How to Use Cost of Living to Negotiate Your Salary

Salary negotiation. Not really anyone’s idea of a good time. Some are downright embarrassed to do it and who can blame them? It’s awkward, it can be nerve-wracking, there’s the fear of offending your new prospective boss, all of these encompass one of the more unpleasant facets of searching for a job.

Don’t think it’s something we all do just once before you start a new job, either, salary negotiations are an important part of remaining in that company for the long term. The cost of living fluctuates and as such your paycheck should keep up with the times or you may find yourself searching for a second job. Here are a few things to think about when it’s time to negotiate your salary.

Do the Math

When you’re considering taking that position, you have a thousand things on your mind, especially if you’re changing jobs and relocating to a different city. The new location is going to factor greatly into this decision, not just because you have to think about whether or not you want to live in that area but also how much it’s going to cost to live there. Rent, utilities, gas prices, the cost of food – all of these things are going to affect your wallet when you move to a new town. Some of the most expensive cities in the country like New York or San Francisco are going to require a living wage that is much higher than in a city such as Cedar Rapids or Memphis.

Do a salary comparison by city and then get out your calculator. Look up the cost of living index for the area where you will be working. Take that, divide your current income by that number and this should give you a general sense of how your salary should be adjusted. This is the number you’re going to aim for when it’s time to negotiate.

Present Your Case

Doing your math will enable you to be better prepared when it’s time to talk money. An employer might offer you a low-ball figure just to get the conversation started. He or she knows full well that you’re probably not going to take that number at first glance. But you also want to present a smart case to convince your potential employer why you deserve a higher wage.

Explaining the cost of living and how it relates to your current position and location will help to illustrate how your salary needs to be adjusted for the new arrangement. Show them the numbers and feel free to counter with a salary that is more in line with the wage you need to live comfortably. Then reiterate why you’re the ideal candidate for the position and make them believe that letting you walk out that door is something their organization can’t afford either.

Stay Current

So you got the job and things are going well. You’ve been with the company for a year or two, maybe more. You are a valuable asset and consistently deliver as promised. Maybe it’s time for a raise. As I mentioned before, the cost of living rises. You don’t want your standard of living to decrease. Be aware of what constitutes a competitive salary in your field as it relates to the cost of living index in your city. Don’t be afraid to bring this matter up again and renegotiate your wage.