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WalletPrep worksheet · Work and income

How to negotiate your salary

Name ____________________ Date __________

Key ideas

  1. Research the range before you talk numbers. Look up pay for your job title and city in BLS wage data, posted job ranges and offers you've seen.
  2. Counter with one specific number. Ask a little above what you want, so meeting in the middle still lands you there. $68,000 sounds more researched than $70,000.
  3. A higher start grows every year. Raises are usually a percentage of your pay, so $4,000 more today becomes about $21,237 over 5 years at 3% raises.

Vocabulary

Marginal tax rate
The tax rate on your next dollar of income. It is the rate of the highest tax bracket your taxable income reaches.
Employer match
Money your employer adds to your retirement plan when you contribute, up to a set percentage of your pay.
Take-home pay
The money that actually lands in your bank account after taxes and payroll deductions come out of your paycheck.

Work it out

Nia, a single filer with no other income, gets a $62,000 offer as a marketing coordinator. Local BLS data and posted ranges point higher, so she counters at $68,000. They settle on $66,000.

  1. Final salary
  2. First offer
  3. More per year
  4. Income tax at 12%
  5. Social Security, Medicare
  6. More take-home a year
  7. Yearly raises
  8. Extra pay over 5 years

Check yourself

  1. You're offered $50,000 and negotiate to $53,000. With 3% yearly raises on both, how much more is your salary in year 2?

    • A. $3,000
    • B. $3,090
    • C. $3,300
    • D. $6,000

  2. When do you have the most room to negotiate a new job's pay?

    • A. In the first screening call
    • B. After you accept, on your first day
    • C. After the offer, before you accept
    • D. At your first annual review

  3. The salary band is fixed. Which is a reasonable thing to ask for instead?

    • A. A signing bonus or an earlier pay review
    • B. Nothing, since the answer is no
    • C. A lower title
    • D. A later start date with no pay

Your turn

Look up your job title and metro area in the BLS wage data and write down the median and the upper range. Pick your three numbers: thrilled, happy and walk away.

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Answer key

How to negotiate your salary

Work it out

  1. Final salary$66,000
  2. First offer− $62,000
  3. More per year= $4,000
  4. Income tax at 12%− $480
  5. Social Security, Medicare− $306
  6. More take-home a year= $3,214
  7. Yearly raises3%
  8. Extra pay over 5 years$21,237
  1. The counter adds $66,000 − $62,000 = $4,000 a year before tax.
  2. In the 12% bracket, tax takes $4,000 × 12% = $480, and Social Security and Medicare take $4,000 × 7.65% = $306. She keeps $3,214 a year, before state tax.
  3. With 3% raises, the gap grows each year: $4,000 + $4,120 + $4,244 + $4,371 + $4,502 = $21,237 of extra pay over 5 years.

Check yourself

  1. B. $3,090 Year 2 pay is $53,000 × 1.03 = $54,590 against $50,000 × 1.03 = $51,500. $54,590 − $51,500 = $3,090, which is $3,000 × 1.03.
  2. C. After the offer, before you accept Between the offer and your yes, the employer has picked you and wants to close the hire. After you accept, there is little left to trade.
  3. A. A signing bonus or an earlier pay review When base pay can't move, one-time money, extra leave or an earlier review often can.