When you’re leaving your job and possibly starting a new one, it’s easy to get wrapped up in the changes taking place in your life and forget about your 401(k). However, if you don’t follow the IRS’s 401(k) rollover rules, you may incur large penalties and lose a significant chunk of the hard-earned money you’ve set aside in your retirement fund.
Penalties Are Big
If you withdraw your money from your old employer’s retirement fund or move it into another non-qualified investment vehicle, such as a regular savings account, you may incur penalties, and the amount of money you receive may be far less than the balance of your retirement fund. First, your previous employer will withhold 20% for federal income taxes; additional funds may be withheld for state income taxes. Second, if you’re under 59½ years old, you’ll probably see an additional penalty applied. Consult your tax advisor.
As an example, if you have worked for 10 years and have $50,000 in your current 401(k) account, you could receive only $35,000 if are under 59½ years old and you elect to take a cash withdrawal rather than rolling over the funds into a qualified plan. Also, the money you receive could potentially bump you up into a higher income tax bracket, increasing the overall amount you are required to pay in income taxes.
Complying With 401(k) Rollover Rules
These rules are in place partly to motivate taxpayers to save for retirement. It is important to think seriously about taking money out of your retirement account before you reach 59½ years of age. When you leave your job, you have a number of options to manage your 401(k) savings without incurring a penalty. These options include:
Leave your 401(k) with your old employer. This can be an easy short-term option. Your old employer is obligated to continue managing the money and provide communications just as they have in the past. You can change your mind later and move the money to your new employer or a different eligible account. However, don’t assume you can always follow this path.
Make a 401(k) rollover to a plan with your new employer. You have 60 days to complete this transaction before penalties kick in. Contact your new employer’s benefits office when you’re hired so you can set up the rollover transaction on both ends without a last-minute rush.
Invest in a non-employer retirement account, generally an IRA. You have many choices here: Roth or traditional, IRA savings or IRA CD. These options may be worth researching if you’re leaving a job and don’t yet know where you’ll eventually end up. This should be done within 60 days to avoid penalties.
At the end of the year you’ll receive a 1099-R statement saying that you’ve had a retirement fund distribution. When you reconcile your taxes be sure to show the appropriate destination for your money as a 401(k) rollover so the IRS doesn’t erroneously apply penalties. Check with a tax advisor if you have specific questions and to be sure you are aware of any changes in IRS rules.
Want to make more money this year? Here are some things to consider.
There’s never a bad time to step back and review how things are going in your career: the new year, after a promotion (or lack thereof), the end of a quarter or following a stressful month. Even if you have your sights set on increasing your earning potential, it can be easy to get stuck in the daily grind and overlook proactive steps you could be taking right now.
Get motivated on the career front and consider these five tips to help maximize your salary potential this year:
1. Ask for a raise
It’s a pretty good time to ask for a raise. Really. According to the U.S. Department of Labor, the unemployment rate is low and employers are starting to boost salaries to attract workers. See how this can play to your advantage? Check out websites like Glassdoor.com or job postings in your area to find out how much employers are paying for gigs like yours. You can leverage that information when you talk with your boss, while highlighting the experience you bring to the table, to negotiate a raise and boost your earning potential.
If you’re nervous to pitch yourself for a raise, remember that hiring and training new employees has real costs. Keeping employees at a higher salary can be cost-effective when compared to the expense of recruiting and training someone to replace you.
If you don’t come out on top in a salary negotiation, proceed to tip two to increase your earning potential.
2. Explore new opportunities
Historically, employees believed the quickest way to increase their earning potential was to change jobs. While there are no guarantees your salary will increase, there are several estimates that indicate the possibility. According to one estimate, the average raise an employee receives for leaving is between a 10 percent to 20 percent increase in salary.
When it comes to looking for a new job, an immediate boost to salary may not be the only financial consideration. A Gallup study found, more than a salary increase, the top reason U.S. workers consider new jobs is to, “do what they do best.” Switching jobs might lead to being more engaged with the work you do, as well as having opportunities for advancement and the ability to learn and grow. Down the line, a promotion or new skills can mean increased earning potential.
