How I Got a Raise 4x the National Average (Using Benefits!)
Do you want to get to a point where investing and passive income are incorporated into your financial strategy? If so, you'll need to have some money left over each month after paying all your expenses... and while I'm all for cutting out expenses you don't need, an even better way to have leftover money each month is to increase your income while lowering your expenses or keeping your expenses the same.
You can only lower your expenses so much... but your income potential is essentially uncapped so there's a lot more room for growth in terms of making additional money when compared to simply cutting back and saving money.
If you haven't listened to Episodes 5 and 6 yet, be sure to check them out because they're all about specific strategies you can use to be paid what you're worth and, today, we're going to deep dive into a certain piece of the strategy, which is employer benefits.
And if you're like, okay this episode isn't for me because my job doesn't offer benefits, then stay with me because I'll also go through how you can use your situation to negotiate a higher pay rate even if benefits are not currently on the table.
Today we'll cover:
How you can use your benefits package (or lack thereof) to increase your pay
The specific items I used the last time I did this
How I secured a raise that was 4 times higher than the national average.
This episode is not for the faint of heart because this exercise is high-effort, but it can truly be high reward. If you're serious about getting a pay increase, this episode is for you.
WHY I STARTED PAYING ATTENTION TO BENEFITS
A subject that is near and dear to my heart is mental health; it's something that I think we should talk about more often and reduce the stigma around it. This past weekend marked World Suicide Prevention Day and it reminded me of a company I used to work for that, in my opinion, did a great job at prioritizing mental health and wellness at work.
At the time, it was just becoming more socially acceptable to talk about mental health, and Cisco, the company I was working for, did that in a big way. Often, at big company meetings, they spoke about mental health and taking care of yourself, and they also walked the walk by giving their employees access to 10 free counseling sessions per year.
This changed my life in a big way, so from that point onward, I knew that in any company I worked for, I'd be looking for mental health care as a part of their benefits package.
Which begs the question: Do you know what benefits your company offers?
Before hearing about the free counseling sessions on one of the company calls, I didn't know much about my benefits package and I was honestly pretty surprised to learn that Cisco offered that because I hadn't heard of employers providing anything like that before. So I started digging through their online portal to see what else I had access to as their employee.
I learned a lot, and when I decided to leave Cisco, the company I was interviewing with offered me a 22% raise, however, I leaned heavily on my existing benefits package at Cisco to counteroffer and ultimately received a 40% pay increase.
HOW I GOT A RAISE 4X HIGHER THAN THE NATIONAL AVERAGE
I'll walk you through exactly what I did, but first I want to point out a couple of things.
The numbers I just mentioned are specific to base pay only - the percentages fluctuate depending on what all is considered, for example when I add in the bonuses I received at each company, the pay increase is closer to 43%.
And if you add in stock, insurance, cell phone plans, etc. - which we will talk about in a bit - each of those will alter that percentage increase. So to keep things simple and give us a line in the sand for this episode, that 40% pay increase is just when comparing the base pay I received at one company to the base pay I received at the next company I switched to. This keeps things apples-to-apples in terms of comparison.
Now, based on an article by LinkedIn in September 2022, the current "tight labor market and inflation [gave] job switchers an annual salary bump of 8.5% in July, according to the Federal Reserve Bank of Atlanta. It's the largest median pay increase for job switchers in two decades."
Another article by Forbes states that the statistic is "nearly 10%" so, regardless of how they’re each calculating this metric, you can see that, although pay increases for job switchers are at a two-decade high, I was able to land a raise that was 4 times higher than that average, and a lot of it had to do with my counteroffer, which was mostly based on the benefits package.
So let’s jump into that because I truly believe that if you’re willing to do the work, you can use your benefits package (or lack thereof) as a key negotiation point in landing a significantly higher pay raise.
STEP 1: QUANTIFY YOUR CURRENT BENEFITS
Before you do anything else, you'll need to know what your current benefits are and quantify them. It's strange, but, despite its importance, I feel that many of us, myself included at one point, don't make time for this very critical piece. For me, benefits were this sort of out-of-sight-out-of-mind thing; it was never top-of-mind because I was so busy trying to do a good job at work.
