As we enter the season of spending, socializing with family and friends, and giving thanks and gifts, we often feel a huge drain on our bank accounts. However, personal finances are not the only ways that people develop money problems. This week we are looking at seven of the biggest money problems people face in their professional lives. Avoiding these common pitfalls can actually free extra cash for you to use this holiday season
1. Failing to negotiate your starting salary or a salary increase when you accept a new position or promotion: The best time to talk about increasing your salary is before you start a new job. However, many people fail to optimize this opportunity to get the extra money they deserve. Even if you’ve been unemployed for a while or are desperate to get any kind of work there are a few things that you should do before you accept the new position. 1. Brush up on your negotiating skills to secure an extra few thousand dollars.
2. Justify the increase by explaining the expenses associated with moving to a new city or increased transportation costs. 3. Explain that the longer hours/travel associated with your new gig will require you to quit your part-time job and/or give up a consulting job. 4. Prepare a great argument by doing your research, including checking out the Living on Purpose Project archives for our August 6, 2016 post on how to ask for a raise or promotion! 2. Not understanding that the only way you will ever be paid what you deserve/are worth is by working for yourself: Stop giving 110% and expecting to be paid what you’re worth. Truth is, people who have great wealth and bank accounts usually work for themselves. You might not be ready, willing or able to launch your own business, however, start exploring ways that you can also work as a paid consultant/freelancer to even out your salary deficit.
3. Trying to keeping up with the Kardashians: Don’t feel pressured to have to keep up with colleagues. Dress, hang out, and eat lunch, where you can afford to do so. Even in your professional life, find ways to live within your means such as buying a suit or dress from a high-end consignment store, bringing lunch at least three times week, and doing what you can to pay down your student loans.
4. Giving the milk away for free: Although this saying often applies to something else, it also relates to your work life. If you’re a consultant who has been asked to develop a proposal – only give a high level overview. When I first started working as a consultant, I developed a 10-page proposal that virtually gave the prospective client both the strategy and the detailed tactics to execute the project.) When I followed up a week later, I was told that, “I’m going to go in another direction and would no longer need my services.” Instantly I realized that I had given away the milk for free, and that he had never planned on hiring me. If someone asks for a comprehensive proposal or plan, charge them for it.
5. Not putting everything in writing: Whether you are working for or with a family member, or involved in a six figure venture or pro-bono project, outline your working arrangement in writing. I have seen many people of all ages and stages of their career not sign contracts or agreements, “because they were family or a close friend and I trusted them.” You can trust people but what you should trust even more is a contract or piece of paper that spells out how and when you’ll be compensated. Download a general contract from the Internet and make sure that you include major contingencies such as the client canceling the job or project. For example, I once worked on an event that the client canceled seven weeks into the project. Luckily, I had a clause in my contract that stated the client still had to pay me a certain amount per hour for all of the time I worked up until that point.
6. Lacking a clear focus about money, success, and youth: Defining success by how much money you make is a slippery slope to unhappiness. Sure you should work towards goals, but you need to first remind yourself that youth fades and there will always be someone who has/makes more money than you. Build your financial goals on talent and things that truly matter and have personal meaning. Letting a dollar figure represent your happiness or success is a sure way to fail.
7. Not knowing when to “fold ‘em:” Statistics show that regardless of industry, a majority of new businesses don’t make a profit in the first five years, and almost half go out of business in less than three years. Since almost every small business owner invests personal savings into their business, you may lose more than just your business when your venture fails. If your business is clearly sinking with no way of saving it, don’t let your pride cloud your business judgement. Filing a business bankruptcy can sometimes prevent vendors, subcontractors, and creditors from seizing your current assets.
Money doesn’t make you happy but it sure gives you better choices, and not having money can make you miserable. Be aware of how you approach and manage money not just in your personal life but when it comes to your professional affairs. This week take a look at how you can prevent making these and similar career-related money mistakes.