What’s the Best Way to Get a Raise?
This guest post was contributed by Aaron from Personal Finance for Beginners. Aaron is a lifelong entrepreneur and internet marketer who started his blog to share experiences and insights from his own financial journey as he pays down student loan debt, sticks to a deliberate budget, and saves and invests for the future.
If you are like the majority of people in the workforce, your job is your primary – and probably only – source of income.
In the personal finance community, increasing your income is an under-appreciated approach to improving your financial situation. Developing a frugal mindset and keeping your expenses low has its benefits, but let’s face it, sometimes it’s easier to earn another dollar rather than finding a way trim your budget.
What’s the best way to increase your income?
There are many personal finance bloggers (including myself) who advocate for the benefits of starting a side hustle. While it’s true, anybody can start a side hustle, sometimes the easiest way to increase your income is by getting a raise at work.
It can take months – even years – to build a side hustle that produces thousands of dollars in additional annual income. Earning a raise at work can help you earn that income each year with just a little research, planning, and communication.
In this post, we’ll look at the five steps you can use to get a raise at work. By following these steps, you will be better prepared to increase your income by thousands of dollars in several weeks or less!
Step 1: Find relevant data
As the old adage goes, “In God we trust, others must provide data.”
Without a divine edict from the heavens, you will need to prepare in advance of asking for a raise by gathering relevant data will justify the amount you’re asking for. Yes, everybody wants to earn more money, but what makes you qualified for a greater salary?
It’s helpful to find comparisons to what other individuals with similar (1) work titles, (2) qualifications and experience, and (3) geographic locations are earning.
It used to be difficult to find this kind of data. How much other coworkers are earning was typically only shared through close friends, “happy hour” gossip, or as the result of a negligent HR manager.
Sharing one’s own personal finances is still generally considered taboo, but these days it’s much easier than ever to find anonymized salary data through websites like Glassdoor and LinkedIn. On a website like Glassdoor, you may even be able out what your peers are making by reviewing the salaries of your specific employer.
Step 2: Define the numbers
When you eventually sit down to request a raise (that’ll be step four!), it’s helpful to have a specific number in mind.
The salary data you found in step one provides an excellent start, but at this point, you’re often still left with a wide range. The median salary for a business account manager might fall between $45,000 and $65,000 in your city… How do you know how much to ask for?
In this case, it might be helpful to start with your existing salary. Most raises fall between 3% and 10%. Anything higher than 10% is typically the result of being drastically underpaid to begin with, demonstration exceptional performance, or acceptance of significant new responsibilities.
When it’s time to make your case, the amount of your raise isn’t the only number you’ll want to define. It’s also beneficial to show up with numbers that clearly show your contributions to your employer.
- How much additional revenue were you able to bring to the company?
- Have you been able to reduce company costs by working more effectively or efficiently?
- Are you responsible for new projects or initiatives with a measurable impact?
Before requesting time to speak with your manager, make sure you have a specific number in mind (perhaps 10% more than your current salary) and 2-3 measurable examples of how your contributions help the business.
Step 3: Make yourself irreplaceable
At this point, you should have all of the numbers needed to help with the quantitative side of asking for a raise. Now it’s important to find two of the social or organizational sides of requesting a raise, starting by making yourself difficult to replace.
Take a moment to step into your manager’s shoes. No, you aren’t trying to replace them in this exercise. Instead, stop and think about how you can make them look like a rockstar.
Depending on the size of your employer, your manager likely has their own boss they report to. Often times, it’ll be that same boss (your manager’s manager) who has the authority to sign off on a raise. Develop rapport with your manager – and make it easier for them to request your raise – by showing how they’re a top performer as well.
Outside of making your manager look like a rockstar, make yourself irreplaceable for volunteering to take on responsibilities that other employees are unable – or unwilling – to do. Perhaps you have unique skills you’ve picked up from another job, or you’ve been with the company long enough that you can offer expertise nobody else can provide.
This way, you’ll make it more expensive for your employer not to take good care of you, knowing that they’d risk losing a valuable team member in the process.
Step 4: Find the right time to ask
Finding the right time to ask for a raise isn’t simply waiting until your manager shows up to work in a great mood (although that can’t hurt!).
Many companies have specific processes in place for handling their budgets and performance appraisals. If you request a raise outside of the established process, you may not be able to get the money you’re seeking no matter how reasonable or justified!
One of the best ways to get a raise is to start the conversation early. Don’t just show up to your manager’s desk with the request. If you have periodic performance appraisals, use that time to plant the seed for a future discussion:
“I’d like to earn another 5-10% above my current salary. I feel this is a fair value for the contributions I bring to the company, and I’m willing to step up my game and take on new responsibilities to help the team. What can we do to make this a reality in the next 3-4 months?”
A request like this gives management plenty of time to review or adjust their budgets for employee salaries, define or redefine your role in the organization, and receive approval by any required stakeholders who need to sign off on your raise.
Step 5: Get the raise – and celebrate!
The first four steps talked about getting the raise… but what’s the best way to get a raise?
Getting a raise is a great way to increase your income, but larger paychecks don’t guarantee financial success. If you’re currently living without a budget, there’s a good chance you spend every dollar you earn. Don’t assume that a raise at work means you should inflate your lifestyle – this may be your chance to stop living paycheck to paycheck!
So what should you do after you get a raise?
- Revisit your budget to determine how much new money you really have after taxes and deductions
- Increase your investments toward long-term financial goals or pay down your debt
- Reward yourself appropriately with a modest, one-time purchase instead of taking on more expensive rent or car payments
Avoid the temptation to go out and make a big purchase as soon as you receive the good news about your raise. You may feel “rich” after you receive that first boosted paycheck. Wait a couple paychecks until this feeling settles down, and you’ll make your financial decisions with a clearer mind!
Getting a raise at work is one of the simplest and most common ways of increasing your income and improving your financial future.
Do your research to understand your fair market value for the skills and experiences you offer. Find ways to make yourself irreplaceable by bringing something unique to the table and making your manager and team look like rockstars within the company.
When do you get your next raise, don’t just give yourself the green light to go buy a new phone or upgrade your car. Find a purpose from that “extra” money – whether investing or paying down debt – before you feel entitled to a higher standard of living. The best kind of raise from your employer is the one where your money starts working for you!
What strategies have you found effective in requesting – and making the most of – a raise at work?