MAKE YOUR CASE FOR A RAISE AND PROMOTION THROUGH YOUR WORK
I ask that you take a clear-eyed look at your attitude toward work and pay. Are you expecting to be paid more because of a sense of entitlement, because you’ve hung in there year after year, or because you are doing spectacular work?
When I was a financial advisor I often had clients who came to me upset when they didn’t receive the raise or promotion they expected. When I asked them why they thought they deserved the raise they often said to me, “Because it’s been a year and I am working so hard.” Mind you, this was in the early 1980s when we were coming out of a recession. Though the situation was different back then—we were grappling with high inflation—there are some striking similarities between that moment in time and where we are, economically, today. One such similarity: Employers were cautious and conservative in how they spent money, just as they are today.
It wasn’t always an easy conversation with my clients, but what I told them back then is the truth I ask you to stand in today: No private-sector employer has to give you a raise. No one is obligated to dole out a bonus. As valued as you are by your employer, the reality is that there are a lot of very talented people who could replace you among the unemployed and underemployed. Please do not think the reason they are out of work is that they aren’t as good at their job as you. There are literally millions of extremely talented people who are out of work. The financial crisis and recession didn’t merely clean out the deadwood; it took a lot of hardworking, competent, professional workers with it too.
I hope this doesn’t cause you to become paranoid and make you afraid of ever asking for a raise or bonus. Here’s what I used to tell my clients:
Make those you depend on for a paycheck dependent on you
. What you want to do is make yourself so valuable, so close to irreplaceable that your employer is doubly motivated to make sure you are happy in your work, and your pay. When you overdeliver on every part of your job and exceed expectations, you are making your case loud and clear to be compensated for your work. When I wrote
The Money Book for the Young, Fabulous and Broke
in 2005 my advice for 20-somethings was to just put their heads down, work super hard, and not sweat the pay. Build a reputation, make your mark, put in the effort, and you will be on solid ground. That advice applies to all ages today. You must double down on making yourself an absolutely essential piece of your firm’s success. That should be your goal at any time, but in these times of economic stress it is imperative. It is how you keep moving forward in a very competitive job market.
I am not suggesting it will protect you from ever being laid off. But I can guarantee you that if you are laid off because your firm is struggling, your reputation will precede you and your manager will likely help your efforts to find a new job by providing a glowing reference. It will also likely put you at the top of the list for being rehired when the company rebounds.
Now that said, I realize at a certain point you may in fact feel your nose has been to the grindstone plenty long enough and you know you have put in the work to merit a raise. Okay, be smart here. Do not request a meeting with your boss, stomp in, and simply state, “I deserve a raise” or “Can I have a raise?”
I want you to be more tactical and frame the conversation by making your expectations clear.
HOW TO ASK FOR A RAISE
Start by preparing a one-page presentation that documents all your accomplishments—exactly how you contributed and continue to contribute to moving your employer’s business forward, and how you have delivered specifically for your manager. Make sure your manager has that document at least forty-eight hours before the meeting. Next you need to decide how much of a raise you want. Let’s say you want a 5% raise. When you are sitting with your boss, start the conversation by saying, “Given my accomplishments and ongoing contribution to our business model, I would like you to consider a raise of 5 or 10 percent.” You make the amount you want the lower of the two choices. In any case, make them no more than five percentage points apart. Now, why do I want you to do this?
This goes back to a lesson I learned when I started out as a commission-based stockbroker in the early 1980s. I was trained to be a professional salesperson to call up clients, and after sharing an investing idea with them, I would ask, “Would you like me to buy five hundred shares or one thousand shares?” The rule was never ask a yes-or-no question, because if they said no there was nothing else I could say. I want you to do the same when discussing your salary with your boss. When you walk in and say you want a raise of 5 or 10%, you have just shifted the conversation about whether you deserve a raise to how big a raise you deserve.
Save Your Raise
If you are living below your means but within your needs, you will not need to use any part of a raise to cover your existing expenses. But you and I both know that if you aren’t careful you will soon find your expenses rising to meet your new, higher paycheck. Please don’t squander your raise. If you have yet to amass an eight-month emergency fund, I want you to aim to save 100% of your raise. If you already have the eight-month emergency fund taken care of, I want you to aim to still put at least 75% of your raise toward any of your other saving and investing goals or paying off your credit card debt. The balance you can use as needed. So let’s say you get a 4% raise. That means that at least 3% must be earmarked for your savings goals. The other 1% is yours to spend. Remember: You are standing in your truth when the pleasure of saving is equal to the pleasure of spending. My suggestion that you save the majority of a raise is not to be taken as a punishment. I am showing you how to realize your dreams.
CHANGE YOUR ATTITUDE BEFORE YOU CHANGE YOUR JOB
In the first class of this book, I explained that there is rarely a bad situation that can’t be improved by a change of perspective. It’s not that you can’t afford a house; you can afford a less expensive house. The problem isn’t that you were turned down for a car loan, but that you were shopping for a car that was too expensive. Change your perspective—and budget—and you can reach your goal. I think that idea is especially timely in how you manage your career.
