As you know, increasing your income and cutting your expenses is one of the key steps you can take in the journey towards future financial prosperity.

The truth is though, expenses can only be reduced so far. The amount we can earn however, has no limit.

While most of us will never reach the income heights of Gates, Buffet or Bezos, at all times, we should be looking for an opportunity to increase our income.

For most, the easiest place to start is by negotiating a pay increase.

Having had a job for over 15 years, it’s safe to say I have some experience in this. There was only one year I failed to get a pay increase, so I must have been doing something right.

So here we have it, my bullet proof guide to increasing your salary.

Step 1: Understand what your performance requirements are

As so eloquently put in Dr. Stephen Covey’s excellent book ‘7 Habits of Highly Effective Individuals’, “Seek first to understand”

It sounds obvious, but as the first step, you need to really understand what your performance requirements are.

Your wage is linked to your output, so make sure you understand what you are required to achieve.

There’s no point busting your gut on something that your employer doesn’t value.

Step 2: Make sure you are nailing your performance requirements

Once you have found out what your performance requirements are, it makes sense to absolutely nail them.

Remember, achieving your performance requirements is the minimum requirement to earn your salary. To earn more, you need to go beyond the minimum.

In my experience, most people think that they can negotiate a pay increase in advance of good performance.

“But if you give me a $10,000 pay increase, I’ll work twice as hard” they say.

The truth is, most people default back to their usual output shortly after receiving a pay increase.

You need to consistently be at the top of your game, kicking goals, before you ask for a pay increase.

Step 3: Record all the extra things you do above and beyond your role

There’s no point getting to the end of the year and not remembering all the extra work you did.

It’s easy to get to the end of the year and feel like you’ve been working really hard but don’t have anything to show for it. That’s because you can’t remember everything you did!

So put it in writing. Everything you think had value, or was an example of you going above and beyond, write it down.

Record, have verifiable evidence, and present these to your supervisor at review time. Not only will they be impressed at all your achievements, they’ll know you’re serious about your role and looking for a pay increase. It will help with preconditioning your employer at review time.

Step 4: Take on the hard jobs

In every workplace, there’s jobs no one wants to do.

In the accounting world, it was the messy jobs, the ones where the client didn’t have a clean accounting file, where the client was fee sensitive and getting records out of the client was like pulling teeth.

You should be doing these jobs. Why?

Because it shows you’re prepared to take on challenges, to get your hands dirty.

I always learnt more on the challenging jobs than I did on the easy jobs, so I grew as an individual.

If you know how to deal with difficult clients, it makes dealing with good clients a pleasure.

If you know how to deal with difficult clients, no one will want you to leave because they won’t want to deal with the bad clients themselves!

Guess who is becoming more valuable?

One thing you need to be careful when doing a hard job is that the budget might blow out through no fault of your own. Be on the front foot. Let your manager know this is a risk. They can accept the risk, but at review time, have a justifiable answer as to why this happened, and remind your manager you let them know ahead of time.

Also, if you can foresee problems coming up, be proactive. Look to explain to the client why them being unorganised is costing them more, that they will need to meet us halfway or their fee will need to increase. If you can get the client on board, great! If the client leaves, you just saved your business from losing money on a customer that didn’t want to play by the rules. Also great!

Step 5: Check in with your boss

A performance review is the perfect time to make sure you are on track with achieving and exceeding your job requirements. But you can also check in more regularly to ask your boss if they are confident you are on the right track for a pay increase.

This sets the expectation for what’s to come.

It’s important that you manage your boss’s expectations. If you want a $10,000 increase within 12 months, ask them what you need to do to get there.

Not only will this help lay out the path that you need to complete to succeed, in 12 months time, your boss will already know what your target income is, and subconsciously will be thinking about it.

It sounds silly, but ask your boss what you can do to make their life easier. I have never met a boss that didn’t want to reduce their workload or have tasks they didn’t want to offload.

