Negotiating a Salary Increase: A Guide for 2024

It’s safe to say that most of us wouldn’t mind a little bump in our salaries. And if you’ve been killing it at work or taking on a few additional responsibilities, it may be time to ask for a raise. Sure, money talks can be uncomfortable, but they can also be successful – and profitable. Remember, you can’t get what you don’t ask for.

Here’s the good news: a recent survey from compensation platform PayScale found that 70% of employees who ask for a raise received one. Those are pretty good odds. If you’re ready to maximize your earning potential, follow this guide for asking for a pay raise in 2021.

Why You Should Ask For A Raise

Before you meet with your manager, consider why you’re asking for a raise. For one, your manager will most likely ask that question. But it’s also good to know why exactly you’re asking. Knowing the reason will help you determine if it’s really warranted at this time, help you strategize your ask and encourage you to go through with it. Here are just a few reasons you should ask for a raise. 

You’re Underpaid

Whether you’re not paid enough based on your experience or the responsibilities of the job, it’s time to ask for a raise that puts you within the median range for either of those factors. Don’t just go by how much you think you should be paid. Look at actual data to determine what it should be and how far off your pay is now. There are several online platforms that can provide some numbers, including PayScale and Glassdoor, to get a general idea. Make sure you’re specific in your salary search. Don’t just search for your job title. Factor in your years of experience along with where you work. Remember that the cost of living is different per location, so look up the average pay for your specific city and state.

You Want To Retire Early

Perhaps you’re planning for the future with the goal of Financial Independence, Retire Early. Also known as the FIRE movement, this financial endeavor focuses on living a financially sound life so you can retire early, usually before your 50s. In order to do that, you’ll need to make more money now, and a raise can be one of the easiest ways to achieve that.

Your Cost Of Living Increased

Maybe you just had a baby, bought a home or got married. Or maybe the annual cost of living has increased across the country as housing, food, gas and healthcare get more and more expensive. Whatever the reason your living expenses have increased, your salary may no longer be working with your (reasonable) lifestyle. When your life – or the economy – changes and you’re barely scraping by, a raise can be just what you need to make it through that change. Keep in mind, though, that many companies provide raises on merit, not cost of living, so focus on your professional achievements, not personal needs when asking for a pay increase.

You Want To Reap Personal Benefits

It isn’t always about the money. Asking for a raise has other benefits, too. It gives you the opportunity for personal growth. Having this type of discussion with your employer helps teach you how to advocate for yourself and have difficult conversations. It can also help you build confidence in yourself and your work. Asking for a raise gives you the opportunity to show your value. Even if you don’t get what you ask for, your manager will be more aware of who you are and the work you’re doing. You may even get the reality check you need, helping you better understand your worth. That may mean being grateful for what you have now and realizing that you deserve better.

When To Ask For A Raise

Even if you know why you’re asking for a raise, it may not be the right time. Part of getting what you want from the conversation is knowing the right time to have it. Here’s when you should and shouldn’t ask.

The Right Time To Ask For A Raise

• After the successful completion of a big project
• When you’re given more responsibilities
• When you’re put in charge of other team members
• When your manager is in a good mood
• If your manager brings it up
• After your company has had a profitable quarter or year

The Wrong Time To Ask For A Raise

• When you’ve been there less than a year
• After a bad year or quarter for the company
• During or directly after a reorg, layoffs or hiring freeze
• When your manager is in a bad mood
• Less than a year after your last raise
• Directly after you’ve made a mistake or failed a project
• During your year-end review

Many people think that the year-end review is the best time to talk about a raise. After all, you’re already talking about your performance and the year ahead. But by the time you have your review, the budget has likely already been planned and passed and your raise already decided. Instead, plant the seed early and have the talk a few months before your review. That way, your manager can have time to mull it over and include the raise in next year’s budget.

If you’re not ready to ask for a raise because you haven’t been at your company long enough or don’t feel your work warrants it just yet, use your year-end review to be proactive and start the conversation for next year. Let your manager know you’re hoping for a raise next year, understand it will take effort and work with them to create a plan and list of goals to reach by the next review.

How To Ask For A Raise

When you’ve determined it’s the right time and reason to ask for a raise, here’s how to do it.

Get To Know Your Employer

Before you ask for a raise, learn more about your employer. First and foremost, is the company in a position right now to provide a pay raise? Is it a startup that’s just gaining traction? Is it going through a rough period or is business flourishing? This can help you plan your approach to the topic. If the company’s doing great, you can lead with that. If it’s a difficult time but you still want to have that discussion, approach it with more gentleness and compassion.

You should also get to know your company’s compensation philosophy, which is the framework for and the “why” behind employee compensation. It explains the company’s attitude and approach to salary, raises and bonuses and will give you a better idea of what you’re working with.

Finally, you’ll want to know who makes the decisions on compensation. Is it an HR rep, your manager, your boss’s boss or the CEO? You may not have the discussion with this person, but you’ll want to know how far up the ladder it goes and who you need to talk to advocate to that person on your behalf.

