Personal Finance Series #5: How to Get a Pay Raise

Hi there,

We all want to be fairly compensated for our work, right? Well, according to studies by human resource companies, the majority of people do not get paid their fair market value. So how do we increase our chance of getting a pay raise? Follow these steps:

1. Research the going market rate: in order to negotiate a raise successfully, you need to know what is the market-established salary for your function in your geographic area. Use websites like glassdoor.com or salary.com to find out how much people make in similar positions as yours. Remember that location is also very important: working in New York City where taxes and living costs are extremely high is vastly different than working in Texas where there is no state income tax and cost of living is reasonable. You can also consult a government source such as the Labor Department's website Bureau of Labor Statistics to cross-validate your data.

2. Document your achievements: in order to get a raise, it is not enough to just perform at a satisfactory level. You need to accomplish key objectives that helped the company in a meaningful way. For example, you researched different ways of saving money to lower the company's travel & entertainment expense (i.e. business air travel must be booked at least 14 days in advance, or employees must use a preferred hotel partner, etc). Or maybe you found new clients who signed multi-year deals that generated additional revenue. However large or small you think it might be, keep documentation in a folder of how you added tangible value to the company, to the business unit, and/or to your team.

3. Do not threaten your manager: whatever you do, do not threaten your employer that you will leave if you don't get a raise. It's all about making a case based on your accomplishments and your thorough market research on fair market value for someone with your abilities and skills. Be assertive yet tactful, and be specific (in terms of dollar amount) of your request.

4. Time it right: No matter how qualified you are and how persuasive your argument may be for getting a raise, if the company is insolvent and going through three rounds of layoffs, it would be extremely difficult to even bring up this topic. On the other hand, if your company just had a banner sales year, then it might be a great time to talk. Wait for the right moment, and then set up an appointment for a private face-to-face conversation. (and if the financial health of the company does not improve over time, then sorry but perhaps it's time to look elsewhere.)

5. Lastly, Practice! Think of what you did to get the job in the first place. Most likely, you practiced what you wanted to say and how to say it, right? They chose you because you probably came across as a confident speaker who researched the company and the position very well. In the same way, once you have your research and documentation in place, practice the delivery of the speech with a trusted friend. Sometimes how you say it is more important than the substance!

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I hope you found this article helpful and I will be sharing more information on personal finance in the next series. Feel free to reply with any questions and thanks for reading!

If you liked this article, check out my previous posts below:

Personal Finance Series #4: Investment Advice - Part Two

Personal Finance Series #3: Investment Advice from Warren Buffett

Personal Finance Series #2: Top Money-Saving Tips

Personal Finance Series #1: Money Management 101

If you are also interested in learning more about taxes, check out my tax series below:

Tax Series #10: Child Tax Credit

Tax Series #9: Standard Deduction vs. Itemized Deduction

Tax Series #8: Child Support vs. Alimony, and Why it Matters!

Tax Series #7: Top Tax Tips to Save Money

About the Author : I am a cryptocurrency enthusiast and a U.S. Certified Public Accountant with over 15 years of experience in accounting, taxation, and finance.

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