Step 6: Start bringing in your own clients

If you’re in the type of job where you work with clients, bringing in your own clients is the perfect way to show how valuable you are.

When you start bringing in your own clients, you become more valuable because not only are you bringing in additional profit for your business, that profit is tied to your connection with your business. If you leave, the clients might follow you. You are becoming more valuable by the minute!

Step 7: Make yourself indispensable and continue to progress in your career

It almost goes without say, but I’m going to say it anyway.

Make yourself indispensable.

Take on more responsibility.

Be the person everyone wants to work with. The person everyone goes to for queries.

As we know, there are only so many hours in a day. And your wage is typically linked to what you can achieve within those hours.

At all times, it’s important to be moving up the ‘value chain’ in your career.

i.e. Don’t look to flip more burgers by working an extra two hours a day, look to flip more burgers by learning to manage more staff.

The higher up the value chain you go, the higher your income.

At some point in your career, your wage will be less about what you can achieve personally, and will be more about the level of responsibility you can handle.

Can you manage 10 staff, or 100 staff?

Step 8: Time to step up to the plate

It’s go time.

By now, you’ve done all the hard work.

Once you’ve kicked your goals and then some, it’s time to speak to your supervisor.

Have proof you’ve met your KPIs, that you’ve exceeded budgets, that you’ve kicked every goal there is to be kicked.

Be confident. Besides, you’re an indispensable member of the team, who wouldn’t want you around? You’re making your boss’s life easier, bringing in clients, and an all round good guy/gal.

There’s no harm in asking. By this stage anyway, your boss is conditioned to know that you’re expecting a pay increase.

Step 9: Using another job offer as leverage

Sometimes things don’t go to pan. But there’s always Plan B.

It’s time to get a little bit more assertive.

By applying for another role, you can find out what your market worth is. Perhaps you don’t even need to apply for another role, you can just talk to a recruiter for a second opinion.

You need to be careful with this approach because some people don’t like being threatened.

Some managers are too proud to admit you could get paid more elsewhere. However, this can be a useful strategy in showing your boss what the market believes you are worth, and showing how serious you are about being paid what you are worth.

Step 10: The last resort - moving on

Sometimes things don’t work out the way you want them to. Sometimes, the only way to get paid more is to change jobs.

It’s an unfortunate reality that sometimes people only see your worth when you go.

The good news is you’ve already recorded all the extra things you did, how much revenue you brought into the business, your output and other examples that made you a killer employee.

If you find this is the only way to move forward, just use all the tips above to kick goals at your next workplace.

General comments on increasing wages:

When it comes to salaries, in many occupations, you may find you hit a ceiling that you can never move beyond as an employee.

In these situations, I would at least try to negotiate a CPI increase every year to keep things ticking along.

Remember, with the power of compounding, even a 1% increase adds up over time. Not only are you marginally increasing your wages, you’re also increasing your super, which is increasing your super earnings as well. Over the long-term, every little bit helps.

When it comes to increasing your wages, it’s not always about just getting a pay increase.

After all, some jobs have limits on what you can be paid.

You might need to pivot into a new role to utilise your full potential.

One tip I wish I knew earlier was to look for roles where the income isn’t necessarily linked to hours worked.

These might be sales based roles, which certainly aren’t for everyone, but in my opinion, are really underrated as a career choice. You could sell a house and get a $30,000 commission in one weekend, or you could spend three months at work to earn the same amount.

If you’re good at what you do, consider freelancing. Can you go direct to your customers and charge them direct, instead of your boss skimming off the top? Imagine how much extra money you’d make if you could be paid what your business charges customers.

There are so many jobs that are perfect for freelancing - bookkeeping, graphic design, editing, website development, consulting, that even if you don’t want to do freelancing full time, you could at least establish it as a side business to boost your income. There’s nothing wrong with that!!

So there you go - my 10 tips for negotiating a pay increase, and a few bonus tips for boosting your income in other ways.

Let me know how you go!