When you think about what it means to make good investments, your mind probably turns to things like the stock market, retirement portfolios, and financial advisors.

But there’s a key idea (that doesn’t require any money from you!) that you’ve probably overlooked, and it can have a profound effect on your financial future: Asking for a raise.

With just a little time and some prep work, you can ask for a raise, and you’ll be making one of the best investments you can possibly make in order to grow wealth and achieve financial success.

The Costs of Not Asking for More

Far too many women don’t negotiate for higher pay. According to this article, only 7% of women reported asking for more. That’s compared to 57% of men who did negotiate for more pay.

The costs of failing to do so are high. It may seem obvious, but what you earn over your working career significantly impacts your ability to reach your financial goals, any which way you look at it. It affects how much you can save, how much you need to rely on loans or credit, and how much you can invest.

But also consider how, in the context of your salary, the difference between making $50,000 or $55,000 per year for the first 5 years of your career is not just $5,000 per year. That’s because just like any other investment, that number—your salary—compounds over time.

How Not Asking for a Raise Affects Your Salary in the Long Run

By failing to negotiate your salary today, you’re ensuring that your lower earnings number carries over. Subsequent raises, bonuses, and promotion amounts will be lower not just now, but throughout your working career.

On the other hand, asking for a raise and receiving higher pay translates into larger pay bumps down the road. Let’s look at an example to illustrate this:

Person A and Person B make $50,000 annually. Say Person A read up on how to negotiate for a raise and understood the importance of asking for more. She approaches her boss and asks for a 10% raise. Her boss counteroffers with 5% and she accepts. She now makes $52,500.

Person B, on the other hand, didn’t think asking for a few thousand more dollars per year was worth potentially ruffling feathers at the office. She does not negotiate for more—and doesn’t receive a pay raise. She still makes $50,000.

Five years down the road, Person A believes she’s earned another raise through the value she’s provided for her company. Again, she negotiates for a 10% raise. Her boss counters with 7%, and again she accepts. Person A is making $56,175.

Meanwhile, Person B has finally decided the time is right to ask for more. Perhaps she’s learned now that she has to take the initiative if she wants to increase her earnings; she prepares a great presentation on why she deserves a 10% raise. Even if her boss is impressed, countering with 7%, this brings Person B up to $53,500. That’s over $2,000 behind Person A.


The takeaway from this example is that the gap only grows wider between those who have asked for a raise and those who fail to negotiate for higher pay.

Asking for a raise is your best investment because your earnings compound over time in the same way your assets in the market should. By failing to ask for more today, you create a mountain for yourself that only becomes harder to scale as time goes on.

Your best investment is in yourself. Ask for what you deserve according to the value you provide, and earn those raises that are critical to your financial success.