The Personal Finance Podcast - How to Negotiate Your Salary Like a Pro

Episode Date: July 1, 2020

 Episode 8: How to Negotiate Your Salary Like a Pro  In this episode we cover:  Why negotiating can make you a million dollars more How to prepare for a salary negotiation  Strategies to negotiate and win  How to get the salary you want  Other negotiation perks   Resources in this episode:  Free Ebook with Scripts and Checklists! Million-dollar study  Dollar After Dollar Article  M1 Finance Best Place to Invest  Personal Capital Free Wealth Management and Budget App CIT BANK (Best Savings Account) Learn more about your ad choices. Visit megaphone.fm/adchoices

Amazon presents Laura versus Fruitflies. Swarming your fruit and terrorizing your kitchen, these little freaks multiply at a rate that would make a rabbit say, yo. Chill. But Laura shopped on Amazon and saved on cleaning spray, countertop wipes, and fly traps. Hey, fruit flies, your baby boom ends here. Save the Everyday with Amazon. Welcome aboard via rail.

Please sit and enjoy. Please sit and sip. Play. Post. Taste. View and enjoy. Via rail. Love the way.

What's up, everyone? Before we get started, we wanted to break out this episode into two parts. So the parts you're going to hear today is actually how to negotiate your salary when you're getting a new job. And the part you're going to hear next week is how to ask for a raise from your current employer. Increasing your income is the foundation to wealth. And if you follow these steps, I promise you you're going to get farther ahead in your salary increases than you ever have before. So really listen in to these next two episodes so that you can increase your income because you're going to be bounds and leaps ahead of everybody else. Secondly, if you have not subscribed,

rated, and reviewed this podcast on Apple iTunes, go ahead and do that now. It would mean the world to me. It helps the show spread and it helps the message get out and we want everyone to understand that they too can build wealth. It doesn't matter how much money you make. It doesn't matter how much time or how much knowledge you have. If you have a simple understanding, you can build wealth. And we want this message to spread. Thanks so much and let's get into the episode. On this episode of the Personal Finance podcast, we're going to talk about how you can negotiate your salary. What is up, everybody. Welcome to the personal finance. finance podcast. I'm your host, Andrew, founder of dollar after dollar.com and we are firing on all

cylinders today. And today we're going to talk about how you can ask your boss for a raise. We're going to break this podcast up into two segments. The first one is how to negotiate a salary when you're getting hired for a new job. And the second one we're going to break down is how to ask your existing boss for a raise at your current job now. And there's two seconds. ways to do this and I have a very specific strategy on how to do this that will allow you to be able to follow it step by step by step and it's a system that most people would not follow because it takes a little bit of time but this system works and we've seen it proven to work and it's a true way to get on the same page with you and your boss where you guys will be able to actually collaborate

and increase your income at the same time and that's what we're all about here at the personal finance podcast. We're all about increasing our income because it's the foundation to building wealth. And learning how to ask your boss for a raise is actually a skill. You're going to learn that it's actually a skill. It's not something that you do on a whim. It's not something that you come in and surprise them out of nowhere with. This is something that you want to build up and it's actually a skill. You're going to be able to sell yourself. And we always talk about increasing our income and we talk about side hustles and we talk about starting your own small business on the side. But one of the very best ways to increase your income is the place where you spend the most time each day.

It's your good old 9 to 5, the place where you put your nose to the grindstone. And some of you may be starting out with an entry level salary or you're starting out at a position that you're not exactly happy with, but you don't have to stay there. And this is not permanent. And you can be able to increase your income as time goes on. But the first thing you got to realize is getting a raise isn't going to just happen. Nobody's going to hand you a raise. You know, somebody may hand you like a 2 to 3% raise each year, which is the standard

at a lot of companies, but nobody's just going to hand you a true raise. And we're going to get into why that's so important here shortly. And just asking your boss for a raise right out of the blue just won't cut it. It just absolutely won't cut it. And unfortunately, this is what so many people do. But if you have proactive communication with your boss, then you guys are going to get on the same page and you're going to be much more successful when you request that raise. Now, what a lot of people don't realize is you actually cannot afford to not ask for a raise.