As we all know, finding a new job is not exactly a snap these days. As I write, there are five job seekers for every job opening. If you are unhappy in your current job, my advice is to take a step back and see how you might be able to make it work for you, so to speak. The truth you must stand in is that in this lousy job market, the job you have is a great job, for it is a job. And I want to be very clear: You cannot afford to walk away from any job today without having another job lined up. I don’t care how talented and well connected you are, that is just crazy in this environment. It is infinitely easier to get a new job if you still have an old one. Ignore this advice and down the line you are going to end up saying, “I wish I hadn’t.” Please don’t make that mistake.
That puts it on you to figure out how to turn around a frustrating job situation. If you can’t stand your boss, get strategic about transferring to another division. Wish you had more responsibility? Well, come up with ideas for how you can expand your work. Right now your manager is probably overloaded and worried about her career. Ideally she’d be looking out for you, but this isn’t exactly an ideal time. So be proactive. Don’t just complain that you’re unhappy; offer up ideas on new challenges you could take on that would make you happy. And don’t tie it to a pay raise. Do the work first, and the pay will follow. That’s just the way it has to be in these economic times.
I also want you to think of how you can change your life away from work, to make the work less frustrating. Hobbies. Working out more. Leaving the office a half hour earlier so you have a little more family time before the fire drill of dinner-homework-bedtime. You can fix a lousy job by reducing its impact on your waking hours. Change your attitude, or your perspective, or your priorities, and watch how things fall into place.
What You Must Have Lined Up Before You Voluntarily Leave a Job
LESSON 2.
ADVICE FOR THE UNEMPLOYED
Anyone who is out of work must stand in the truth I presented at the beginning of this class. Our slow economic recovery means job growth will remain sluggish and that in turn means we could be facing years during which the number of people looking for work will far exceed the number of job openings. I wish I could tell you that if you can just hold on a bit longer everything will make a big turn for the better and there will be plenty of new opportunities. But, sadly, that is not the truth.
Here are my recommendations for adjusting your career dreams to today’s realities:
CUT YOUR SPENDING IMMEDIATELY ONCE YOU LOSE A JOB
There is a dangerous tendency to just stick with the status quo right after you are laid off. Between your severance, unemployment benefits, and your emergency savings you think you are going to be fine for a while, so you don’t feel the need to cut back. But I want to repeat a startling statistic from earlier: Nearly one-third of the unemployed in late 2010 had been out of work for at least one year. That’s likely a lot longer than your severance, and even if your state has expanded the amount of time you can receive unemployment benefits during this slow recovery, the payments, as noted earlier, typically will cover just a fraction of your prior salary.
That makes your emergency fund all the more important. In fact, my advice is that every family that is dealing with a layoff should take measures to make their emergency fund last as long as possible. I realize it may be harder to add to your emergency fund when your income is reduced; that’s not what I’m suggesting. The goal is to cut your expenses as much as possible, as quickly as possible. Review every expenditure. Spending that you could afford when you had a job is not necessarily spending you can still afford.
How much to cut? Stand in the truth of the job market in your area, and your field. If you know it may take time to find a job—any job—you must be very aggressive in scaling back your expenses right now. Challenge yourself to reduce your expenses so your eight-month emergency fund could last twelve months. If that means getting rid of one of the cars, or scaling back the kids’ after-school programs, so be it.
DO NOT DIP INTO YOUR RETIREMENT SAVINGS
As we discussed in “Stand in Your Truth,” one of the biggest challenges is to weigh the long-term impact of any financial decision. Yet often we get so caught up in the moment that we don’t stop to think through the impact that decision will have on our long-term financial stability.
This is especially tricky when you have lost a job. You become so focused on just getting by today that you think it is okay to borrow from your future. So instead of leaving your 401(k) growing for your future retirement, you cash it out the minute you are laid off or you chip away at it. You tell yourself you will worry about retirement later; you need to pay the bills today.
I want you to know how very sympathetic I am to the stress of paying the bills when you have been laid off. But I do not want you to touch your retirement savings. As I explain in all three of the Retirement Classes, the truth you must stand in is that your personal savings are going to play a pivotal role in whether you in fact can live the life you want and deserve in retirement. And the only way that will happen is if you leave your retirement savings alone.
MAKE SURE YOUR CREDIT PROFILE REMAINS STRONG
As a job hunter it is your job to impress potential employers, right? You need a résumé that grabs their attention, you need to make an impression during the interview process, and you’ll be relying on your references to sing your praises. You also may need your credit report. If you are applying for a job that requires you to handle money in any way, a potential employer will want to make sure you don’t have any red flags that might make you a high risk around the cash register or dealing with the company’s finances. And even if you aren’t applying for a finance-related position your credit report can still be an important factor in whether you get hired. The credit report has become a data point employers like to consider as an insight into your sense of responsibility and stability. If they find a financial mess, it could give them a reason to reconsider hiring you. In today’s world, where you are competing against so many other applicants, don’t let a shaky credit report keep you from your next job. That means making sure you stay current with all your bill payments.
If you already have some dings on your report and a potential employer asks for permission to have a look, take control of the situation. Give them permission, but tell them the truth behind your credit report. Acknowledge the problems; don’t hide from them. I can’t guarantee that standing in your truth will get you hired, but I can guarantee you that hiding from the truth and letting a hiring manager find out on his own will likely work against you.