Millennials: Not Negotiating Your First Job Offer Will Cost You (up to $0.5M)

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Failing To Negotiate Your First Salary Could Cost You Half A Million Dollars

Yet curiously, members of Gen Y are missing a huge opportunity to increase their pay: They are not negotiating their first salaries.
In an exclusive survey of 548 millennials in the U.S., 82% said they did not negotiate their first salaries because they either didn't feel comfortable (38%) or didn't know they were allowed to do so (44%).

Since your first salary is the baseline for all future raises, the impact of starting out behind is huge. "Not negotiating your first salary in a low-wage job can amount to a sacrifice of half a million dollars over the course of your career," says Sara Laschever, a negotiating expert and the author of "Ask For It." "In a higher-wage job, that loss is magnified."

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Not Negotiating Your First Job Offer Will Cost You

A person who accepts a $35,000 starting offer for an entry-level job isn’t just making $7,000 less than a colleague who negotiated a $42,000 starting salary. The person who negotiated stands to make hundreds of thousands of dollars more during her lifetime—and that’s before retirement is taken into account.

Let’s crunch some numbers: Say you start out your career making $42,000. The average annual raise for professionals is around 3% (for simplicity’s sake, we’ll assume that’s the only pay increase you get). After 10 years, you’ll be making about $54,800 per year. If you start your career with the lower salary of $35,000, you’ll be making about $45,700 after ten years. What was once a $7,000 gap is now around $9,000. Over that ten years, the higher wage would have added up to about $80,000 more in your bank account. According to personal finance expert Ramit Sethi, even a $5,000 higher starting salary can be worth $1 million over time, once factors like increased retirement, bonuses, and investment contributions are added in.

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