Asking For a Friend | Chapter 61
Advice from Babe to Babe
Money, money, money. We’re all on the same page with regard to diminishing the gender pay gap—but when it comes to taking charge of your own professional finances, it’s totally normal to feel a little overwhelmed. This week, the gurus respond to two questions about cold-hard cash (and what to do with it).
Provide concrete, numerical reasons why you deserve a raise. Whether it be in sales, projects managed, etc.—if you can show how you’re making your company more money and how you’ve earned a raise, the process should be easier.
It's not arrogant to ask for what you're worth, but sometimes employers or supervisors are unaware of the true value you bring. If you can take stats with you into your meeting that show how you've met or exceeded goals and how you've helped the company, that will help them get a better understanding of your worth to the company. Depending on the size of your company as well as your position, there are other things you can ask for in addition to a raise: more time off, flex time, stipends for cell phone or car, etc. Be sure that you ask for a number you can defend based on what others in your position and market make, and a number that's fair based on your current salary and what you've done to progress since you took the job.
First of all, stop thinking that asking for a raise is arrogant; it's standard business practice. No one is going to give you money for free; you're going to have to ask, period. If people see you as arrogant, that's their deal, and you may not want to work for them if that is the case. Asking for a raise is all about market compensation rates, job performance, and contributions to the bottom line. If you've done your research on comparative compensation (e.g., Glassdoor, informational chats), proven you're a high performer in areas that matter (use your company's performance reviews, if possible), and can show your contributions to the bottom line are more than the compensation you're requesting, you should be all set. In this regard you've made a business case, not simply a request because you want more money. You've shown the company you're an asset worth investing in and that losing you might mean real losses for the business (you've made them an offer they can't refuse). I've also found that businesses value employees who value themselves. Negotiating on your own behalf shows companies you can also negotiate for them. Come from a place of "business sense," instead of "need," and you'll never appear arrogant.
At a minimum, contribute what they match. It’s free money and adds up really fast. As you get raises, I would increase at least half of your raise percentage to your 401(k) for a few years. Once you get a good foundation, consider branching out into other forms of investment.
The very minimum you should contribute is whatever it takes to get the full match. For example, if they match dollar-for-dollar up to 3 percent and then 50 percent of 4 and 5 percent, then you should put in a minimum of 5 percent to earn the full 4 percent from your employer. Beyond that depends on your budget and your goals, but you should absolutely take advantage of their match. (Be sure to ask how long it takes before you're vested.)
How much does your company match? That’s how much you should contribute. Never, ever, ever turn down free money, which is what you’d be doing if you didn’t put in the amount required to get a full match. At my first job, I put in the max required to get a full match, and six years later I’ve never gone below that amount, even as I’ve changed jobs. If you learn to live with less from the get-go, you’ll never miss that money. Yes, having the money now would be so nice, but being able to retire one day will be even nicer.
This will be up to your personal financial goals. Look into how much money you're putting into long-term savings, short-term savings, investments, etc. Figure out how "liquid" you need your money to be and then look at all the ways you have access to your funds. Think about things like: When do I want to retire? What tax bracket to I plan to be in when I retire? When do I want access to this money? How risky am I willing to be with this money? Does increasing my contribution affect my current standard of living? Would I be taking from another financial bucket to fill this one?
Everyone's financial needs and goals are different and I suggest diving deep into some of these questions (and more) with a financial advisor. If you cannot afford one, or do not want one, find ways to fully understand how 401Ks work and how they contribute to your bigger financial picture (possibly through online research). At the end of the day, you're the only one who will be able to answer this question.
Until Next Week,
—The BWH Advice Gurus
Asking for a Friend is Babes Who Hustle's weekly advice column that asks and answers the work-related questions on all of our minds.
Looking for advice and guidance? Hit us with all of your workplace-related questions below and stay tuned for next Wednesday's edition!
