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As 2024 kicks off, it looks like many people are in a good position to ask for a raise or move to a higher-paying job elsewhere. Inflation has started to taper, interest rates are on the way down and unemployment has stayed under 4% for two years. And although some economists expect unemployment to increase slightly in the new year, it may stay relatively low.
Even with the advantage on your side, however, asking your employer for more money can be uncomfortable. You can ease your nerves and increase your chances of success by taking steps to prepare and support your request.
1. Start the Discussion Early
While you might want a raise today, timing your ask can be important.
- Start well before your performance review. Try to bring up the topic several months before a quarterly or annual performance review. Take this opportunity to explain to your supervisor that you're hoping to get a raise and ask what would need to happen to ensure you get one. If you follow through before your next performance review, you're simply asking your manager to keep their word.
- Consider your company's budget cycle. Also, think about how you can align your ask with your company's budget cycle. After all, even if your supervisor is on board, their hands may be tied if raises are typically only given out during a certain time of the year, such as the beginning of a new fiscal year.
Your supervisor's response also might depend on factors outside of your control, such as the company's overall success or the team's budget. But your individual contributions will definitely be a factor. If possible, try to start the initial discussion after you've done a great job on an important project.
2. Record Your Accomplishments
While some employers offer an annual cost-of-living raise, you might have to make a case for why you deserve an additional raise that rewards your individual accomplishments.
Instead of sharing a long list of everything you've done, highlight a few occasions or projects where you went above and beyond. It may be easier to do this if you take notes and screenshots throughout the year. These could include:
- Praise from managers, coworkers or clients
- Details about what you did and how you did it
- How you work helped your team and the company
If your manager needs to ask higher-ups before approving a raise, they can make a more powerful argument if they understand the context of your contribution and the results.
3. Gather Outside Statistics
Knowing what other people with similar jobs or responsibilities get paid can also help you make your case. If you're underpaid, you might simply ask for an increase to match market standards. Even if you're not, you can use your research and list of accomplishments to explain why you deserve more than the average.
Good places to start your research include:
- Salary websites: Some websites gather and share anonymized hourly and salary info, including Glassdoor, Indeed, LinkedIn, PayScale and Salary.com.
- Job listings: A few cities and states have pay transparency laws that require employers to include salary ranges in job postings. Use these postings as benchmarks, although you may need to adjust your expectations to account for location-based pay differences.
- Gather competing offers: If you want more subjective estimates of what you can earn, you could apply for other jobs and use your offers to negotiate a raise.
- Ask recruiters: If you don't want to let your employer know you're looking elsewhere, you could reach out to recruiters and ask how much someone with your experience could expect to earn.
4. Be Specific About What You Want
When you ask for a pay increase, get specific with the request and use your research to back it up. For example, you might consistently exceed expectations in reviews but have a below-market salary. You could make the case that you deserve a certain percentage above the market rate to align with your performance.
If a pay increase isn't an option, come up with alternatives that would make you happy, such as:
- More paid time off
- Flexible hours
- Remote days
- Equity compensation
- New bonus opportunities
- Financial wellness benefits
- More interesting assignments
Instead of asking for a raise, it may be easier to persuade the company to pay for career advancement opportunities. Having them pay for a career coach or continued education could help you qualify for a higher pay bracket or a higher-paying job later.
5. Have a Backup Plan
You might try your hardest and still get a "no" in response. Rejection can be discouraging, but feel out the situation and think through your options:
- Ask follow-up questions. Was that the final word or part of an ongoing negotiation? Ask about potential growth for your career and salary within the company and what needs to happen for you to progress.
- Earn a certification. If there isn't a linear path to progress in your current role, ask whether earning certifications could warrant more pay or help you move into a higher-paying career path at the company.
- Learn new skills. Even if there's no certification involved, learning new skills that you can apply to your job—or a new role somewhere else—could be helpful. For example, there are many free online courses related to in-demand fields, including cybersecurity and AI.
- Update your resume. If you're ready to leave your company, it might be time to update your resume and see if you can negotiate better pay—and potentially a sign-on bonus—at a different company. If you're not confident in your writing abilities, you can hire a professional resume writer or even employ artificial intelligence to get started.
- Try a side hustle. If you want to stay at your company but need an income boost, look into flexible side hustles that you can use to supplement your income.
You should also figure out what will happen to any employer-provided benefits, such as health insurance and retirement accounts, if you leave your job. Consider how all these changes will impact your finances and whether you can afford to leave right now or if you need to have another job lined up first.
How a Raise Could Impact Your Credit
If all goes to plan, your hard work will pay off and you'll be rewarded with a raise. Your income doesn't directly impact your credit score, and it's not part of your credit report. But it can affect your creditworthiness in several ways.
A higher income can make paying your bills easier and lower your debt-to-income ratio, which creditors may consider when making lending decisions. You could also update your income with your credit card issuers, which might lead to a higher credit limit. In turn, a higher limit can lower your credit utilization ratio, which could increase your credit scores.
If you want to track how these changes impact your credit, sign up for free credit monitoring from Experian. In addition to monthly updates of your credit report and score, you'll receive real-time alerts when there are important changes to your credit.