So, you’re about to start a new position. You’re all excited about it, and you should be! Landing a new job, one that will be great for your career as well as taking care of your family, is something to be proud of.
The job is what you want, it’s a great fit for you, and you can’t wait to get started on this new journey. All is good, except there’s one catch: the starting salary is lower than what you want.
What should you do?
You could jump at the chance to take the job, and believe that your future success will allow you to make up that difference through your strong performance. Confidence is good!
Or, you could take a moment to negotiate to make sure you get closer to the salary that you really want. You’ll still succeed on the job, but you’ll be at a more appropriate level of compensation. That is, based on your own perception of it. But regardless, the bottom line is that you’ll have more money in your pocket.
Why Don’t People Negotiate?
I suspect that there are a variety of reasons for this. Here are three that come to mind:
- Fear of negotiating. Some people simply don’t feel comfortable negotiating for anything. Whether it’s bargaining for a car, buying something off craigslist, or even something involving a small expense – negotiating is a problem for some.
- Fear of losing the offer. Now, I can’t speak for how this might technically work, but maybe some people are afraid that if they come back and try to negotiate, the offer might be rescinded.
- Fear of losing the “honeymoon period”. Perhaps the worry is not that the offer could be rescinded, but it could make it hard to start the job on the right foot in good graces.
Why Starting Salary is Important
Now, it’s certainly understandable that many people might be leery of negotiating that salary. However, it’s good to run the numbers to see why it matters.
Let’s say that you can negotiate just $1,500 more in terms of annual salary. Just for sake of example, let’s say this means you’ll keep $1,000 extra after taxes. If you don’t change your spending habits, that is!
- Compounding. If you just take that $1,000 and invest it over 30 years with an 8% annual return, you’ll have $10,000! That’s a pretty significant difference if you take a long-term view.
- Future Salary Increases. Keep in mind that future salary increases are calculated, quite often, as a percentage of your current base. For example, let’s say someone has a nice $100,000 salary (just for a simple round number). A 3% increase means the new salary would be $103,000. A $101,500 salary with that same percentage increase would result in a new salary of $104,545. Subsequent years would see increases on an ever-growing base.
Bottom Line: As you can envision, the long-term value of getting started with a higher salary can add up. It’s worth considering these benefits while you’re spending time thinking about your reservations about negotiating. Every situation is different, but whatever you decide, at least make your choice of what action to take based on not just those risks, but on the upside as well!
My Questions for You
How would you approach negotiating your salary with a job offer?
Do you think the benefits could outweigh the risks, or vice-versa?