But then I realized that one of the reasons I was trying to do a good job at work was to make sure I was positioned well to get continued salary increases, and it dawned on me that my benefits package was a key piece in my total compensation.
My friend Kristen has been in corporate HR for years and I have to give credit where credit is due because she's the one who taught me a lot of this, including the term 'total compensation' which, in Lamens terms, means all the different types of monetized benefits you receive... so 'total compensation' extends beyond just base salary... it includes base salary plus any other monetized benefits such as paid time off, health insurance, and more.
So I made a spreadsheet (and if you're not spreadsheet savvy, don't let this scare you off - you can just make a list if that's more your style) of every single benefit I was currently receiving. And, if you know me, you know I'm detailed so when I say every benefit, I mean every benefit.
If you're not naturally detail-oriented, I encourage you to try to be for this exercise because it can pay off in a big way... for me, it paid off 4x higher than the average and, again, I credit it to this exercise.
If you're not sure where to start, reach out to someone in HR at your job. If you don't know who that person is, ask your manager; just tell them you're trying to get a better feel for your benefits package and they can point you in the right direction. Many companies have a portal which can sometimes be hard to find, but once you find it, most of the benefits information is all there in one place.
Now, if you do NOT receive benefits at your job, you'll want to do some research on the typical benefits your industry offers and/or other companies in your industry that ARE offering benefits - and what those benefits are.
Say you're an assistant in Austin, Texas - you could do an online search for "typical benefits for an assistant in Austin, Texas 2022" or "employers offering benefits to an assistant, Austin, Texas, 2022". Play with your search terms as you need to, but the goal is to find out either what's standard for your industry or, if no benefits are typical for your job type, to find an employer in your industry that DOES offer benefits - and write down what those benefits are.
Okay, I told you I was detail-oriented... so now I'm going to tell you the list of benefits I wrote down, considered, and used to negotiate higher salary. You can copy my list of use it to find inspiration for your own.
There are 21 items!
Base salary
Bonus
401K offered?
401K match
Holidays
Employee Stock Purchase Program (ESPP)
Health Savings Account (HSA)
Employee Assistance Program (EAP)
Vacation
Maternity leave
Cell phone paid?
Medical insurance
Dental insurance
Vision insurance
Life insurance
Spousal life insurance
AD&D insurance
Long-term disability
Employee critical illness
Spousal critical illness
Total benefits out of paycheck per month
If you feel overwhelmed you're not alone, like I said I LOVE details, and reading through that list makes even ME feel overwhelmed! But, remember, although this may feel like an obnoxiously intricate process, it can be worth it if you're willing to wade through all these details.
Once I wrote down all the benefits, next to each of them I summarized as succinctly as possible what I was currently getting for each. For things like base salary, and 401K match, these are pretty straightforward.
But once you get down to some of the insurance items, these can be a bit more complicated. For those items, just try to pick the top 3-5 things within each that matter to you and your life circumstances.
For example, when I looked at my medical coverage, I thought about my current health situation... I'm relatively young and pretty healthy and I don't take any regular prescriptions, so really the only time I would need to use my medical insurance would be either in the event of a big emergency or if I was sick with something that required a prescription like antibiotics, which doesn't happen often.
So the 3 things I wrote down to consider in terms of medical coverage were the deductible amount and the out-of-pocket max - which would be relevant to me in case of a medical emergency like a car accident or something that would require a large medical bill - and I looked at the amount of money that would be taken out of my paycheck each month to go toward my medical insurance... because this affects how much money I actually receive into my bank account each month.
If I were to go through this exercise now, my medical considerations would probably look the same, but my dental situation would be a bit more complicated because I now know that I need a dental implant, so I would look more closely at the pricing for some of the larger dental surgeries.
My point is: once you get your list of all the benefits you have or should have in your industry, go through each item and, for anything that isn't as simple as, say, your base pay, pick out the top 3 things that are relevant to your specific life situation and use those as your points of comparison.
But, most importantly, find a way to somehow quantify those because QUANTIFYING will allow you to more easily compare, and it'll give you some numbers to work with when you start to formulate the Target Number for your pay increase (see example below).