Have A Number In Mind

Go into your meeting knowing how much you want and how much you’ll take. If you don’t know how much to ask for or agree upon, you could get taken advantage of. Knowing the range in salary you should be making will ensure your raise is fair. But don’t just pick your numbers out of the blue. As mentioned before, you’ll want to do your research to find the average salary for someone in your position, with your experience and in your location. Use online compensation sites for a basic understanding of your salary range but drill down even more by chatting with others in your field and reviewing job postings that mention base salary. Talk to recruiters and managers you know. Make sure, too, that the number you have in mind is in line with the type of raise your company usually gives. If your employer typically offers raises around 3%, asking for a 10% raise may be excessive. Instead, something along the lines of 4 –5% may be more reasonable. Knowing what you want and having the data to back it will tell your employer that you’re confident and should be taken seriously.

Come to the meeting expecting to negotiate and be prepared to do so. You may not get exactly what you ask for, but you may be able to get to a number you’re comfortable with. The ability to ask for your max and not accept anything less than your minimum will provide some wiggle room for both you and your employer and show that you know your worth but are realistic at the same time.

Build Your Argument

Along with wanting to know how much money you’re seeking, your employer will want to know why you think you deserve it. Having your argument prepared ahead of time will only make your case for a raise that much stronger. We’re not saying you need to go in there with a PowerPoint presentation and handouts, but you should have a few points – with proof – ready to go when asked. Throughout the year, keep a running list of all of your work accomplishments, major projects you’ve been a part of and any responsibilities you’ve taken on that are above and beyond your job description. Keep any accolades you received for your work, including congratulatory emails from your boss, awards you received and praise from outside sources, like customers, business partners or the press. If you have the numbers or other data that shows a direct correlation between your work and the success of the business, make sure that is included in your conversation. 

Schedule Time With Your Boss

Schedule a time with your manager to talk specifically about compensation and avoid springing the topic on them. When you catch them off guard, they could feel attacked. Don’t expect a result to come from one meeting, either. The discussion may require a few meetings and your manager may need time to mull everything over. After you’ve finished stating your case, circle back with them a week or so later.   

Practice

Once you have your argument built and know what you’re going to say, practice your pitch. Try it out in front of a mirror and go over it with a close friend or loved one. Go through all of the potential ways the conversation may go. Practice receiving and responding to possible objections. Practice negotiating. Practice your reaction to a “yes” and a “no.” It may feel weird practicing a conversation, but taking this proactive approach will help you feel more comfortable and composed during the actual meeting.

How Much To Ask For

To play it safe, there are two options. Stick to your company’s average pay raise percentage or stay around the national average annual raise, which is expected to be about 3.0% in 2021, according to WorldatWork’s Salary Budget Survey.

To go big or go home, you may consider following Business Insider's suggestion to ask for 10% - 20% more than your current salary – but tread lightly. Whether that’s the right number or too much will depend heavily on a number of factors, including:

• your company’s salary policies
• how in-demand your job is
• the state of the economy
• the average salary for your job title
• your years of experience
• how long you’ve been at the company
• the caliber of work you’ve done so far
• whether that comes with a promotion and additional responsibilities or not

What To Do When The Answer Is ‘No’

It can be discouraging when your employer says “no,” but take it in stride. That doesn’t mean it has to be the end of the discussion. If it’s not money, what’s the next best thing you can ask for? An extra day off or more flexible hours could be another way to reward your hard work and can feel just as nice as a bump in pay.

If your employer thinks it isn’t the right time, have a constructive discussion on what you can do to earn a raise in the near future. Ask your manager what skills you need to gain and goals you need to hit before approaching the subject again. Figure out a timeline and create a plan with your manager that includes regular meetings to check in on your progress.

You may also decide that it’s time to move on. While it’s totally fine to go to a new employer willing to pay you what you’re worth, you shouldn’t use that as an ultimatum with your current employer if you don’t have another job offer.

What To Do When The Answer Is ‘Yes’

Congrats! You came in with a number in mind, proved that you deserve it, spoke clearly and confidently and your employer agreed to give you the raise you deserve. Now what? First, if you haven’t discussed it already, get the details on your raise. How much is your increase? When can you expect your pay to change? What new responsibilities, if any, come with your raise?

Once you know how much you’ll be making and when you can expect the change to take place, make a plan for your new income. Without one, you could easily adjust your lifestyle to your new salary, making it feel like your income didn’t change at all. To create your plan, first calculate your new take-home pay (including tax withholding) to see how much additional money you’ll get each check. Then, decide what you will do with that extra money. If it’s just enough to feel like you are no longer living paycheck to paycheck, great. If it’s a little more, find a purpose for it.

Here are a few things to do with the additional money, so your raise has more of a positive impact on your financial life: 

• Increase your retirement savings.
• Pay off your debt faster.
• Build an emergency fund.
• Save for a down payment or other big expense.
• Increase your charitable donations, which can be tax-deductible.
• Diversify your portfolio.
• Invest in your passion project or side hustle.

For more tips on making more money, saving more money and adapting to financial changes, check out our Personal Finances Learning Center. As always, we recommend also speaking to your financial advisor, who can make recommendations and provide advice based on your individual needs and goals.