Negotiating your salary can be intimidating, especially for your first-ever job offer — and in fact, only 16% of workers between the ages of 18 and 24 negotiate for higher pay, according to data from ZipRecruiter. The rest are making an expensive mistake.
"It's really important to go in to your very first job with your negotiating hat on because what we know is that, over time, all of your next salaries key off that last salary," says Jean Chatzky, CEO of HerMoney.com and bestselling author of books including "Women with Money."
Negotiating leads to a $5,000 increase in starting salaries, on average, according to a 2011 study published in the Journal of Organizational Behavior. Over the course of a 40-year career, losing out on $5,000 by not negotiating that first salary could end up costing you about $634,000, assuming annual pay increases of 5%, according to data from Harvard Law School.
"If you don't negotiate for the first [salary], you're going to be putting yourself behind the eight ball for years and years to come," Chatzky says.
Video by Courtney Stith
Here are two of Chatzky's tips for navigating these salary discussions.
Before salary discussions, it's important to do your homework. Chatzky recommends consulting websites like PayScale or Salary.com to figure out what someone with your skills and experience level is likely to earn or asking current employees if they can ballpark how much someone with your qualifications might make.
Don't forget to do online research about the salary of the person you're negotiating with. Figuring out how much he or she may make can help you if you need to throw out the first number in a salary negotiation, Chatzky says. "Knowing your opponent — and in this case, they are your opponent — is a valuable way to spend your time before you walk in the door."
Another added benefit of knowing how much your immediate manager makes is that it could prompt you to work harder, according to a 2018 study conducted by professors at Harvard Business School and UCLA's Anderson School of Management. The researchers said workers who learned that salary information may have found it to be aspirational because it was just a promotion or two away.
A salary negotiation is about more than just finding out what other people with a similar job title earn. Chances are you'll find a range of salaries. Experts recommend aiming for the high end of that range — justifying that number with the value you'll bring to the company.
Even if you aim a bit higher than the company is willing to pay, that gives you more room to negotiate a salary that's closer to what you want.
Whatever amount you ask for "should represent the value that you are bringing to that organization," Chatzky says. "And they should be happy to step up — in your mind — and pay that amount because that's exactly what they're getting."
Finally, don't talk about what you need or want. "If you hear those 'I' phrases starting to come out of your mouth, you're headed in the wrong direction," Chatzky recommends. "You want to be talking about all of the value that you could bring to the company, preferably to the bottom line, and you want to put all of those things on the table."
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