3. Find a mentor
Having an idea of where you want your career to go—this quarter, next year or in the next decade—can pay off enormously, but you don’t need to make these plans all alone. A good mentor can provide feedback or advice based on his or her own experience, and help ensure you’re on target to increase your earning potential. It may sound like a sweet deal, but it’ll take some effort on your part:
First, reflect (on your own) about how your career has been going. It will help you have a more meaningful and effective conversation with your soon-to-be mentor. This reflection worksheet is a good starting point.
Second, find a professional organization or meetup group for your industry that matches up mentors and mentees. By meeting people in your industry whom you don’t directly work with, you can have candid conversations about how your career is going, your strengths and weaknesses, and ways to maximize your salary potential.
Third, once you’ve connected with a potential mentor, set up an initial conversation. Don’t forget to ask if they’d be willing to talk again in six months or so.
4. Start a side hustle
A side hustle is a flexible job you do “on the side” that can increase your salary potential. Of the many ways to earn money outside of your main job, starting a side business can be a valuable option. The business skills you learn as an entrepreneur can pay off in other parts of your career. You could also give freelance work or consulting a go, leveraging skill sets you already have to help problem solve for other companies.
With any second job, however, it’s easy to fall into a trap of trading your time for money without improving your skills in a meaningful way. Weigh the pros and cons to ensure you’re balancing the desire to increase your salary with the desire to advance your career. Take driving in a ride share program, for example. Pro: It can be a quick and easy way to increase your earnings. Con: It may not benefit your primary career if you work in a very different or unrelated industry.
5. Learn to code
Coding can be something learned at any career stage to help boost your earning potential in short order. When analyzing its graduates, CodingDojo, a coding boot camp, found that more than half of students were earning less than $35,000 before entering the program. After graduating, the majority of students earned salaries that topped $70,000.
There are free online classes where you teach yourself to code or programs as short as one month where you can learn from a pro all the coding basics you need. Even if an industry switch isn’t in your future, understanding the basics of coding could improve your ability to work with technology, data, programmers and engineers.
Increase your earning potential
Whether it’s with your current employer, at a new company or as your own boss, you should be utilizing your skills where they are appreciated most. By making a conscious effort to invest in your existing skills and develop valuable new ones, you can help increase your earning potential every year—not just this one.
Open a savings account and have it at the ready to make the most of your increased earnings.
College means independence—and responsibility. See how mobile banking can work for you.
College students use mobile devices for a variety of activities – from posting to social media to purchasing concert tickets. Comfort with smartphone technology has made mobile banking an easy transition for students who are gaining financial independence with their first checking or savings account, and mobile banking apps offer a convenient way to keep track of their finances.
The day-to-day life of a college student is demanding and short on free time. Lengthy banking activities like paying bills and transferring funds are made simple for college students through mobile banking. More time can be spent on the many priorities of a student’s life with the help of banking apps and mobile sites.
How Mobile Banking Differs from Online Desktop Banking
Mobile banking is still relatively new compared to online banking on a desktop computer. While students can still perform many of the same functions on both a mobile device and a computer, using a smartphone or tablet for banking in between classes to check account balance or pay rent may be more convenient than having to pull out a laptop at home. While desktop and mobile banking share similarities, in that both are online banking, the 24/7 accessibility of mobile banking appeals to the on-the-go lifestyle of college students.
Mobile Banking Features Include:
Account Monitoring: Instantly view accounts, track spending and bill payments- helpful for budgeting and managing daily activity.
Funds Transfer: Transfer money from one account to another in seconds when initiating a one-time or ongoing transfer.
Bill Pay: Use the bill pay feature to review which bills have been paid, which bills are due, and what day the money should be withdrawn from the account.
Check Deposit: Deposit checks simply by taking a picture of the front and back of the check within the mobile banking app.
The Benefits of Mobile Banking Include:
Security: Smartphones and mobile banking apps have built-in features to keep bank account and personal information safe.
Peace of Mind: One of the best ways to achieve peace of mind is through frequent account monitoring. Mobile banking apps allow instant monitoring of accounts to see if anyone else is accessing them.
