Hello and welcome to It All Adds Up the podcast where we chat about money, how to get it, how to spend it, and how to invest it. I'm senior economics writer Jess Irvine, and you're listening to our summer series, where we're replaying some of our hottest hits to help you get in shipshape financial form for 2023. It all adds Up will resume normal programming in February with a brand new season full of money saving tips and insights.
So until then, sit back, relax and enjoy. Hello and welcome to It All Adds Up the podcast where we chat about money, how to get it, how to spend it and how to invest it. I'm senior economics writer Jess Irvine.
And I'm money editor Dom Powell. And today we're going to get you a pay rise.
Well, we're going to try anyway. We're going to give you some strategies. But do stick around to the end of the episode as well, because we're going to be answering our first listener question about investing in property. And of course, I'll be sharing my budget tip of the week.
So just you've written recently that there's never been a more important time to think about asking for a pay rise because we've got official data that shows that average wages are rising around 2.6%, but inflation is at 6.1%, which is a lot higher than 2.6%.
That means that your real wage is going backwards. So if you don't know what that means, that's you know, when the price of things are going up faster than your wage, you can afford to buy less stuff from your money. So you either have to, you know, slash your spending or find ways to increase your income and get a pay rise. So that's what I thought would be really great to focus on today.
Yeah, and it's also a great time to ask for a pay rise because the unemployment rate is at a half century low. So the workers have never had more power in pay negotiations because businesses just need that need the workers. So it's a great time to be asking for for more money.
You can always ask you.
And you can always ask what's what's the harm?
Exactly. And I think we did just want to acknowledge, you know, we're going to talk about pay rises today. Not everyone can negotiate their salary because you're on the minimum wage or you're on award stipulated wages, you know, and then you are collectively bargaining or you're having your wages determined for you. But you can always be sort of pushing for greater progression to be moving up the scale. And I also just wanted to recognize that we've also
probably got some people running small businesses. And then you're not talking about going to a boss, but you are talking about setting your prices and negotiating with clients essentially for the work that you're doing. So it's an important conversation for everyone, whether you're a salary earner or earning income in those different ways.
Yeah, and I think maybe the best way to start is to talk about the ways that you shouldn't ask for a pay rise, because.
I've done a few of them.
Yeah, well, I think we've all we've all been there. And I think number one is to not ask, because as we said before, you can always.
Ask, you can always ask. And some companies, you know, have really highly structured pay reviews every set periods of time. And in some companies the topic just never comes up unless you raise it. So asking is really important. And then my other thing is don't wait so long that you are you have this sort of building resentment inside you.
You have left it for so long and that you sort of just sort of get in this mood where you're really feeling resentful to your boss and then you sort of launch ad on them that I need a pay rise. I'm, you know, overworked, underpaid, because that's not a great mindset to to be going into the negotiations with.
Yeah. And I think you should always make sure you have a bit of a sense of your market value, know your worth. It's always a good thing to do in pay rises in life, in everything, in relationships. So we get into that and you never want to have no back up. If they come to you and they say no, do you pay? Right? So you order you want to have something in the tank for Eve, which is not a you know, which is a particularly not an unlikely situation where they might say no. So you
want to have something else to offer. So what should people do when they're asking for a pay rise?
Yes. So let's flip it around. So there's a few things don't do. And another one is just don't go in and start whingeing about lettuce and saying that lettuce is very expensive and I can't afford it because the cost of living is true for everyone. But it's not a great argument as to why you specifically deserve a pay rise because you are competing with colleagues, I guess
to get that extra money in a way. So yeah, let's, let's put it in the in the positive and we've come up with about ten, ten points here, ten strategies which should help people broach what is I think, you know, a lot of people find it difficult. Even the idea of asking for a pay rise will make some people cringe. And they're just you just don't know how to go
about it. So you mentioned there, Don, what are the most important steps before you even have to summons any courage to ask your boss, what should people be doing?
Well, they should be looking around and working out what the general sort of market value for the job that you're that you have, what job that you want if you're asking for a promotion is so total recruiters look on job websites like very often you can go on to seek and there will be, you know, a job that might be similar to yours and will have a
salary range. And if you look at that job and you look, oh, my salary isn't like that, that gives you a bit of an indication of of maybe what you should be asking for, what you could be asking for. And you can also ask colleagues what they're paid. That's fine.
