When I graduated from college and got my first job, my starting salary was $54,000. I was ecstatic. It was more money than I’d ever earned in my life, and as far I was concerned, I was balling. It didn’t once cross my mind to ask for more money or even a signing bonus. I was just happy that I got a job.
Well, as time went by and I got to know my coworkers, I realized that I was the lowest earner in the entire group. We were all hired for the same position, and we all had similar educational backgrounds. Some of them made thousands of dollars more than I did, while others had gotten signing bonuses. Why? Because unlike me, they didn’t accept the first offer they received. Instead, they asked for more. Not only did asking for more get them more money, it also positioned them to earn more when it came time for raises and bonuses since those are given as a percentage of the base salary. Throughout their careers, that’s likely hundreds of thousands of dollars more than I’d make.
Not negotiating my salary was one of the biggest mistakes that I made when I entered the workforce. But as I made progress in my career, I realized that it was equally important to be aware of financial pitfalls when it comes to negotiation. According to my friend Dorianne St. Fleur—a HR expert, career coach, and the founder of yourcareergirl.com—the following are five common negotiation mistakes that a lot of people often make (and don’t realize):
Mistake #1: Not having a compensation strategy
A compensation strategy is a plan that spells out your long-term salary expectations. You should base this on your skill level and experience, industry standards for people in similar positions, and unique value. You calculate your worth, add tax, and create a plan to get you to that dollar amount.
Ideally, you should have a compensation strategy before you start your first job, but this is something most people don’t know they should do. A lot of us, especially those fresh out of college, don’t take the time to think strategically about how much we get paid. This can end up being a costly mistake. If you don’t already have a compensation strategy, start now. Take out a pen and paper and think about where you are currently, where you actually should be, and where you want to be in the future. Once you’ve done the math, create a plan to get there. That might involve asking for a raise, looking for a new job, or starting a side hustle.
Mistake #2: Assuming you’ll be paid for your contributions
It sounds so simple, right? Do an excellent job at work and you’ll eventually get paid for it. However, this isn’t always the case. Yes, there are times when doing your job well can mean a few extra coins, but nine times out of ten, managers aren’t sitting around waiting to hand over wads of cash every time you accomplish a new goal. If you want your boss to give you money, you need to be an active participant in your salary progression. That means making sure your boss (and anyone else involved in money decisions) is well aware of what you do at work and how that benefits the company. Whether you have to beef up your annual self-evaluation or schedule a stand-alone meeting to talk about your achievements, you need to make sure you create a platform to show your boss all you’ve accomplished throughout the year.
Mistake #3: Being uncomfortable talking about money
Many people have pushed the subject of money to a space that is “off limits.” They don’t discuss things like current salary, future financial goals, and earning potential with even their closest friends. With this kind of mindset, it’s no surprise that the prospect of asking for a raise can cause a lot of anxiety. Although it can be tough, it’s time to move past the uneasiness that comes with talking about money—especially if you want to earn more. The saying “A closed mouth won’t get fed” couldn’t be more accurate in this situation. The most important conversations are usually the most uncomfortable ones, so it’s definitely in your best interest to push past your fear (and do it anyway).
Mistake #4: Making emotional decisions
Emotions like anxiety, anger, nervousness, and fear can sabotage your efforts to get the raise you want. Being so nervous that you accept the first lowball offer, or being so angry that you yell at your boss will ruin any chance of a positive outcome. Your goal should be to remain calm and collected throughout the entire process, leaving the way you feel out of the equation. When it comes to making decisions on salary, you need to focus on your research and the facts.
Mistake #5: Being afraid to walk away
It is important to note that ultimately, the final decision on whether you do get that raise is out of your control. Instead of getting hung up on this fact, have a contingency plan and exit strategy in case things don’t work the way you would have liked. You know what’s worse than realizing you’re being underpaid? Realizing you’re being underpaid, asking for what you deserve, and then staying put if nothing changes. This fear of change is what holds many people back in forging a new career path for themselves. Don’t do that to yourself.
This article is adapted from Clever Girl Finance: Ditch Debt, Save Money, And Build Real Wealth by Bola Sokunbi. It is reprinted with permission from John Wiley & Sons, Inc.