By Robert Stitt
Finance 101 tells us that even a small amount of money compounded over a long period of time adds up to a significant amount of cash. Putting this information into practice, getting a raise, even a small one, can make a huge difference over the course of a career. In fact, through the power of compounding, if you made just $5,000 more at the start of your career, and only kept that same pay differential until retirement, you would have made over $500,000 more than you would have without that extra $5,000.
Of course, finance principles also teach us that employers don’t just hand out money. Many employers will pay you the least amount they can get away with. In the private sector, employees who want a raise have to ask for it. Some people have no problems marching into the CEOs office and asking for more money, but most people are hesitant to do so.
For women, the asking for a raise can be very daunting. Yet, if you want to get the extra cash, you are going to have to overcome your fear. Kerry Hannon is a personal finance and retirement expert. He says, “Ask nicely if you have to, but ask. If you don’t ask, your career might stall. I never heard of anyone getting canned for asking for a raise.”
If you are not sure how to go about asking, consider these suggestions from Hannon:
- Schedule a meeting. Managers will appreciate that you value their time and had the courtesy to schedule a meeting. Once you secure a meeting day and time, prepare for it. Go in with data that shows why you are worth the extra money. Nobody is going to give you more just because you want them to. Be positive, assertive, and tell them why you are worth their investment.
- Don’t wait. Many people wait until their annual review. By that time, the “money for the year” has already been assigned. Your boss can’t ramp up your pay without taking away from someone else,” says Hannon.
- Think about your timing. While you don’t want to wait for the annual review, you also don’t want to ask for a raise after a layoff, in the middle of an audit, or in the midst of your boss’s major project. As with most worthwhile things, timing is everything.
- Do your research. There are numerous sites that provide information on what other companies are paying for your skills and services. Bring in data from Salary.com, PayScale.com and GlassDoor.com. If you are already making more than the average wage or salary, you may want to forego this step; but, if you are making less than others with your skill set in your industry, this is important data to provide. Not only does it show that you know what you are worth, but it shows that you are willing to do your research.
Don’t take things personally if you do not get the raise, but don’t give up. Realize that most people aren’t going to get a raise every time they ask for one. This isn’t personal, it’s business. Don’t let it stop you from asking again in six months, though. After all, the sooner you add that extra money to your paycheck, the sooner you can start compounding it for the future.