If you’re one of the country’s current 6.6 million unemployed citizens, you’d likely jump at a job offer — any offer — if it came your way, without negotiating your starting salary. Other circumstances might make you eager to accept a position, too. You could be working in a toxic environment, or switching career fields and convinced that your lack of industry experience warrants lower pay. But think again.
GOBankingRates spoke with certified financial planner, founder of Gen Y Planning and Smart Money Squad member Sophia Bera, who said not negotiating your starting salary is a huge mistake. “The best chance you have of really earning more money is when you switch employers or when you start a new job,” said Bera.
Bera speaks from experience, having made this error herself. “I was going to be paid $40,000,” she said of a financial planning job she had landed, “so I immediately accepted. I thought I had won the lottery. They were going to pay for my health insurance premiums, I was getting company benefits, I was getting a 401k and a 4 percent 401k match.”
Unfortunately, shortly after accepting the job, the stock market crashed. This meant an effectively flat salary for Bera for the next five years. It made her realize that asking for a pay bump up front is far more effective than relying on annual or merit raises that might never come.
Further, Bera pointed out that if you don’t negotiate, you could be missing out on money that could be put to work elsewhere. “Let’s say I was able to get $45,000 per year instead of $40,000, and instead, I took that $5,000 and invested it in my 401k,” she said. “If I earned 7 percent over 30 years, that would be worth an additional $40,000 or $50,000 if my rates of return were even better than that.”
After her own bad experience and years of working with clients with similar stories, Bera saw a pattern emerge. Not negotiating was a common mistake for job seekers — particularly women. ” … Women would accept the offer that was given and then say, ‘I’m really trying to work hard and try[ing] to prove myself and then ask for a raise next year.'”
Not only can this thinking hurt your bottom line, but the lack of confidence and assertiveness can really damage the way you’re seen in an employer’s eyes. ” … If you just accept the position and don’t negotiate, I think it surprises some employers,” Bera said. “It could make you seem like you are in a weaker position because you’re not willing to ask for what you are worth.”
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So what is the answer to landing that dream job with a salary to match? Other than getting comfortable negotiating by practicing, Bera emphasizes the importance of knowing your own worth. “What is your superpower? What do you do that nobody else can do?” she asked. “That’s going to put you in a great position to be able to negotiate.”
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