STEP 2: QUANTIFY YOUR *POTENTIAL* BENEFITS
The next step is to quantify your POTENTIAL benefits and, what I mean by this is, if you were to go get a job somewhere else, what would that benefits package look like? The easiest way to know this for sure is to go interview and get an offer from a new employer, however, I realize not everyone wants to go find a new job.
If you don't want to find a new employer, then I advise doing some research into what types of benefits others are receiving in similar roles in your industry. Ask friends and do an online search for your job role in your city in the current year. Get as many details as you can. Even if you don't plan to find a new job, play out the scenario as if you were.
Once you've received an offer from a new employer or have done the research I mentioned, you'll want to list out your benefits package for your Potential New Employer next to the benefits list you worked through in Step 1 for your Current Employer and, again, you'll want to quantify them.
One thing to note is that, if you really are looking for a new employer and you received an offer from them, you'll probably have to go back and forth a bit with your new employer's HR department to get all your benefits-related questions answered because, in my experience, a lot of offers give you the bird's eye view of benefits and not the specifics. Just let them know that you're working to compare your total compensation and that's the reason for all the questions - most HR folks will understand this and will be happy to help.
And, while this can feel obnoxious, this can serve you well because, when you make your counteroffer, they'll know you've done a ton of research and you're countering based on that data, rather than just pulling a number out of thin air. It can also make you appear thorough and like someone who makes decisions based on metrics, which a lot of employers like. Ask as many questions as you need to, but just make sure to respond to their emails within a day or so of receiving so they're not ever left wondering where things stand.
And for those of you listening who do not currently have a benefits package, your benefits list for your Current Employer will be blank, and you'll put all the information from your research or from your new job offer in a second column which I call "Potential New Employer" - you can see an example of this below.
STEP 3: CALCULATE THE DIFFERENCE
Step 3 is pretty straightforward which is to calculate the difference between the benefits at your Current Employer and your Potential New Employer - line by line - to see in which case you're better off for each item on your benefits package list.
In most cases, some items will be better at your Current Employer, and some items will be better at your Potential New Employer.
(I'm all for financial transparency, but for this exercise, I don't want you to get distracted by the dollar amounts that I was making so I've hidden them... I want you to focus on getting the biggest percentage increase you can based on your numbers.)
STEP 4: PREPARE YOUR COUNTEROFFER OR RAISE REQUEST
So, as I talk through this part, I'm going to speak in terms of someone who is looking to switch jobs because that's what I did and I'll be talking through my specific example, but if you're looking to stay at your current employer and get a raise, you can still follow this method... the only difference is you'll be working to pull together a raise request instead of a counteroffer, and the items you'll use to negotiate your raise request will be based on what you COULD GET by leaving your job and going to work for someone else - even if you don't necessarily plan to.
I'm super type A, which is why, in my example, you'll see that I color-coordinated this part.
Because I WAS looking to switch jobs, I focused on the items where I'd be losing something by switching employers (so, in my photo these are the red items) because these are the areas in which I could say to the Potential New Employer, "You know, I'll be losing this, this, and this by leaving my current job and coming to work for you... so how can you sweeten up this deal for me?"
Once you have a list of all the things you'd gain versus lose by going to work for this new employer, you're going to do 3 things to prepare your counteroffer.
First, you're going to want to add everything up on your benefits list and to make sure that you're going to be financially better off when you look at the whole picture.
For example, once I was considering moving jobs but the new company wanted me to come to work in person, whereas I'd been working from home before. Once I went through this entire exercise and also looked at how much it would cost me to make that commute, I realized that even with the pay increase they were offering, I'd be LOSING MONEY going to work for them.
If you make the calculations and realize you'll be losing money, pull that amount to the side because you'll want to add that to your counteroffer.
Next, make sure that the base pay increase percentage is at least as much as the current rate of inflation and also at least as much as what other job switchers are getting. You can confirm all this with a simple internet search.
If not, calculate how much is lacking in the offer, and add that amount to your counteroffer request.
Finally, go through the items on your benefits where you'd be losing out by switching employers, and get a grand total... just do the best you can and get as honest of an estimate as you can.