And there's a lot of reasons why, but one of the main reasons is because of inflation. And if you look at inflation over the course of the last 20 years, it's on average been 2.15%. So say your boss gives you a 2% raise every single year. You're actually losing money every single year because inflation is eating away at your income potential. So just getting those standard 2 to 3% raises is doing absolutely nothing for you. You're running on a treadmill, you're running in place. You have to come up with a plan to be able to ask for a raise. And if you don't negotiate for more money, either when you first get hired, if you don't negotiate,

if you don't negotiate your existing job as time goes on, then you're going to leave over a million dollars on the table. And yeah, I know some of this stuff is uncomfortable. Some of this negotiation crap is uncomfortable to have to discuss with your boss. But would you leave a million dollars on the table because you did not want to talk to your boss about the hard questions? Because if you don't negotiate, that's exactly what you're doing. There was a study done and all else being equal. Employee A negotiated $5,000 salary above employee B. Over the course of their career, employee A would actually make a million dollars more than employee B,

just by starting off with $5,000 more at the beginning because it compounds and it grows and it develops over time. And I'm going to have to leave a link to this study in the show notes. And then I did another study myself and I pulled up a spreadsheet and I said, okay, we have two people,

a guy named Dave and a guy named Kira. All else being equal, if she just negotiates a slightly higher raise every three years over the course of an entire career, she's going to make $631,000 more than Dave. It's astounding what you can accomplish. if you actually ask for those raises over time because the raises over time compound. So, so now you're making $55,000 and one guy's making $50,000 where you're going to get a 3% raise on top

of that $55,000 and that's going to be significantly higher as time goes on and it grows than the person who started at $50,000 because they're only getting 3% raises on top of $50,000. So if this doesn't convince you to ask for a raise, I don't know what does because a million dollars is absolutely worth every penny to have these conversations. So let's get into how to actually ask your boss for a raise as a new hire. So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy, clothes don't fit anymore, and routines are changing. And it just hits you. Life is expanding. And when your life grows, your responsibility grows with it. That's something I've been thinking about more this spring, making sure the safety net we have in place actually matches the life that we're

building. And that's where PolicyGenius comes in. PolicyGenius is an insurance company. They're an online marketplace that helps you compare life insurance quotes from some of the top insurers in America, all in one place for free. And their licensed team works for you, not the insurance companies. So they help you find the right coverage for your situation without all the guesswork. And they walk you through everything. Answer your questions, handle the paperwork, and help you get the coverage that actually fits your life today and where it's going. So protect your family with a policy that grows with your life. With PolicyGenius, you can see if you can find 20-year life insurance policies starting at just $276 a year for $1 million of coverage.

Head to PolicyGenius.com to compare life insurance quotes from top companies and see how much you can save. That's PolicyGenius.com. I remember when I needed to hire someone fast, but finding the right person quickly felt impossible. And if you've ever been there, you know how stressful this can be. That's where indeed comes in. When it comes to high school, you're not. When it comes to high Indeed is all you need. Instead of struggling to get your job post noticed, Indeed's sponsor jobs help you stand out and hire faster. Your post jumps up to the top of the page, making sure it reaches the right candidates. And it makes a huge difference. Sponsored jobs on Indeed get 45% more applications than non-sponsored ones. And there's no need to wait any longer. Speed up your hiring

right now with Indeed. And listeners of this show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash personal finance. Just go to Indeed.com slash personal finance right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash personal finance. Terms and conditions apply. Hiring, Indeed is all you need. Local news is in decline across Canada. And this is bad news for all of us. With less local news, noise, rumors, and misinformation fill the void. And it gets harder to separate truth from fiction. That's why CBC News is putting more journalists in more places across Canada, reporting on the ground from where you live,

telling the stories that matter to all of us, because local news is big news. Choose news, not noise. CBC News. Okay, when I sell my business, I want the best tax and investment advice. I want to help my kids, and I want to give back to the community. Ooh, then it's the vacation of a lifetime. I wonder if my out of office has a forever setting.

