not so high that they’re turned off.
The employer may not be able to raise the salary—it may be all the business can afford, or the company may have preset pay levels. If that’s the case, ask about other ways to improve the offer, such as a bonus, deferred compensation or better benefits, which can really affect your bottom line. Consider how extra vacation time, flexible work arrangements, fully or partially paid health insurance, a 401(k) match, and tuition or commuter benefits can add both financial value and a lifestyle boost.
Tip: If your negotiation isn’t successful, you could ask for a six-month review, with predetermined criteria for a raise at that time. It shows initiative and a commitment to achieving more.
Lobbying for a raise?
If you’re already working and looking for a salary bump, go ahead and ask. Justify your request with your career victories and how they helped the company succeed. But don’t assume your boss has been tracking your successes; it’s up to you to keep a log of accomplishments.
Avoid bringing up details about your personal situation. It’s not about your roommate bailing, paying for a wedding, or that long-postponed trip to Costa Rica.
Also be sure to keep it real: Try your best to understand your organization’s current condition. Has there been a hiring freeze? Are quarterly profits down? Don’t neglect your own needs, but it’s wise to acknowledge your company’s financial situation. It shows you’re paying attention and that you get the big picture.
While you’re negotiating, don’t make these rookie mistakes:
- Getting emotional. Showing disappointment—or too much enthusiasm—can give the hiring manager the upper hand.
- Refusing to budge. Give in on something the employer wants in order to get what’s most important to you. A successful negotiation should feel like a win-win.
- Being too money-focused. Growth potential, new networks and the skills you’ll develop could be much more valuable than an extra three grand.
If you don’t get a raise, find out why and ask your boss for suggestions on how you can improve. That can set you up for success on the next go-round.
Whether you’re negotiating your first job offer, your fifth or for a raise, always keep in mind your best alternative—whether it’s unemployment or a competing offer. (If you have one, it’s fine to share the details as you negotiate—but never make one up.) That can make your final decision easier, once your options are clear.
The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.
Want to join the conversation?
- Should I be concerned by all of what I read even if I'm still in high school? Or is that only meant for those who want to get a job?(19 votes)
- Definitely not! High school is a great time to establish skills and social connections, and to make plans for the future. If you're feeling intimidated, start small with volunteer work or joining a new club.(16 votes)
- How would you make yourself stand out from other people(18 votes)
- What I've learned is that most employers remember the first and last things you put on your resume. Also learned from a mini course in my hometown to use highlighter to highlight specific information that is relevant to the position. Remember, they are likely reading a lot of applications/resumes.(1 vote)
- I want negotiate with my boss about raising salary. But I do not know how to approach, because my boss sees me as a secondary worker, an assistant, but in fact everyone has a separate projects and I have achived concrete results. Can you can advise how to approach this conversation?(15 votes)
- My boss always asked me to ask him if I can be considered for a raise. But make sure to highlight why you believe you deserve one in the first place(9 votes)
- The median salary of 20 to 24 year olds is $667 per week which translates to $34,684 per year.(17 votes)
- How would the discoveries of scientists affect the future?(7 votes)
- should I call them frequently when I applied for the job?(4 votes)
- That is a great question Logan! When my dad got his job he did the usual and got a interview and waited. He then called after about a week,so I would say wait a week and just call once a week until they give you their answer. A person that calls and is waiting but still paying attention gives the employer a feeling that you care about what happens.They should call you to tell you about what they say but if you don't get a call in about a month, your probably not getting the job.(6 votes)
- need to keep everything cleaned and not damaged.(6 votes)
- To make money to get a job.(5 votes)
- what is the best thing about a good job?(2 votes)
- Your safety, happiness, ability to show and receive love, and coherence with your life purpose and faith are good things about good jobs. Don't forget that in the rush for great pay.(2 votes)
- It will be smaller thanks to deductions and withholdin?(2 votes)