Easy Access: Most mobile banking apps offered by financial institutions have no fee, although there may be data usage charges or other fees associated with your cell phone account. The apps are widely available on most mobile platforms.
More Control: As a college student, learning to manage money is an essential part of independent living. Being able to see transaction history and complete basic banking activities from anywhere provides better control over funds.
College students who are learning skills to manage money will benefit from having access to their accounts at all times using their mobile devices. Using a mobile banking app allows students to be proactive and take ownership of their own financial success.
Think you’re too young to save for the future? Think again.
You may be able to ace the big test after a late-night cram session or get a gold star on you term paper after putting it off until the final hour. But when it comes to saving? Not so much.
In fact, the earlier you start saving, the more financially confident you’ll be. True story. Yet many college students struggle to get in a savings groove. Balancing your studies and social life can get pretty time consuming, after all.
Here are four simple steps you can fit into your college schedule today to build good savings habits with long-term payoff:
1. Understand why starting now is critical
Time really is money when you’re in your teens and early twenties, thanks to compound interest. Compound interest means your money has the ability to start making you more money because you’re earning interest on previously earned interest.
To see how saving small now can pay off big down the road, crunch the numbers with a savings calculator. You’ll find that stashing away money in your college years will make your long-term financial goals far easier to reach than if you wait until your mid-to-late thirties to make saving a focus.
Haven’t worked out your long-term financial goals just yet? No problem. By saving now, you’ll have money in the bank when those goals become more concrete.
2. Choose the right savings account
You need to find a place to put your money (other than below that dorm room mattress). Look for a savings account with few or no fees that offers a competitive interest rate.
You earned it. Now earn more with it.
Online savings with no minimum balance.
Discover Bank, Member FDIC
The more interest you earn on your savings, the more your money will compound over time. This compounding effect is how you can accelerate the amount of money you build up in your account without any additional work on your part.
Choose an account with an institution that offers mobile banking and lets you set up automatic transfers from your checking account to your savings. Make it your goal to open your new savings account within the next week.
3. Start a monthly contribution
Next, set up automatic deposits to your savings account. Set a small goal to start—even a reoccurring transfer of $10 per month from your checking account is better than nothing. Start with what you have and what you can do, and build from there.
Automating these transfers means consistently and easily adding to your savings. There’s no need to schedule reminders each month, and the money won’t be sitting in your checking account, tempting you to spend it.
4. Look for more ways to save
The fastest way to save more is to cut expenses. Look for inexpensive or free alternatives to pricey items and activities, and cut out small expenses that add up over time. While you’re at it, try to limit unnecessary and impulse purchases (online shopping, anyone?).
When you’re ready to do even more, look for ways to boost your income. That might mean working a part-time job or picking up more hours at your current gig. With your newfound savings knowledge, you’ll be better prepared to put that additional cash toward your financial future.
I know what you’re thinking; what’s a finance toolkit? How do I go about making sure I have what I need? Before going on the deep end, think about it in very basic terms. A toolkit is something full of different gadgets to help you fix, mend or repair things – and tools can be added or removed based on need. Since it’s portable, this toolkit can be taken anywhere and is durable enough to withstand various environments. A financial toolkit serves as your source to maintain a steady pulse on your finances while including important information that can assist in proactively solving problems before they occur. If you need to create, revamp or declutter your finance toolkit, keep reading for must-haves in your arsenal.
Dedicate the time to revisit your budget
Most people either live by their budget, don’t even bother to look at it, or update it so much where it’s no longer useful. No matter where you fall, understand that establishing a budget will help you determine what’s working (or not) over time. I know we can pride ourselves on doing things in our head or at a rapid pace – but it’s best to take some time to review the numbers within your budget to verify it makes sense. Life events can cause your budget to fluctuate along with your specific financial goals. Take the initial time to review, make updates as necessary while feeling confident about your initial work. Don’t be afraid to start from scratch! Adopting different budget methods or creating your own mixture can work in your favor. After figuring out what’s suitable for you and your lifestyle, review your budget weekly to make sure everything is on target. Keeping a pulse on your finances is what helps things stay on track versus reactively making last-minute tweaks.