An IG Private Wealth Advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IG Private Wealth.com. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Playojo. The online casino with all the latest slot.

and live casino games. What you win is yours to keep with no wagering requirements. Instant payouts and no minimum withdraws. Hey, I just won. Woohoo. Feel the fun. Play, oh, Joe. Honey, forget about the lasagna.

Let's celebrate. 19 plus Ontario only. Please play responsibly. Concern about your gambling or that of someone close to you. Call 16-531-2600 or visitconXontario.ca. Learning to negotiate with your boss is absolutely a skill. It's a skill that you have to develop over time. And the more and more you do it, the more and more you flex your negotiation muscle,

the better you're going to get at this process. So don't expect out the gate to be amazing and the words just flow right off of your tongue every time you try to convince your boss about all the accomplishments you've covered within the company. Nobody is a natural when they begin to negotiate, not a single person. And it's absolutely uncomfortable. That's a completely normal feeling. And if you're shy, if you're naturally introverted or you're shy, then you just have to practice a little more because there's a lot at stake here. And it's definitely worth practicing to be able to get better. better and better at this over time. So what I'm going to show you is a step-by-step process. And within that step-by-step process, I'm going to recommend that you develop some scripts.

And I'm also going to put together for you guys a few scripts, and I'll leave those in the show notes as well. And you can use those scripts to practice and develop your skills and develop your negotiation skills to be able to finally get that raise. I myself am an introvert at heart. So I had to practice this over and over and over again to actually get good at it. And as time went on, it just becomes so much easier. It's so much easier to be able to have these conversations. You just feel more comfortable and you're more confident. And confidence is key in this.

So one thing I recommend is if you are on the introverted side, then go out of your way during meetings to get a little bit uncomfortable and negotiate a little bit so that you have experience in having these conversations. So let's go step by step into exactly what you want to do to ask for a raise as a new hire. So step one is to use Glassdoor to find out the average salary for your position. So before you even interview at a position, you want to go to Glassdoor.com and check out some of the average salaries and how much people are making. And usually they'll give them to you in ranges.

And you can also see on there if people typically get sign-on bonuses or other perks and benefits. Because having that data to back you up during a negotiation is a must- You have to base your findings on facts. You cannot go up and say, I want $100,000. Well, Brian, you're a copy boy. Yeah, but I still want $100,000. Well, what are you basing that on? Because I want it.

That is never going to work. You're never going to be able to do that. Having this data available will also help you have a rebuttal if they lowball you. Because if they lowball you, you're going to have facts and you're going to have claims to back up your side of the negotiation. So make sure you collect as much information as possible at your pay rates at your position and collect as much information as possible about the benefits that that position may offer. Now, the second step is to understand that this is a collaboration. So you should be going into

these meetings, understanding that this is a collaboration, it's a collaborative negotiation from start to finish. Don't ever get defensive and never get confrontational in any way. If things don't go your way, it doesn't matter. You cannot get confrontational and hurt your reputation. It's counterproductive, it's disruptive, and it hurts your reputation. The third step, in my opinion, is gold because a lot of people give away the most important information. If you understand what's going on before you go into these meetings, you're going to be so much better off.

