Updated: Jan 5
Did you know that if you negotiate even $1 per hour it can turn into $144,000? It's true!
Your experience and abilities have VALUE! Learn the value of what you bring to an organization and associate the proper $$$ amount to that value.
It is vital that you take the time and effort to ask and negotiate for all that you are worth. You should receive fair compensation for your work with your organization. Besides, you have bills to pay and fun to have. The better you negotiate, the better position you will be in financially now and in the future.
Did You Know: The average student loan balance for 2016 college graduates, according to the Student Loan Hero website is $37,172 and the average student loan interest rate, according to Student Loan Hero, is 3%-6%?! Ouch...
Now for some math and some hopeful news....
Let's assume that you successfully negotiated a $1.00 per hour raise or increased initial salary offer. Great job! Let's take a look at what that extra dollar per hour can do for you over time. In this first example, we took just your extra $1/hour and applied it monthly to a pre-tax retirement fund earning 5% interest while paying the minimum balance on your student loan each month. If you continued to apply that $1/hour towards your retirement account for 30 years, you could have over $144,000*!!! Now, that's definitely worth your time to prepare and to negotiate successfully!
An extra $1/hour yields $2,080 each year pre-tax. Applied over a 30year time period, you would be contributing $62,400. That's a lot of money. When you're starting out in your career, one of the best resources you have is TIME. With the help of many working years ahead of you and compound interest, your successful salary negotiation can yield huge results for you for retirement! Over 30 years, your $62,400 combined contributions can turn into over $144,000.
If your immediate goal is to pay off your student loan debt, it can be very effective to use your extra $1/hour to pay more on your student loans each month. By using just $100 extra per month from your raise to add to your student loan repayments, you could shave off 2-3 YEARS' worth of loan payments! Once your debt is gone, you could then use that extra money towards a pre-tax retirement fund.
Funding your pre-tax retirement with that same $1/hour raise after your student loans have been paid off can yield $88,000 in a little over 20 years!
As you can see, even with this scenario, your negotiating skills help you win big in the end!
*Both examples assume 5% monthly interest for the pre-tax retirement account and 5% monthly interest charged on the student loan debt.
* Write down 2-3 ways you would like to use your 'raise' money. This will help you stay focused and motivated to continue with your negotiation.
* Check out the tips in the other blog articles to prepare for your career negotiation!
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Connect with me at Sarah@ThatPurpleBook.com with questions.