Your salary matters.
“For many people, your biggest asset is your earning power, so you have to manage that as well as any other asset,” says Dawn Rapoport, a certified financial planner and chief operating officer at Waddell & Associates.
This is especially important for people early in their careers, in the “accumulation phase” of acquiring assets.
“In the early years, where you start very much has an impact on where you end up,” she explains. “You want to make sure you are being very focused on negotiating your best opportunities, because that will help determine what you’re getting paid in future roles. If you spend 10 years being undervalued, that doesn’t set you up for the middle or later stages of your career, where you should hit peak earning power.”
This advice applies to everyone — but research shows that women may have more trouble putting it into effect, whether that’s because of their own socialised tendencies, a lack of history with effective negotiation, or the way their actions are perceived from across the table.
Anyone can make the following mistakes today that will cost them money tomorrow:
'In academic studies and in my own experience in the business world, women often do not negotiate,' says Lee E. Miller, co-author of 'A Woman's Guide to Successful Negotiating' with his daughter Jessica. 'They simply accept the first offer.'
Counterintuitively, an employer is usually ready for a little discussion. 'I've been on the recruiting side, I've been the head of HR, and I expect there will be negotiation -- especially as you move up the ladder,' Miller says.
In fact, missing the opportunity to negotiate for yourself could even raise a red flag with your employer. 'If you don't negotiate for yourself, the company will wonder, as you move up, 'Is she going to negotiate effectively for us?' Declining to negotiate casts doubt on your leadership,' Miller says.
Part of the reluctance to negotiate might be that women tend to follow the rules and take what they're told at face value, like 'The offer for this position isn't negotiable' or 'This is what we can do,' the first time the subject comes up.
'The first offer that is made rarely is the best offer,' Miller says. 'Men almost always come back and ask for something else.' The offer is almost always negotiable, he continues -- even if not the salary, things like benefits and scheduling.
One tactic Miller has seen among women is to accept a position without negotiating, with the intention of proving their worth and then approaching their employer for a raise.
But, he explains, there's a flaw in that approach. 'If you start too low, your raise is on that too-low base. Aren't you better off getting an additional $10,000 up front and then getting the same 10% raise down the road? You should always be negotiating the best possible deal that you can.'
He acknowledges that sometimes an employee isn't in the best position to get more than the initial offer right off the bat. That's fine, he says, but go in with a strategy. 'It's very typical if you're changing fields or you need new skills, to get the experience and then ask for the raise. If you can't get it after all that, be willing to change jobs, because someone will be willing to pay you.'
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