Salary Negotiation Is Scary

Salary negotiation is scary.

But there’s a major reason why you need to push past the fear.

It’s called the law of compound interest. This refers to the ability of an asset to generate earnings that are then reinvested or remain invested with the goal of generating their own earnings. In other words, compounding refers to generating earnings from previous earnings.

Einstein called this the “8th wonder of the world”.

Now, let’s look at an example of why this is important:

Pam and Sam are starting at a new investment banking company in the same job position.

Pam negotiates her salary and ends up making $ 65,000 / year.

Sam doesn’t negotiate his salary and ends up making $ 59,000 / year.

After 5 years, Pam has made $ 325,000 and Sam $ 295,000.

That’s a $ 30,000 difference in 5 years and a $ 6,000 difference — per YEAR!

And that’s just the simple subtraction.

If we take the total sum of earnings over that 20 year period, by playing...

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