Whether you’re just starting out in the workforce or are currently making a career pivot, Suze Orman said that making one crucial mistake can end up having a large impact on your future earnings.
“It’s common to think that the goal should be to just land a job you want — get in the door, at whatever salary is offered,” she wrote in a blog post. “But that can be a costly mistake. Your first salary becomes the base for subsequent raises with that employer, and will likely be the reference point for what you’re offered at your next job.”
Why Everyone Should Negotiate Their Salaries
It can be tempting to accept a prospective employer’s initial offer, especially if it’s a job you really want, but Orman advises against this.
“When you negotiate your initial salary, it has a positive cascading effect throughout your work life,” she said in the blog post.
Orman notes that it’s especially important for women to negotiate their salaries.
“Research shows that women don’t naturally gravitate toward negotiating, in part, out of concern they will be perceived as too aggressive/pushy, which research has sadly shown can be an issue,” she said. “That’s not a reason to not negotiate — it is a reason to be smart about how you negotiate.”
How To Negotiate Smartly
The first step in negotiating your salary effectively is to know what that specific job typically pays.
“Online salary websites such as Glassdoor and PayScale have valuable info,” Orman wrote in the blog post. “The career/job office at an alma mater might have salary info, or it can connect job seekers with recent alumni working where you are interviewing. In today’s e-connected world, there is no excuse for not having specific timely data on the salary range for a given job.”
Once you know how much you should be paid for a job, don’t be afraid to ask for it.
“Ideally, the employer will start the process by offering a salary. That’s an offer, not an ultimatum. Based on the research you’ve done, it’s now your turn to propose a counteroffer,” Orman said. “I recommend conveying something along the lines of, ‘Based on my research of typical salaries for this job, I am hoping to start at a salary of AT LEAST, $X.’ You are setting a floor here.”
Take the Fear Out of Negotiating
Negotiating your salary can be an anxiety-inducing process, but Orman offers two tips to make the conversation run smoothly. First, enter the negotiation as if you are speaking on behalf of a friend rather than yourself.
“Research from leading academics on this topic has found that if you imagine you are negotiating on behalf of a friend, it can remove stress and anxiety and make it easier for you to advocate for yourself,” she said in the blog post.
Second, exude calmness and professionalism — even if you have to fake it.
“Leave the emotion at home,” Orman said. “When you communicate in a strong and respectful tone, you are not just advocating for yourself, you are telegraphing to the hiring manager that you possess a valuable skill.
“Navigating any office requires different forms of negotiation, within your team or when you find yourself working with other groups. The same goes for dealing with clients or suppliers,” she continued. “When you negotiate for your first salary with confidence and calm, you are giving the hiring manager one more reason to get you on board.”
Don’t Accept Additional Benefits as a Substitute for Higher Pay
Some hiring managers will try to offer additional benefits, such as more vacation days or the ability to work remotely more days of the week, instead of giving you the salary you want. Orman advises against accepting this offer.
“While you may value those benefits, I want you to carefully think through accepting this tradeoff,” she wrote in the blog post. “Is the salary they are offering in the range of what you know they are paying other people in the role you are exploring? You have to respect your employer, and that’s hard if you know from Day 1 you are being underpaid.
“You don’t need to accept this offer,” she continued. “Consider a script along the lines of, ‘Thank you for this offer, I indeed value those benefits. But based on my research, I remain interested in a salary of at least $X.'”
Orman said that no matter what offer you ultimately accept or reject, it’s important to always ask for more.
“Just promise yourself that you won’t immediately accept the first salary offer,” she said.
More From GOBankingRates