Determine your short and long-term financial goals
Where would you like your finances to lead your life within the next two years or ten years? Try your best to identify no more than three goals short and long-term; respectively. Believe it or not – how you spend/invest/allocate your funds today creates a roadmap for where your finances will be in the future. Establishing healthy habits now and determining your financial areas of growth will ensure your financial goals will be completed. If you’re having a hard time narrowing down your goals, take a look at these questions for reflection:
How important is financial freedom to you?
What luxuries would you like to implement into your life?
Is entrepreneurship in any capacity a goal of yours?
Remember, when one goal is complete you have the flexibility to incorporate something new into your list. Grant yourself grace – any goal(s) you choose to focus on will always take time, dedication, and patience.
Look for ways to diversify your financial portfolio
As it relates to your long-term investments, explore various ways to diversify your existing portfolio. A solid mix of stocks, bonds, ETFs, etc. is a great way to encourage growth while covering all your investing bases. If you’re unsure of how to move forward, consider using the expertise of a financial advisor to help guide you. Feel free to schedule consultations with various firms to get a feel for who best aligns with you and where you’d like to be in the future. If you pride yourself on doing your own research, pick a new topic each week and explore! There are so many free resources available that can help you before soliciting the help of a professional. If you’re ready to dive into real estate, carve out some time to educate yourself on the basics. If stock market jargon sounds oddly interesting, begin exploring the best way to dive in. Most employers offer a retirement plan and if this applies to you – does your portfolio mix meet your current needs? Are there things you would like to change based on your findings? Leave no stone unturned – be sure you’re completely comfortable with the method(s) in which your money grows!
Review or establish estate planning
While none of us want to blatantly talk about death, it’s vital to make sure there’s a plan in place for your money when you’re no longer here. No matter your marital status or if you have children, it’s always best to have all of your affairs in place. Have you set up beneficiaries? Do you have a will in place? Do you have life insurance policies? Take the time to ensure all of this information is up-to-date and accurate.
Locate all important documentation
We live in a digital world and a lot of us have important documents saved on computers or external hard drives. While there’s nothing wrong with this approach, what happens if the computer files become corrupted or if the laptop no longer functions properly? Be sure to have important documentation in multiple places. A fireproof lockbox or a secure lockbox located at a bank for all pertinent paperwork is ideal. Make sure there are a couple of trusted individuals within your family that know exactly how to get access in the instance of an emergency.
Remain diligent and stay committed
We’ve been through this rollercoaster before. Things start out fantastic and suddenly – life happens. Your spending habits slowly creep back up. You’re making more visits to the savings account. The credit card balance started off very low and manageable, then it gets right back where you started. No matter what missteps happen, try your best to avoid the dangerous cycle of financial carelessness. When challenges arise, take a moment to reflect on where you currently are and all of the work you’re doing to create a better financial future. Stay committed to the process! Financial resiliency is nothing more than being able to overcome what’s thrown your way. We can’t always control what happens in life, but we can make sure there are things in place to avoid the financial roads we’ve worked so hard to escape from.
Retirement may seem like a long ways away, but the sooner you start saving, the better.
If you’re in your 20s, it’s likely you’re facing many financial responsibilities — college loans, rent, and car payments strain a paycheck that only goes so far. And, understandably so, it can be difficult to invest for retirement when you’re just starting out. But the younger you are when you begin, the more likely you are to achieve the goal of financial security later in life.
So do yourself a big favor, and start making financial moves now that will help maintain your peace of mind in the decades leading up to retirement. As part of that initiative, spend a few minutes reviewing the roles a Discover account — such as a Discover Individual Retirement Account CD — could play.
Time and Money
The word “compounding” describes what happens when you allow investment returns to accumulate, potentially boosting the value of your account and giving it the potential for even greater growth in the future. Because of compounding, the more you save when you’re young, the more you are likely to have when it’s time to retire.
When You Change Jobs
Younger workers are also likely to change jobs several times early in their careers. According to the U.S. Department of Labor, the average worker holds about 11 jobs between the ages of 18 and 441. And with those transitions comes the temptation to “cash out” of a former employer’s retirement plan by taking a cash distribution. However, that strategy could have negative long-term implications.