You'll notice in my example that the biggest differences when moving from one employer to another were around the medical insurance, specifically if I chose the "High Insurance Plan" option that my New Employer offered, I'd lose about $3.5K per year from my actual paychecks plus another $1K on my HSA, so that's $4.5K right there but more importantly, if I were ever to need the max benefits on my medical insurance, I'd be losing about $9.5K per year for similar coverage. I also noticed if I needed to use the maximum benefits on my dental plan, I'd lose another $1K per year, again, for similar coverage.
Sure, I likely won't need the full benefits of my medical and dental coverage, but think about it: what if I did?
That would mean there was probably some kind of medical emergency and I don't want to put myself in a position where I'll be dealing with something as serious and stressful as a medical emergency, and then realize I'm also losing thousands of dollars because I didn't think to ask for a pay increase to cover this worst-case-scenario-type situation.
So when you add up all those differences, I was losing about $15K on the medical/dental insurance front.
There were some other differences you'll see in other areas I was very unlikely to need like life insurance, long-term disability, and more, and again, although those differences weren't going to cost me money in the present because they didn't require any money out of my paycheck, think of how terrible it would be if I DID need them, it's pretty serious, I mean in some cases we'd be losing hundreds of thousands of dollars.
So to account for that, I essentially decided to double that $15K and I planned to counteroffer and ask for an additional $30K to cover it. But I ultimately decided to reduce that number to $25K more because I felt the New Employer was already offering me a nice base pay increase and other benefits.
STEP 5: MAKE THE ASK
As you can see, getting your specific counteroffer number nailed down isn't an exact science so lean on your actual numbers as much as you can, but when you need to don't be afraid to make an educated guess. I suggest always asking higher because typically the employer will make their own counteroffer, coming down a bit from yours, but if you at least MAKE the counteroffer, even if the counter back, the result will be higher than their original offer.
And that's what happened to me. The new employer would not agree to an additional $25K on my base pay, but they DID agree on an additional $15K, and when you consider the percentage-based annual bonus, it pushed me above the $25K counteroffer that I'd requested, so everyone was happy.
But how did I actually ask?
Let me tell you, despite all the details and calculations and math involved in even getting to this point, for me ASKING was still the hardest part.
But you just gotta find it in you and do it.
My friend Kristen, whom I talked about earlier, told me that even though counteroffering may feel so weird to you, people in HR expect that and deal with it all the time. It's not weird to them and it's not going to surprise or offend anyone, so don't let that deter you.
Plus, it shows confidence, can increase perceived value, the worst they can say is no, and it's highly unlikely that they'll rescind the offer.
Same goes for those of you who are going to ask your current manager for a raise. Chances are, you're not the first person to ask them for that, and you won't be the last.
But you have to do it.
As Kristen told me: "Do you want to avoid feeling awkward for a day, or do you want to get a raise that'll affect your finances for years to come?"
I don't know about you, but I'll take the latter. Every single time.
THE BIG PICTURE
Benefits, whether your employer offers them or not, are a valuable point of negotiation for higher pay if you're willing to put in the effort because this aspect of the negotiation process does require the most heavy lifting.
Can it feel like a drag? Yes. Is it a tedious process? Certainly.
But, is it worth it? In my experience, this exercise resulted in a $15K base pay increase, which made me even more money when you consider my percentage-based bonus so, 100%, I think this is worth it - yes.
And between getting the offer, going back and forth with HR on all my benefits-related questions, calculating my counteroffer, and making the ask, it really only took about a week.
Yes, it was stressful, and yes I was tired, but doing this has significantly increased my wealth over time because I was able to keep my expenses the same and put all that extra money into investments which have grown and continue to grow.
When you make the effort to QUANTIFY things, you're essentially turning them into data points... and people can't argue with data, which, in my opinion, is one of the reasons this approach works so well.
So I hope you're willing to put in the effort because there are big rewards to reap, my friend!
Episode 5 walks you through my free resource, The Ultimate Make More Money Starter Kit, which will help you make 3 key decisions and put a specific plan in place to get a raise (you'll see the benefits piece mentioned in there but it also goes through other things you can consider and use as negotiation points for a raise!).
And in Episode 6, you'll hear about 5 habits you can adopt right now to stand out at work and position yourself well for the next round of raises and promotions.
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