The compounding power of asking for a pay rise

At the start of the year it’s pretty common for our minds to turn to pay rises, promotions and career change. After all, we’re setting new year resolutions and goals, and the way we start the year can help us succeed in achieving those dreams. 

But let’s face it - asking for a pay rise can be super scary! For any woman who has had to ask for a pay rise, you know how nerve-racking it can be. You feel you're worth more, and your performance shows an amazing track record. You're reliable, deliver great work, people love working with you, and you're keen for your salary or day rate to reflect this.

And yet you're petrified to go into the negotiation... or even to send the meeting invite or pick up the phone for a chat! 

You are absolutely not alone! Many women I've coached are terrified to go into pay negotiations and to ask for what they feel is fair, reasonable or simply desirable. There's many, many reasons (and everyone thinks their situation is unique) but often it boils down to a simple set of three:

• You’re worried you’ll be rejected
• You’re worried you’ll be seen as greedy or ungrateful
• You’re worried you’re not good enough

So often you never get there, and you spend days, weeks, months and maybe even years, stuck on the same pay (or growing only incrementally).

But that’s absolutely costing you - in financial terms, personal terms and spiritual terms. When you do ask for and receive a pay rise, there’s a compounding power that can transform not just your bank account but your entire future. You’re worth more in lots of different ways...

First disclaimer - this is not financial advice, but just general in nature and doesn’t take your personal circumstances into consideration! 

You might be eligible for bigger loans or credit

Before I moved into Change Management, I had already put down a deposit on an off-the-plan property. I thought that I could only get a certain maximum for my home loan. But just over a year later when I settled on the property, I was earning $15,000 more per year and so I was eligible for a bigger home loan. I didn’t actually end up taking the larger amount, but it was still fantastic that, had I needed or wanted it, the option was there. The same goes for things like credit card limits - you’re often eligible for higher limits if you have a higher salary and if you’re sensible with credit cards and monthly repayments the higher limit could give you a buffer at times when you might need to put down larger upfront payments for things like wedding venue deposits, overseas flights and accommodation bookings, or in my case my quarterly tax bills for my independent consultancy (yes, I points hack!). Again, you might never actually use the increase in loan or credit eligibility, but the fact your potential is bigger can really boost your self-esteem!

You can pay down debt much quicker

When I tripled my salary in the space of 3 years to almost $200,000, wow did I see my debts domino (a term used by The Barefoot Investor Scott Pape). My HECS student loans suddenly disappeared in a flash, I made extra monthly repayments against my home loan and saw my equity build in record speed, and my savings grew rapidly giving me a nice comfortable security blanket. 

You can build more wealth more quickly

Usually a higher salary or day rate also includes a higher equivalent of superannuation payments made by your employer (or whatever retirement fund is in your country). Given these are often locked until retirement age, they really do compound in the truest sense of the word! If investing is your jam, you could also use the extra discretionary income for that. 

You can buy back time

One of the other amazing things when you earn more is that you can decide to work part-time or take unpaid leave days (such as for school holidays or because you want to go to the beach) and still earn a great salary. When I was a contractor in Change Management, I worked 4 days a week and also took off a couple of months of the year to go travelling overseas. Because I was earning so much, I still earned an income on par with most highly-paid professionals but I had such freedom and flexibility through my week and year.

The increase in self-worth can increase other areas of your life, too

I also found that when I started to earn more and felt I was being paid what I was truly worth, I attracted my first long-term partner (we’ve now been together 10 years), felt confident to show up in life and business (building my side hustle and then later having the funds to move to my business full-time), and started owning my life decisions even if they go against the grain (such as my decision to remain blissfully childfree by choice until the end of my days). 

These are just a few examples of the compounding power of asking for and getting a pay rise.

But you might still be scared, so what can you do about it?

Work on your confidence blocks so you can ask for the pay rise and feel good about doing it. 

Asking for a pay rise can be one of the most liberating things you can do. The process itself helps you understand what you truly want. Getting a "no" opens you up to new possibilities (a.k.a. do you want to stay somewhere that you're undervalued?). And getting a "yes" gets you more coin in your bank account. It is literally a win-win.

So don’t shy away from aiming for a bigger pay rise this coming year.

If you’d like my help building the confidence to get the pay rise you dream of and deserve, come to my free Underpaid and Overlooked Workshop kicking off on Monday 16 February:

Register your free spot on my Underpaid and Overlooked Workshop

All my belief, 

Lata xx