Loyal and reliable, Fiona has worked for the same employer for the past 11 years. But she has only had one pay rise during that time. Accounting for inflation and the rising cost of living, in financial terms Fiona is actually going backwards.
Financial independence can feel like an impossible dream.
Being financially independent means you have a steady, reliable income from your ‘money pot’ (super and non-super investments). By not having all your eggs in one basket, you’re protected from variation in government policies or changes in legislation. You have control of your money and your financial wellbeing.
To achieve financial independence, you need to accumulate the money that will form your ‘money pot’. This can occur throughout your life in a variety of ways:
saving
investing during your working life
inheritance
other financial windfall
sale of business
superannuation
Most of us start to build our ‘pot’ by earning money from employment or business and saving what we don’t spend. These savings can then be turned into investments and you’re on your way.
Ensuring you are paid properly is one of the key elements to achieving financial independence. In Fiona’s situation, her lack of pay increase means her ability to save is compromised. But it’s not always easy to ask for a pay rise.
If you are well prepared and open to discussion, it doesn’t have to be awkward or difficult to ‘talk money’.
5 simple steps to ask for a pay rise
Do your homework – Read your job description, investigate salaries in comparable roles, speak to a recruiter. Work out what is a fair and reasonable pay rate for the job you are doing. It’s important to be realistic.
Know your worth – Identify the value you add to the organisation. Show why you are worth more than your current pay rate. It may be your skillset, experience, efficiency, sales performance, customer service or knowledge. Prepare figures if applicable. Keep it simple and make a clear case outlining your worth.
Write it down - No one likes to be blindsided so write a letter or email explaining that you would like to review your salary and the reasons why. Then schedule an appointment at a convenient, non-stressful time. Having your case in writing will also give you both something concrete to refer to during the meeting.
Listen - Remember that this is a conversation. State your case politely and listen to the response you are given. Show you understand the company perspective and negotiate calmly and confidently.
Have a back-up plan - While your workplace may not be able to offer greater remuneration, they may consider alternatives such as job flexibility, a car/ phone allowance or training opportunities.
Being aware of your earning potential gives you the ability to plan and work towards the goal of financial independence in your future.