So the third step is do not disclose what you make at your current job in the interview. See, many states don't allow your potential employer to actually ask what you make right now. And you can actually see if they have this information, how valuable that is for them in a negotiation. They have the most important key information, how much you make now. And a lot of employers and interviews and things like that will actually craft ways to ask you without directly asking. And a lot of people just give them the information. They just tell them how much they make. So I recognize this somewhat early on. And when I wanted to make big level jumps, I knew that if I gave out that information, it would be to my detriment. So what did I do? If they

asked me a question that was basically asking me, how much do I make currently now? I would would respond with a question. And I would say, what does this role offer? Responding with a question puts you in the driver's seat because it creates an environment where they have to respond to you and give you the answer. And this is extremely invaluable information for you because you want to see exactly what they're willing to pay. Step four is to know exactly what you're worth. So don't let anyone tell you what you're worth. You need to know exactly what you're worth. It is completely expected by managers for you to negotiate. So don't have any embarrassment or don't feel like you're really giving them a hard time, they expect you to negotiate. And if for some reason they seem

completely off guard that you're negotiating a salary on a new hire, and that may be somewhat of a red flag, because that may mean that they're not willing to give raises in the near future, which would crush your opportunity to move forward in your career. So make sure to watch out for some of these red flags. If there is tension or if there's any issue with you asking for more money, then really think about that because sometimes there's companies that are giving you the max amount they have for a position, and they're not going to give you any more raises over time.

And if you don't get raises over time, unless you're making a high salary, then you can never get ahead because as we discussed before, inflation's going to eat away at your earning power. So look out for those red flags as you go through this process. Step five is to ask for their number

before revealing yours. So even if it's just a range, you want to be as informed as possible. So finding out what their number is will give you the proper tools to move on to the next step. So don't fret if it's lower than what you want or don't worry if it's not exactly what you expected because they may be utilizing a negotiation tactic.

And a lot of people will hear the range or hear a number that an employer is willing to pay and they get all flustered because it's not what they want and it's way too low. And they think they'll never be able to negotiate to exactly where they think they need to be. And that's not the case. This may just be a negotiation tactic for your employer. And one thing you really truly need to remember is you do not. not have to accept anything on the spot. If they put pressure on you to accept something on the spot, there's a reason behind that pressure. So if you want to take some time to think about it,

you absolutely can do that. Never ever feel pressure to make an instant decision, especially one that you don't want to make in the moment. Now, if they're willing to pay you 30 grand over what you thought you were going to get, go ahead and take it. Don't go home and think about it because they could rescind that offer. You want to take a top notch offer right away. But if it's not exactly what you want and you really do want to think about it because you think that company could be somewhere that you could grow, then absolutely go home and do that. So the sixth step is after they give you their number or their salary range, then give them your expected salary. And this is where scripts really become helpful because it's time to reveal exactly what you expect. And so if you want

to propose your salary, there's a specific way that I like to do it. And it's contrary to what a lot of people do, but it will allow you to actually maximize your salary. So say the employer gives you an offer and you say something like, thank you so much, I'm excited about the opportunity, and now you can talk about exactly what you're excited about doing within that company. Then you can say, based on the market and goals that I have set for myself, I would expect to be in the blank to blank range. Now, this range is extremely important. And I'm going to explain exactly how to set up this range. So say you see on Glassdoor that the average salary at the position you're applying for is $80,000. But Glass Door usually has a range.

So say it's $80,000 to $95,000. What you want to do is when you give them your range, the bottom number needs to be your highest number. So if Glass Door says it's $80,000 and $95,000, you're going to actually ask them for $95,000 to $15,000. This is the key to the end. entire script. This is the key to negotiation. Asking for your best possible scenario as the lowest part of the range opens up a bunch of opportunities for you to potentially get more than you ever wanted. But if they try to lowball you and say, I can't go that high, but I can go down to 85, well, you wanted 80. So now you're making more than you wanted in the first place. 95 was just your

highest number. And if you really want to go for it, you can actually add a buffer even higher. So say the same example, instead of saying 95 to 115, you can say 105 to 125. This gives you a buffer, and if you actually get it, well, you can have yourself a big old party because you just out-negotiated them. This actually allows you to get a number that's potentially that is higher than your highest number. And I've seen people ask for more than their highest number within this range, and they get it. It happens. So this is a strategy that you can use to be able to increase your income significantly, in worst case scenario, you get exactly what you want. And the seventh thing to remember when you're getting hired on as a new hire is that your

salary is only part of the equation. There's a bunch of other factors, including time off. So if you're someone who loves to travel, say, for example, well, potentially, say you get six weeks off paid vacation, you're allowed to take a six weeks sabbatical every year to travel around Europe, that would be fantastic for someone who loves to travel. That's a fantastic perk, and it's a great lifestyle enhancement. So that may be something you want. So say the money is not exactly where you want it, but you have that perk.

