When we think about improving our personal finances, the first solution that may come to mind is to shop less, go out less and otherwise deprive ourselves.
Though cost-cutting has its virtues and its place, another surefire way to brighten your financial outlook is to just make more money, which could mean picking up a side job or … negotiating your salary or a raise.
Whatever the case, it’s a fact that women make less than men in almost every occupation. (The only field in which they make more—if you define 0.3% more as “more”—was bookkeeper/accountant/auditing clerk.) In 2011, they made, on average, 82% of what their male colleagues made, though female financial managers made an even worse 65% of what their male coworkers did!
Clearly, these depressing numbers need to be addressed. And one way to do so is to not let yourself become a statistic. Read on to learn more about the importance of negotiation and how you can do it.
Negotiating in a Nutshell
Negotiating is the delicate and, for many, anxiety-producing dance that happens between you and a potential or current employer that determines your income or the fee you’ll receive for a gig.
Sometimes the dance is as short as an employer naming a fee and an employee accepting it. Sometimes the dance is a multi-round process in which the sides go back and forth, naming numbers, nixing offers and finally reaching a compromise that may include other aspects of compensation such as title, vacation, flex time or bonus.
Why It’s Important
Your income is one of the biggest influences on the kind of life you’ll live. What you negotiate for yourself will affect whether or not you’ll be able to afford that trip to the Galapagos, Christmas gifts for your kids or a big unexpected medical bill.
For that reason, negotiating is one of the most important skills you can pick up. If you learn this one thing, it will ripple out to every aspect of your life—and improve it.
Women especially need to pay special attention to negotiating for all reasons. First, they earn less than their male colleagues with similar experience. They also make less than men at every single level of education.
We can decry sexism all we want, but one of the main culprits could be that women do not negotiate as often as men do. A 2012 study of 3,000 business school graduates showed that for their first jobs, half of the male graduates negotiated, while only 31% of the female graduates did. And even if women do negotiate just as often, sexism may rear its ugly head: Within a few years, the women in the same study did start to negotiate more often, but they got worse results.
How to Negotiate
When it comes to negotiating your compensation, your primary goal should be to increase your income/salary, and if that doesn’t happen, to improve your compensation in other ways such as more vacation, flex time or better benefits. Here’s how to do it whether you’re dealing with a new employer or a current one:
Negotiating When Starting a New Job
1. Always, always, always negotiate when starting a new job.
Don’t just accept the first offer they give you. Starting a new job is absolutely the best time to negotiate. Your starting salary with an employer sets the baseline for all future raises.
2. Don’t name a number.
Get the employer to name a number first, and then when they do, even if the number is higher than you expected, explain kindly, but with a poker face, that it was less than you were expecting and ask whether there’s any more they can do for you. Emphasize what you bring to the company that will immediately add value and say that you therefore believe you’re worth $X more. (Read below for tips on what to do if it seems you’ve really reached the maximum offer.)