You can do that sort of subtly. You know, it's, it's, it's alright to get a bit of a sense from people you work with or maybe other people in the industry that you might not work with to see what they're being paid to, to make sure that you're sort of on the, on the same page.
I have done, that I'm the annoying friend. I ask all my friend. NS exactly how much they're being paid. So I know what all my good friends are being paid, which is awkward enough. But then I have also been sneaky and asked colleagues and you have to be careful because some companies do have pay secrecy clauses where you
can't divulge what your salary is. So you have to be a little bit careful, but you can sort of just broach it in terms of a Oh, I'm curious to know if you would be interested in, you know, swapping information about a bit of a trade page, which might be awkward, but maybe you'll discover something or maybe I will. And we both get information. So and as a woman, I always say, don't forget to to ask
your male colleagues what they're being paid. And I've actually found male colleagues are quite forthcoming and wanting to help, you know, because we do know there is that gender pay gap. So, yeah, just a little bit of sneaky research internally.
I see nothing wrong with a bit of sneaky internal research, is that right?
I'm all for it. But then once you've done your research, this is a mistake that I have made before into sort of lobbying, a pay rise, discussion on to a manager unprepared, you know, and managers are people too, and they need a bit of time to sort of be in the mindset to be thinking about your pay and
not sort of doing rosters and other things. So I think if you are thinking of asking popping the big question, put it in an email or a message and get an actual time in the calendar, Schedule some time with your manager to sit down and make it really apparent from the get go that you want to discuss your pay and performance. So it's not a surprise when you do start talking about it. I think that's really important to help your boss be prepared for the conversation as well.
And then once you've got that time in your calendar or you know, you've got a sort of a something lined up, it's great to sort of sit down and prepare a one page summary. Don't want to go too over the top. You know, you don't need to do a full resumé. They've already employed you. But summary of your sort of achievements, your current pay and the way that you might be sort of, you know, achieving over
your current position. You know, that could be something like customer satisfaction ratings if you're in sort of that sort of job or your sales numbers, if you're in a sales job or anything that's anything you can sort of draw on to sort of really help make your point. So you can come at it from a sort of a, you know, cost of living and inflation and pay rise sort of angle, but then also sort of back it up with a bit of with a bit of solid data.
So I think definitely worth making sure you have made a bit of a plan when you come into these sort of meetings.
Yeah. And particularly if you are feeling a bit nervous about it, I think that's really helpful to literally have it in front of you. So you've got some key cards.
Why not.
Make some cue cards, PowerPoint.
Presentation?
But then I think that is pay rise.
Worthy Yeah, I mean, that would be impressed. If I was a manager, I'd give someone a pay rise if they had a full on PowerPoint presentation. All the animations. Yep, that's it.
More interactive graphics as to why I'm awesome. Yeah, but also if you do sort of stumble in the meeting or you get flustered and you don't manage to make all the points, you can also just send that to your boss afterwards. And I've just following up here, here is some more points that I didn't get around to mentioning. So I think that's a great idea. So moving into the sort of brass tacks of negotiation, one thing to
just mention, everything is negotiable. So even when you're looking at the job ads and it says, you know, but usually it's a range, but if it says, you know, the salary is $70,000, nobody pays the ticket price or, you know, no, nobody. But lots of people do, unfortunately. And what we do see is, unfortunately, women tend to be more reticent in even asking for, you know, an increase on the starting salary. And I was looking at
some gender pay gap statistics. And even for people under age 20 with no kids or any any other childcare responsibilities in there, women are still earning 3.7% less than men. And part of that is due to just not asking the question, not saying, you know, just taking the face value of being so grateful for the salary, but you know, ask for more.
In the same vein, never make the first offer. Make sure that the employer is the one that's coming to you with with the offer of of a pay rise. And sort of they're suggesting what it is because that gives you more bargaining power. Like I've got a friend who's done a number of job interviews recently, and the employer would always ask him, what would you think the salary for this role would be? And he would go, Well,
what's the salary on offer? And I would make sure that he was never the first one to put a number on the table.
