Topic: Calculate your salary needs first!

Work out what you need to live (or stay afloat). I have read and heard this argument before, but I don't buy into it at all. Take these 3 scenarios.

    1. You are a medical doctor, and I've paid off all your student loans, you live in a modest house. You need 60K to cover all your expenses. But other doctors with your level of experience and qualifications make around 130K. Are you going to take what you need?

    2. Your previous jobs have earned you 20K per year. Maybe your spouse earned 30K, before he/she lossed his/her job, maybe your spouse fell sick, maybe you have additional medical expenses.  You once got by comfortably with 50K. Maybe with all the changes you absolutely need 45K just to survive. You can't just go to your next interview and ask for 45K because you need it based on your personal circumstances. Your type of work pays 20K, maybe 30K at best.

    3. Maybe if you are a new grad and you earned a bachelor of arts and you want to be an administrative professional, and the starting salary is typically 35K, and you absolutely need 28K to get by, then the work-out-what-you-need model works; but that only works because what you need happily coincides with roughly what you are worth anyway; but what if you are an electrical engineer and you absolutely need 28K. You would still be seeking the median starting salary of about 56K to begin with, because that is what engineers get paid. You might privately set a low of 45K, but I doubt you would do as low as 28K.


In each of these scenarios what you need is completely irrelevant to what you are worth based on your skills, experience, and qualifications, and the job market.

Let me give you one more example, a real example, based on a conversation I had with a company recruiter. They were giving me the same work-out-your-expenses philosophy; and my response to that is - I need $0 to cover my expenses. Yes, I am out of work, but I am very fortunate to have a spouse that earns an income to support us both, so based on my expenses I don't need a salary in order to survive. Likewise, when I am working, she doesn't need an income, but we both choose to work when we are able so that we can build up a savings and have disposable income to spend on things we enjoy.

So does that mean I should be giving my services away for free when as an engineer a very low-ball amount for that kind of work would be 50K.

My advice: Find out what you are worth based on your skills, education, and the job market. This includes discounting that amount by a percentage (5,10,20% or whatever) since it is a recession, it is a supply and demand market after all.

Re: Calculate your salary needs first!

1.  I don't mean this disrespectfully, but you missed my point.  I said the job seeker needs to know what that "can't go below" amount of income is, not ask for a salary that's equal to or slightly more than is needed to survive!  In this instance, the doctor is clearly going to be offered more than $60K and it would be foolish to ask for that amount.  Your example still doesn't negate the value of knowing what level of income is needed to survive.  If this physician is offered, let's say, $130K and takes it, then the paradigm shifts to making wise investments with the $70K above his or her "break even" point.  Knowing what that point is will help the doctor know what portion of his or her income that can be devoted to investment.

2.  In this example, knowing the "break even" point clearly points to a couple of courses of action.  First, more training or education in his or her field to qualify for higher paying positions in his or her occupational field.  Second, it suggests that this couple will have to make some cuts in their discretionary spending - and maybe in their variable spending as well - until the training needed to command a high salary is completed.

3.  This is a variation of your first example - the point still remains that the job seeker needs to know what his or her basic income needs actually are in order to negotiate effectively, adjust spending habits, or get additional training.  If the job seeker's experience, training, skills, and education qualify him/her for a higher salary based on the value the employer has put on the job, then the offer is likely to be higher to begin with or the job seeker will know to keep looking.

Knowing what you need is not irrelevant, its fundamental to developing a strategy that will enable any job seeker to negotiate more effectively within the additional framework of the experience, training, skills, past job performance, and education required by the employer to do the job.  Let me give you and example.  Suppose the job seeker has no idea what his or her fixed, variable, or discretionary expenses are.  Suppose he or she is offered a job for $50K and is thrilled with such a great offer - only to discover that his or her income requirements are $60K?  He or she is $10K in the hole because there was no basis for developing a negotiating strategy.  Not knowing what your expenses are is like playing cards without getting to look at your cards first!  This is especially true if the employer has decided that the job is worth $X to his or her organization and the job seeker needs $X plus $10K to get by.  The job seeker can either try to negotiate a salary that's adequate for his her her needs or he or she can continue the job search until a more lucrative position comes along.  Finally, the job seeker can determine what salary range he or she wants to be in far more effectively knowing what his or her expenses are - and the point should be made that even if that basic income requirement is $X, that doesn't mean, by any means, that he or she can't ask for a salary in the $Y to $Z range.  The point is making the most well informed decisions possible.  Gotta see the cards dealt to do that!