For example, cash distributions from a retirement plan are subject to a mandatory tax withholding of 20%, which your former employer must take from your account balance and pay to the IRS. Also, a 10% penalty may be imposed if you leave your employer before retirement age.
On top of that, “cashing out” any long-term investments from your former employer’s retirement plan account could leave you shortchanged when you need the money most during retirement. A better idea might be to leave the money in your former employer’s plan or transfer it to a new employer’s plan (depending on plan rules). You could also “roll over” the money into a tax-deferred Individual Retirement Account (IRA).
Regardless of the specific strategy you choose, keep in mind that planning for the future by maximizing retirement account contributions when you’re young is almost certainly more productive and less stressful than waiting until retirement is just around the corner.
In addition to offering IRA CDs to help you grow your retirement savings, Discover also offers an Online Savings Account to help you with your short-term savings goals and a full range of CDs to help you save for the future. Open an account online in minutes or call our 24-hour U.S.-based Customer Service at 1-800-347-7000.
The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.
1Bureau of Labor Statistics of the U.S. Department of Labor, September 2010
Heading off to college? Here’s why you need a checking account.
During the transition from high school to college, financial responsibility becomes increasingly important. Tuition, living costs and other college expenses must be calculated and budgeted. Opening a checking account before the big move can make life a little easier.
Even if your parents are paying for the tuition costs, there may be times when you need your own money. You can carry small amounts of cash, but it is more convenient to have a checking account for living expenses; anything from lunch in the commons to a parking pass for the semester. Getting a checking account with a debit card allows you to quickly and conveniently pay for purchases almost anywhere.
Opening a checking account may be beneficial if you plan to have a part-time job while in school – you’ll need a place to deposit your paychecks, or you can set up direct deposit. You can also pay bills directly from your account. For example, you may be the roommate responsible for paying the utilities and having a checking account with online bill pay makes this process that much simpler.
College is a time when you learn to do more with less. People who learn to manage a bank account when they have limited funds available are more likely to manage their money well when they have a full-time job after graduation. It is a great time to learn about creating a budget and reconciling your account while you only have a small balance and a few bills.
What to look for in a checking account
Many standard bank checking accounts have restrictions and fees to worry about. Some checking accounts may be more lenient and designed for those who have smaller balances. When considering the ideal account for college, you want to look for certain features.
You may be busy with school activities, studying, working and having fun. You want to be able to check your balances, make purchases and pay bills when it is convenient. A bank that has online checking account access and a mobile app will be easier to use.
You can also make deposits and even find ATM locations with a mobile banking app. Need cash at the last minute before your night out and you have already left for the party? Just tap the mobile app on your smartphone and you’ll find the closest ATM around the corner from you.
While many checking accounts are advertised as having no fees, they may come with strings attached. Make sure you look past the sales pitch to see what it really means. Some accounts have no fee as long as you keep a minimum balance of a certain amount, have direct deposit, an automatic transfer from a savings or checking account or deposit a certain amount each month. If you are limited on the number of debits you can have in one month, find out the fee for going over the limit. Look for banks that offer checking accounts with no monthly fees.
A checking account is a convenient and a wonderful introduction to independence and life on your own. If managed well, a checking account can help create a good financial foundation for the rest of your life. Just make sure you find the right product that fits your needs.
Just out of college or just starting your career, now’s the time to start saving for retirement.
You’re just out of college or you’re in the early years of your career. How do you begin to pursue your financial goals at a time when you may have limited income and a variety of expenses to cope with? It may not be as difficult as it sounds if you take advantage of Discover’s flexible, high-interest accounts and a few time-tested strategies.
Buy and Hold for the Long Term — Some of your largest financial goals — retirement, for example — are decades away. With that kind of time horizon, you may not need to worry too much about day-to-day fluctuations in the value of your investments. You can potentially afford to ride short-term volatility out and stay focused on the long-term performance of your investments. Keep in mind, if you try to “time” the market, or make decisions based on short-term developments, you could guess wrong and miss out on market upturns. Discover’s Individual Retirement Account CDs offer guaranteed returns as well as flexible terms ranging from 3 months to 10 years. And when your term is up, it’s easy to renew.