Well, that still may be right up your alley. Or there could be additional benefits, really high 401k matches or things like that. There could be yearly bonuses or even sign-on bonuses. Sometimes all you have to do is just ask for a sign-on bonus. I've seen people ask for a $10,000 sign-on bonus and get it just because they ask for it. I mean, if you don't ask for something, you're not going to get it. But if you throw it out there, the only thing that's going to happen is that they're going to say no. That's it.

That's the worst case scenario. So just putting yourself out there a little bit could significantly increase your income over time and make a massive, massive, massive difference. And in the final step, step eight, is to accept or reject it with grace. So either way, if you guys don't come to an agreement, then make sure you're professional and courteous

and extremely thankful for their time. But if you do come to an agreement, have a party, high five with the new boss, have a celebration. See, following these steps allows you. you to become prepared. It allows you to be able to negotiate a higher salary than you would if you just came in there with one single number. And what a lot of people do is they just take the number that's handed to them. They just take the salary off that's handed to them instead of negotiating.

They expect you to negotiate. They may be even offering you the low number expecting you to negotiate because they want to meet you in the middle. And that's why this is so important to have a plan going into it and practicing scripts until they sound natural. Because once you sound natural with your scripts, you're just having a conversation with them and you're saying exactly what you want because you've put in the time to practice and put in the extra effort. And before we wrap this episode up, I wanted to let you guys know that if you wanted the scripts or anything else that we're talking about in these episodes, I actually wrote a free e-book for you guys. And the e-book has all these scripts and it has checklists that you can go through to make sure you're on track when you're

doing this negotiation process. So I will leave a link to get the e-book in the show notes. And all you have to do is just click that link, put in your email, and the e-book will automatically be sent to you right away. And the e-book's called Negotiate Your Salary, a step-by-step guide to asking your boss for a raise. So you'll see that come across literally instantly right when you put your email in. And it's fantastic to have those scripts so that you can practice in home. your strategy and hone your craft so that it'll become second nature when you're speaking to your employer, your future employer, your boss. And it sounds like you have everything put together because you do, because you've actually practiced and put in the time and put in the work,

whereas somebody else just went in their cold. And it's going to make a massive difference for you where you'll be able to nail those raise negotiations. And next week, we're going to be talking about how to ask your boss for a raise because there's a very specific system that I follow to be able to actually ask your boss for a raise. And I truly believe this system is actually going to open your eyes. Because when you listen to how you actually go about doing this, you're going to say, oh my goodness, I cannot believe I tried to walk into my boss's office cold and ask for a raise. Because this system actually will warm up your boss. So your boss will actually know that your raise negotiation is coming. So tune in in the next episode and we're going to go through that

entire system. And I'm actually going to throw in a bonus piece as well because a lot of people are stuck at home and they're not seeing their boss every single day. So I'm going to actually tell you how to ask your boss for a raise in a virtual situation as well. So we're going to go through both of those pieces next week. So stay tuned. Thank you guys so much. Thank you guys so much for listening. And if this is our first time meeting, consider subscribing so you never miss an episode. And hey, we're giving away a free one-on-one money coaching session with me. All you have to do to enter, subscribe to this podcast, and leave a rating or review on Apple Podcasts, then send it over to Andrew at dollar after dollar.com, and you'll be instantly entered to win the one-on-one,

one-hour coaching session with me. Again, thank you guys so much for listening. We truly appreciate it, and we'll see you on the next episode. Have a great day.