Exactly. Because you don't want to be just from the get go starting too low. And particularly if you're someone who is going to undervalue your skills, wait to see because they may offer you more than you would ever dream to ask for. So I think that's a good one. And so the next tip is if they do make
an offer to you, never accept the first offer. So whatever it is, even if it's wildly above, you know, what you were thinking, you know, you've wanted a pay rise and they suddenly come back and say, yes, here's. $5,000 extra a year. Never accept that. Just go. Oh. Oh, Thank you. Thank you for that proposal. I'd like a little bit of time to think about that. If possible, you can do some delaying and then always come back and ask for more so you can say, I really
appreciate you coming to the table with that. I think that I'm worth a little bit more. I think I'm worth $10,000 more a year and see how they go, because what they offer you is rarely the final of what they can truly pay you.
And I mean, you know, in this it is power to the workers here. So we're just going to keep on table and hitting it with these with these with these strong sort of communist vibes here. But, you know, ask for double what you want. Like, you know, think about how much of a of a pay rise you want and then ask for twice that. And like I know that might sound like ridiculous and outlandish and whatever but again all you can do is ask and then if they come back to you and say, well, look,
we can only offer you half of this, and then you. Right. What you started exactly getting what you want.
So they go, Yeah, happy days. And don't forget that your boss is probably paid a lot more than you.
Almost always, I think is the idea.
Well, that's the whole point, you know. So use your view for what might be an audacious sum to ask for is still going to be smaller than what you know your boss is on. They're still going to think that, you know, it's not going to seem audacious to them unless you really are just walking in and saying, I want $200,000 for my retail worker position.
Yeah, I mean, there are some caveats here.
Yeah, but we're trying to get you to try. You got to have a have a crack. Yeah.
Have a go to get a guy. Is someone famous. One said.
Who said.
That. I think some politician anyway.
So I mean overall I think the mindset that you take into this is important and people sort of have a sense of oh, it's my boss is going to be annoyed with me, I'm going to be an inconvenience, but actually try to flip that. And, you know, having pay negotiations is a crucial part of the job of being a manager of people. And by by initiating the conversation, you know, they're expecting it. Bosses expect people to ask
for pay rises. And if you are really a good performing employee, it's better for your work output, it's better for your boss that you do talk about it and you don't have that resentment that builds over time because you haven't asked for what you think you're worth. So just trying to have a mindset of, you know, this is a good conversation for everyone to have and not to put off.
Yeah, and you can always come in with things that are not necessarily strictly pay rise related like a lot of jobs, offer perks, you know, personal development funds, some jobs give you free gym memberships and all that sort of stuff. Like there's a lot of things that, you know, if you don't necessarily or if you can't necessarily get a full monetary pay rise, you could ask for more annual leave or more flexible hours or more training or
something like that. And then you can use those things to then maybe build your case for a pay rise, you know, in 12 months time.
Yeah, and that's a really important thing to think about. If the boss does actually say no, you have to prepare some strategies for if they do say no and asking for, you know, those alternative things can be one of one of the strategies you do, you know, you ask, you know, they say no, but could I have this and that instead? Another good thing, I think if if the boss says, no, don't just let it slide until the next year. A great way to say follow up on that is like, well, can we talk about it
in another three months, six months? And then could you give me some idea of what I would need to do in that time period to sort of have this conversation again and for you to feel that I've really demonstrated that I'm working at capacity and that I'm doing good things, you know, So come up with a bit of a a short term plan if they do say no.
And then if all else fails, get up and leave. You can do it.
Walk out the door, speak up the door.
Stuff in a box, get your plan, put it in a nice box and walk out the door. You can do it. The job market is hot. It's so hot. You can you could you could find another job, depending obviously on your job, but you could probably find another job pretty easily. So don't be afraid to walk out.
Yeah. I mean, have a plan, you should say, you know.
Just go. Just leave.
Just, you know.
Okay.
David, do you seriously have a plan? You know, if you've done your research, you know, maybe you've talked to the competitor organizations, maybe you've got an offer from an alternative competitor, or you just know that, you know, the employer down the street is paying more. Yeah, leave. I mean, it's it's it's just not the usual thing anymore that you would stick with one company for your whole career.
