Most of us would love a higher salary. While applying to another job or taking on a side hustle are ways to achieve this, the simplest solution is often to ask your employer for a raise. Of course, there are pros and cons to doing this that extend beyond a simple ‘yes’ or ‘no’ answer. Before you approach your employer for a pay rise, consider these following benefits and drawbacks.
Pro: More financial security
A pay rise could lead to greater financial security. You could find it much easier to pay your bills on time and may be able to consider setting aside more money for savings. Even if you’re keeping on top of your finances, a pay rise could still give you the option to live life more luxuriously. For those who are financially struggling, it could be a necessity for continuing to afford your current lifestyle (when given the choice – earning more is better than making cutbacks).
Con: Potentially higher tax
If your current salary puts you at the top of your tax bracket, you may want to be careful of asking for a pay rise. While your salary may increase, your tax may increase with it by a much greater rate, and you could end up taking home less money each month. A salary sacrifice is a potential way to get around this. What is salary sacrifice? This involves having an employer pay for something on your behalf and then take it out of your salary. This could include paying for a car, a gym membership, a phone or a laptop. By accepting a pay rise but then also accepting a salary sacrifice, you can stay in the same tax bracket, but gain access to greater employment benefits.
Pro: Communicate your value
Unfortunately, it’s often the employees that shout the loudest about their achievements that get the most praise. An employer may not recognise your value unless you draw attention to it. Asking for a pay rise is an opportunity to list all the reasons why you think you are valuable. Even if an employer isn’t able to give you a pay rise at this moment, it could encourage them to start noticing you and to consider offering a pay rise in the future.
Con: Increased responsibility
Some employers may feel that a pay rise is not deserved unless you are willing to take on extra responsibility. While you may be able to justify that you are already doing enough to warrant a pay rise, many employers may still feel that they need to get more out of you if it’s to be a worthy investment. You should therefore be prepared to potentially take on more work when demanding a pay rise. This could be a struggle if you are already going above and beyond to prove your worth – do you have it in you to offer more?
Pro: A convenient solution
Asking for a pay rise is often more convenient than having to look for a higher paid job or taking on a side hustle. You can continue to work in an environment you already know with people you already know. You may have to take on extra roles, but you’re not having to get used to working for a new company or launching your own business. If you want to earn more money without having to make too many big changes, asking for a pay rise should be the first strategy to try. If this doesn’t work, you can then still move onto the other earnings boosting options.
Con: Timing is key
Timing is crucial when successfully negotiating a raise. You need to make sure that the company is not only making enough money at that current point, but that your employer is in a generous mood and not too preoccupied with other plans or problems. Without being able to see inside your employer’s head, it can be very hard to judge the perfect time for a salary negotiation. The best option is often to ask to arrange a meeting. Try to arrange this meeting for a non-busy part of the morning when you think your employer is likely to be in a good mood. Make sure that your work performance has also been great recently – you don’t want to ask for a raise immediately after having received a complaint. Wait until you’ve had a major success to then spring the question upon your employer, at which point they will be more encouraged to believe you deserve it.
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