Earning

Suze Orman: 'Tell everybody how much money you're making' — here's why

Suze Orman. Photo by Marc Royce.

If you want to make sure you're not being underpaid, "tell everybody how much money you're making," says Suze Orman, financial expert, bestselling author of "Women & Money," and host of the "Women & Money" podcast.

"I know you're told, 'Don't tell anybody how much money you're making,'" Orman says, but your salary shouldn't be a secret.

In fact, being open with colleagues and discussing compensation will empower as well as educate you. And you may all see the benefits. "Once you feel free to talk about your salary and everybody knows how much everybody is making, it will be very difficult for your employers to underpay some and overpay others," says Orman.

If you do find out you're making less than your peers, there a few steps to take to increase your chances of success before you go to your boss, she says. Here's how to make sure you're positioning yourself well to get a raise.

Begin by making yourself indispensable

When you're just starting out, you shouldn't be focused on whether you're making enough money, or that someone else is getting paid more than you, Orman says. Instead, you should make it your mission to be an indispensable employee.

That's good advice whether you want to increase your pay or get a promotion. "Make those that you depend on for a paycheck dependent upon you," says Orman. "So dependent they can't do without you."

That can mean being so dedicated and reliable that your bosses end up telling each other, "'Have you seen that person? ... They could go home at 5 p.m., but they're here until 8 p.m. We need workers like that,'" says Orman. "If you follow that advice, your earnings potential will be limitless."

Once you feel free to talk about your salary and everybody knows how much everybody is making, it will be very difficult for your employers to underpay some and overpay others.
Suze Orman
bestselling author of "Women & Money"

Besides putting in extra hours, as Orman told CNBC Make It last year, there are other smart ways to make yourself indispensable at work:

  1. Pay attention. Know what your boss needs before they tell you and make it happen, ideally without being asked.
  2. Step up. Show a willingness to take on the tasks that need to be done.
  3. Develop a specialized skill. Figure out what your strengths are within the company and become an expert in one of those areas. This can make you the go-to person for a particular task.

Then ask for a raise the right way

Once you've shown that you're invaluable and you want to make sure you're earning what you deserve, you have to ask for what you want. "There's no way your boss is going to come and say, 'You know what, Suze? You should get a raise,'" says Orman.

Follow these steps, she says:

  1. Create a presentation. First, clearly outline the value you add to your company. For example, if you're a top-performing sales representative, come prepared with how much revenue you've brought in over the last year.
  2. Don't ask a 'yes' or 'no' question. Asking for a specific figure, like a 10% raise, makes it easier for your employer to turn you down. Instead, offer some flexibility.
  3. Make the discussion open-ended. Give your employer a range of options by saying something such as, "I would like a 10% or 15% raise." That will often yield better results. But make sure you think through your request. "They're going to give you the lower of the two choices ... so always make the lower percentage the raise that you really want," says Orman.

More advice: Stay calm and don't let 'no' stop you

In case you're concerned, you are allowed to talk about compensation with your coworkers. Employers are barred from forbidding employees to discuss pay and benefits, with a few exceptions, thanks to the National Labor Relations Act, and they're generally not allowed to retaliate against you, either.

That said, there are a few potential drawbacks to discussing what you make. It can be demoralizing to find out a coworker is being paid more than you, for example. You could also end up drawing conclusions based on incomplete information, since it's unlikely that you and your coworker have the exact same background and level of experience.

If you don't want to ask others about their salary or share yours, resources like PayScale and Glassdoor offer tools to help you determine the pay range in your job or industry.

And, if you find out you're being underpaid, you should take a moment to process that news so you don't act out of anger, Vivian Garcia-Tunon, founder of VGT Consulting Group, told CNBC Make It. Garcia-Tunon suggests starting the conversation with a positive tone and not mentioning specific names or salaries. The conversation should be about your performance and the value you add, not about your coworkers.

And be persistent, in a polite way. For example, if your boss says "no," you can ask what you can do to work towards a pay increase in the future.

Once you do score that raise, your next move shouldn't be a frivolous purchase, says Orman. No matter how big of a pay bump you've received, you should stick to only spending on items you need, not on items you want. "If you could just do that, you're going to maximize your money to the nth degree. You'll be able to save more, invest more, and in the end, have more," she says.

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