It’s also a good idea to set aside money on a regular basis in a savings account, so you can pay unexpected expenses without having to dip into your retirement accounts. With a Discover Online Savings Account, that’s easy to do.
Take Advantage of Compounding — Even if you invest a relatively small amount on a regular basis, you may still be able to pursue large goals over time thanks to the power of compounding. Compounding is when previous earnings from an account remain in the account and in turn earn more money for you. The earlier you start saving, the more your money may compound.
Procrastination has been called the thief of time. Don’t let it rob you of a more secure financial future — start investing and saving as early and often as you can.
Regardless of your time horizon, risk tolerance, or savings goal, you can always find the right savings vehicle for your needs at Discover. Discover offers an Online Savings Account to help you with your short-term savings goals, a full range of CDs and IRA CDs with terms from 3 months to 10 years as well as Money Market Accounts that may be ideal for rounding out your overall savings strategy. Open a Discover account online in minutes or call our 24-hour U.S-based Customer Service at 1-800-347-7000.
The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.
Experts weigh in on the best way to negotiate a starting salary and raise.
You know the potential perks of negotiating your salary: higher pay and better benefits. But it can feel awkward, or even scary, to negotiate when you’re interviewing for a new job or looking for a change at your current gig.
Devon Smiley, a negotiation consultant and coach, says many people are hesitant to negotiate because they don’t feel like they have enough experience doing it or because the thought simply stresses them out. As a result, they don’t negotiate the best starting salary, and instead, wind up accepting an initial offer without discussion.
This could be a mistake, Smiley says. Recruiters and hiring managers might expect you to negotiate and start with a low-ball offer.
Even if you just entered the workforce, you could be agreeing to less compensation than the company is willing to pay. Smiley says if you can secure even a small increase at the start of a job, “it can have a fabulous knock-on effect, as each raise or bonus from that point on is based on a higher figure.” So why not give negotiating a try?
Whether you’re interviewing for a new job or asking for a raise, here are four tips to successfully negotiate your salary:
1. Do your research before negotiating
You can start your negotiation preparations by finding out the average pay for someone in a similar role. Try to focus your research on similarly sized companies in your local area to get a good apples-to-apples comparison. This step is key if you’re trying to negotiate the best starting salary or if you’re focused on a raise.
“Advice that has worked wonderfully for my clients (and in my own experience) is getting off of the salary websites,” Smiley says.
She recommends talking directly to people in the role at several companies. Reach out through your network to find good connections, or consider a cold email or call after finding someone’s information on LinkedIn or a company’s website.
“You’re not asking people to reveal their actual salary,” she says, “but you can ask them if a range feels like it’s in the right neighborhood.” You can use the findings to help negotiate a higher starting salary or request a raise.
While you’re discussing pay ranges, you can also ask about their general work responsibilities. If you are tackling more work than someone else who has the same title, for example, you may deserve higher pay. And as an added benefit, Smiley has found that people are sometimes willing to share what they wish they’d asked for during their negotiations.
2. Think about the big picture
Negotiations aren’t just about your cash compensation. When you’re considering how to negotiate a higher starting salary or tips to successfully negotiate your salary, think about your work-life balance. How can you align employer-provided benefits with your long-term career and personal goals? There are a variety of benefits that might be on the table, if you ask.
Perhaps you’d be happier and better able to focus on personal projects if you accept lower pay along with more paid time off or work-from-home days. Employers might be willing to help pay for child care or transportation, or even provide paid maternity or family leave if they won’t increase your salary. One benefit that could be especially useful is contributions toward your professional development, such as the ability to attend conferences, enroll in courses or pursue a graduate degree program.
“Professional development ups your earning potential both within that organization and with future employers,” Smiley says.
3. Justify your requests
Your market research can help you negotiate a higher starting salary or raise, but your skills and experience are also an important factor in determining your compensation (and whether you get the job at all).
