career

The simple formula that will help you calculate your ideal salary.

Anyone who’s reached the stage in their career where it’s possible, knows negotiating a salary can be daunting.

Because… where do you start?

Many people – including Red Balloon founding director Naomi Simson – would tell you that the best way to figure out the ideal salary to ask for is to research and find out at what people of your experience level in a similar role earn.

But a writer at career website Career Contessa has discovered another way of working it out.

Writer Kit Warchol reports on the theory of a San Fransisco woman who works at a company that funds lady startups.

She suggests using a simple equation to calculate the wage you should ask for next time you land a new job – or the pay rise to request during your next annual review.

STEP 1: Add up your monthly expenses. 

So this includes your rent and bills (water, electricity, gas, phone, internet etc) but also an average of your monthly food shops, and your entertainment spend. And then make sure you’re also accounting for all the necessary extras, like birthday presents, or clothing. Basically an average of how much you spend each month.

STEP 2: Double it. 

This is to allow for all the unexpected extras in your life, like concert tickets, plus allow you to save money for things like holidays, or a house. Plus, set some money aside for a rainy day (or a redundancy).

STEP 3: Add 20 per cent

Okay, you already accounted for extras, what’s this for, you ask? As Kit Warchol explains, the reason for the 20 per cent addition is two-fold.

First, it forces you to ask more than you’re comfortable with – which as, Kit points out, is probably a good sign you’re asking for the amount a man wouldn’t think twice about requesting,

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Secondly, it allows for your employer to make a counter-offer at a lower wage that you can still be happy with.

So here’s what to punch into a calculator:

( [Average monthly expenses] x 2 ) x 1.2 = [Your ideal salary]

Yep, that does sound simple.

But it’s worth keeping in mind that while this may just be your ideal salary – to live a life you enjoy – it may not be the salary that your experience level or qualifications make possible.

Which is why Naomi Simson advocates doing your research to make your request for a pay rise or generous starting wage as hard to turn down as possible.

“Do some research and benchmark a specific [salary] after you have looked at what people of your experience and in your role earn,” the Shark Tank shark told Mamamia.

“Look at how much experience you have and rate yourself against that.”

You can find this information through a decent Google search, looking at job postings for similar roles on sites like SEEK, or by asking an experienced recruiter.

And if you just want to boost your wage at your current job, Naomi advises keeping the value you add front of mind.

“The absolute must before contemplating asking for a pay rise is establishing whether you know how you make money for the business that you work for.

“What value do you deliver to the bottom line? How do you add value?”

“Remember to consider what is in it for ‘them’? Be clear about why it makes business sense to give you a pay rise.”

So if you do use that helpful equation, it’s probably best not to bring it up in the meeting with your boss.

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