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Money Terms You Need to Know When Negotiating Your Salary

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Salary negotiations with your current or a potential employer can be awkward and uncomfortable. However, those discussions are absolutely crucial. The key to a successful negotiation is to be prepared.

If you don’t negotiate your salary you’ll be missing out on potential income. Employers very rarely lead with their final offer. It’s important to know what you’re worth—and to be unafraid to ask for it. Your dream job and your dream salary won’t fall magically into your lap— it’s up to you to go out and get what you want.

How can you do that? According to Monster, the first step is to research the average salary for your position. You can usually find this information internally with your company’s human resource department. You can also search popular websites like PayScale or Glassdoor.

Once you have a target salary in mind, learn the terms that come with negotiating a salary. Then, let the negotiations begin.

Term 1: Total Compensation Package

This is one of the money terms often used by employers. It’s the total value of all the benefits you’ll receive as an employee in addition to your salary (such as paid vacation, health and dental benefits, retirement savings plans and stock options).

Employers often use this as negotiating power when they’re unable to provide the salary employees want. It is definitely something to take into consideration when accepting a job offer.

Term 2: Industry Standard

This is a metric used by employers to set salary ranges for each position. They often use this as a negotiation tactic and you should too. In this part of the negotiation, you should showcase your expertise. You don’t want the industry standard salary, you want the salary that reflects what you’re worth.

Talk about your accomplishments and tell your potential employer why you’re better than the industry standard. Make sure you come across as being proud and confident, not cocky. Self-indulgence isn’t always a flattering quality in an employee -- especially if your job requires you to be a team player.

Term 3: Performance Evaluation

When negotiating a new job offer, it’s important to understand money terms that define how your income can increase every year. An annual performance evaluation can determine your annual bonus payout amount as well as how your base salary will increase each year.

Initial job offers usually state an estimate annual bonus percentage as well as a salary increase. However, these are conditional—and are based upon an employee’s individual performance evaluation. It’s important to understand how you’ll be evaluated. That way you’ll know what’s expected of you as an employee as well as what to expect as your income increases in the years to come.

CESI is committed to promoting a healthy financial future and debt-free living. If you could benefit from a free financial consultation, give us a call today. Our certified financial counselors will be happy to review your situation.

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