When you negotiate for a higher starting salary, be prepared for interviewers to ask about your current pay. “My advice is not to share your current salary,” says Cheryl Santiago, a career transition coach in the Washington, D.C. metro area and founder of Get Hired Coach, Inc. If you’re trying to negotiate the best starting salary, you don’t want to peg it to your current pay, Santiago says.
If they ask, Santiago recommends being prepared to answer with a range. The high number is your dream salary, and the low number is the midpoint between your dream salary and the minimum you need to live. To ensure there’s a potential good fit for you, you may want to ask the recruiter or hiring manager about the company’s salary range (if it’s not listed on the job description) early in the process.
If you’re shooting for the higher end of your range when negotiating the best starting salary or raise, you’ll need to demonstrate why you deserve it. Maybe you were part of a successful initiative or project in the past that increased your company’s revenue, recruited new clients or won an award.
“Linking your work to facts, figures and documented recognition helps you support the salary you’re asking for,” Smiley says.
Hard skills, such as certifications or training, could help you stand out from other candidates. Soft skills are also important. If you have an aptitude for networking or team building, try to come up with specific examples of how these skills have helped past employers and how you can leverage them in your future work.
Even if you’re happy with your current job for now, you should keep a record of your accomplishments to use during negotiations for a raise. This documentation will also help if you decide to leave down the road and need to negotiate a higher starting salary.
4. Continue negotiating after your first year
Some employers offer modest pay increases each year to offset cost-of-living adjustments. But unless you receive a promotion, you may find that it’s hard to secure a significant raise without moving to a new company. Santiago says one of the tips to successfully negotiate your salary with your current employer is remembering that it’s expensive for a company to find, hire and train someone new.
One idea is to talk to your manager several months before a formal review and ask what you need to do to deserve more compensation. You can then focus on accomplishing these tasks or learning the skills. Additionally, share positive results from previous performance reviews and projects with your manager. Be sure to discuss new skills you’ve acquired or new responsibilities you’ve taken on since starting the job.
Santiago says another tip to successfully negotiate your salary is requesting that your boss or the HR team do an industry assessment of your job role if you’ve had the same job for more than five years. This would entail the company comparing the responsibilities and compensation for employees at your level with similar employees at other companies. This could help in your negotiations if the standard market rate for your position has risen faster than your compensation. And that could be reason enough for a raise.
Seal the deal
Conquering the fear of negotiating can be difficult, whether you’re trying to negotiate the best starting salary or raise. But it’s all possible with practice.
“You’re more likely to get the result you’re looking for when you can clearly demonstrate the value you’ve brought (or will bring) to the organization,” Santiago says. And that’s why it’s important to have a plan and prepare with these tips to successfully negotiate your salary before even entering the negotiation room.
Rather than asking for more money due to tenure, you’ll back up your requests with facts, figures and examples of your personal accomplishments.
If you get a raise at work or negotiate the best starting salary, consider opening an online savings account so your earnings can grow while your career does.
Data show that a good economy is helping workers leave their jobs for more money.
According to The Wall Street Journal, career experts used to tell people to stick to one job as long as possible, even if there was a down economy. The idea was that if you were planning on finding a new job at some point and had a history of job hopping, employers might have considered you unreliable.
The Journal reported this in 2004. Fast forward to the present, and more recent data suggest the opposite may be true. The 2017 Q3 Workforce Vitality Report from ADP, a payroll processor, found that among full-time workers, job switchers saw an earnings increase by an average of 4.9 percent. Job holders lagged behind at 4.3 percent. A similar ADP report from the first quarter of 2017 found that a better economy is giving workers more leverage, meaning they feel more comfortable leaving a job and negotiating a salary increase.
This significantly changes the career game. Now that switching jobs won’t necessarily hurt you, it’s crucial to discuss ways you know it’s time to quit your job.
Here are six warning signs you need a new job:
1. You haven’t seen a raise in two years
According to another ADP survey, there is a sweet spot for trading in your current gig for a new opportunity. The survey found that individuals who leave a company after at least two years, but before five years, get the highest salary increases at a new job.