And the surveys do show that people who do switch jobs more often to alternative employers, they do get paid more, you know, as their careers progress. It's a great point to negotiate your salary again and really go to where your skills are valued.
Yeah. And that's the number one thing. You want to be valued. You want to be paid what you're worth. And that's why we're here trying to tell you and help you that you should be paid what you're worth. So go out there, ask for a pay raise and see how you go. Because as we've said a few times, all you can do is ask.
You should ask.
And you should. And you should. Now onto Allison, a question for the week. Our question this week is from Michelle, who's sent in her question, and we really appreciate it. So please send in all your questions. We would love to hear them or read them. Michelle asks, How do you get into the property investment market when prices are still quite high? Should I wait until interest rates go higher and prices fall? Jess, what do you think?
Yeah, so this is trying to time the market, I think. And that is something that lots of people would tell you is very hard to do, trying to pick pick the bottom. I mean, I think and I have written that, you know, I may be interested in getting an investment property one day. The thing about that is that as interest rates are going up, we've got prices coming down. It's always a double edged sword. So that's might be great because prices might get cheaper. That is happening because
interest rates are going up. And when interest rates go up, you can actually borrow less. So there's always swings and roundabouts. My view is that if you have considered what your alternative strategies are, whether you you know, if property investment is going to fit into your goals and objectives, if you've considered alternatives, if you've got, you know, your emergency fund of 3 to 6 months sitting there, you do know that you have some spare cash flow to invest.
Then just try not to sort of get too absorbed in the noise of of property prices going up or down. You know, what's really going to determine whether property pays off as an investment for you is whether you borrow responsibly, whether you buy a property, you know, that is, you know, reasonably priced with good, you know, long term capital growth prospects, you know. And that's a really individual question as to
which markets you're looking at buying into. So just doing all your research, getting a handle on your budget and realizing if you have the cash flow, if you do have it, and if you're a long term investor, you're planning to hold the property for decades, you know, it's all going to come out in the wash. So my tip is don't try to time the market.
Yeah. And if you look at property prices in Australia, they tend to go up.
Over time, but they can over time they can dip.
So it's I think timing the market is is difficult to say.
But be in it for the long, long term investment.
Here. Yeah. Just around us off. What's your budget tip for the week Geoff.
Yes. So petrol prices have been bobbing around a lot but if anyone is not using petrol price apps, you're making me cry. That's really bad. There are price comparison apps in every state, and when I fill up, you know, it can be the difference of 40 or $0.60 per litre for a station that is just across the road. So just like letting the people know if you're in New South Wales, your app is fuel check, download it now. If you're in Victoria, the RACV has a site as well.
And for everyone else and including those states as well, this national sites like GasBuddy, petrol, spy and motor mouth. And I should also mention the 7-Eleven app, if you want to download that, it has a price lock feature, which means if you know that prices are about to take off, you can duck into a 7-Eleven or you just have to like drive past it and it scans for a 7-Eleven in your area and you can lock in a low price that you can then redeem over
a seven day period. And then you do need to just check that the 7-Eleven price is still the cheaper. So you go back to your original price check app, but get on it.
I love I use petrol spy all the time, you know. I do, yeah. Yeah. Big fan. And there's this little petrol station just around the corner from me, which is like independent and has like three pumps and it is the cheapest fuel. This is my secret for anyone who lives in the like Melbourne's north. There's a little, little petrol station in Ascot Vale. Cheapest fuel around this much. That's my guarantee. That's my budget. Tip of the week. All right, well, that's it. And don't forget, ask your
boss for a pay rise. Let us know how it goes, then. US an email. Did it work? Are you now filthy rich? If so, give me some. And we'll see you next week. This episode of It All Adds Up was produced by Cheech Chong. The information discussed is general in nature and does not take into account your personal financial situation, goals or objectives. You should always do your own research or
get professional advice before making any major financial decision. If you like today's episode, it follow a new podcast app. Leave a review and recommend it to all your friends. You can also submit your listener questions in text or audio form at. It all adds up at 9:00 today. Thanks for listening.