Individuals who try to switch jobs after working five years at the same company won’t see as much of an increase as those who leave between the three- to five-year mark (this, the survey found, is when employees get the greatest salary bump). The longer you stay past five years, the less of an increase you’ll see, the ADP survey found. More experience often means you’ll have higher pay at your current job, so you’re less likely to see as much of a pay bump if you leave.
2. The company is having money problems
One surefire warning sign that you need a new job? “If your paycheck suddenly starts becoming irregular,” says Sandy Smith, a senior certified human resources professional with seven years of experience working in corporate human resources. It’s a clear indication of cash flow issues within the company, she adds.
Smith, who is also the founder of the personal finance blog Yes, I Am Cheap, says this is one of the major signs it’s time to change jobs.
“Saving money by not paying employees is the death knell of a company on its last legs,” she says, “and you should immediately jump ship.”
If your employer is starting to cut benefits or lay people off, Smith suggests that it might be a warning sign you need a new job and time to financially prepare for a job transition. While one layoff or cut may not be definite signs it’s time to change jobs just yet, Smith says to keep an eye on it.
“Layoff after layoff indicates a serious issue, and you should never take for granted that your job is safe,” she says.
“Saving money by not paying employees is the death knell of a company on its last legs, and you should immediately jump ship.”
3. You’re stagnant
Going as far as you can go with a company is one of the ways you know it’s time to quit your job.
“If you are upwardly mobile but you have no opportunity for advancement within the company, it might just be time to move,” Smith says.
And because you alone are in charge of your career, it’s essential to be proactive, Smith says. That means you can’t wait for your manager to give you a promotion or tell you when there’s no promotion anywhere in the foreseeable future.
So, if you find yourself lacking mobility, it may be a warning sign you need a new job, and finding a new employer could be the best way to advance. Smith also points out that taking a new job in this scenario will likely allow you to increase your earning potential as well.
According to a 2016 global report by LinkedIn, 74 percent of job candidates want a job where they feel like their work has a sense of purpose. If that need for fulfillment isn’t being met, it may be one of the ways you know it’s time to quit your job.
While there were several factors that contributed to Tara Falcone’s decision to leave her well-paying job, a lack of purpose was one of them. When she started her own investment firm in 2016, ReisUP LLC, she was seeking more personal and professional satisfaction.
Before going out on her own, Falcone spent four years working as an investment analyst on Wall Street. She enjoyed what she did, but she wasn’t exactly feeling fulfilled by it. She spent her days helping people who were already wealthy manage their money. Instead, she wanted to help people who came from backgrounds similar to her own attain more wealth.
74 percent of job candidates want a job where they feel like their work has a sense of purpose.
“Coming from a humble, blue-collar background, I yearned to find a way to use the skill set I had acquired on Wall Street to help people like my friends and family.”
Even if you identify a lack of fulfillment as a sign it’s time to change jobs, leaving a secure paycheck is a difficult decision for anyone, especially when, like Falcone, you’re making a pretty hefty sum. Yet, money was not the biggest factor in her decision to leave her job. Ultimately, she valued other things more—like helping an underserved community and having more personal time.
“The money was good, but not good enough to tie me down, nor more than I thought I could ever make doing something else,” she explains. “I grew up without money, so I wasn’t chasing it. And I knew that a big shiny paycheck would never fulfill me on its own.”
6. Your job is negatively affecting you
A final way you know it’s time to quit your job: It’s negatively affecting your life. Of course, this may look differently to different people. For some, health problems are the warning signs you need a new job. For others, like Falcone, it’s when your job starts getting in the way of your personal life.
“My work started negatively affecting the limited time I spent with family,” she says. “As an investment analyst, you don’t really get true vacation time when the market is open.”
Falcone recalled going home for Christmas and still needing to be available for work via phone and email. Eventually, she felt like it became too intrusive.
It’s time to find a new job
If you see yourself in any of these six scenarios, take them as signs it’s time to change jobs. Dust off that resume, get on LinkedIn and start reaching out to your contacts. Now that the job-hopping stigma seems to be a thing of the past, you have far less to worry about should you decide to quit your job and find a new one.