The working world presents a complex landscape of opportunities and challenges. While pursuing professional goals is essential, you should navigate this field strategically to ensure both career satisfaction and financial well-being. Unfortunately, some common missteps can have a significant financial impact over time, hindering your ability to achieve the desired financial security.

If you find yourself looking around and wondering why other people are making significantly more money than you, perhaps despite being more junior or less skilled, chances are you have made one of the five costly career mistakes that can lead to losing a significant amount of money over the course of your career. Here they are and how to steer clear of them:

1. You are stuck in a low-paying career

I guess it is no surprise to you that some jobs pay more than others, but it may not have been so obvious to you when you were young and had to choose your field of study or where to do your internship. For example, one should avoid starting a career in the hospitality, F&B, or retail industries if one aims to earn higher wages. While you can eventually climb the ladder and work your way up in any industry, becoming a high-level executive of a hotel or retail chain and earning six figures, the chances are rather slim. Positions at the top are naturally much fewer than at the bottom in every industry, and not everyone can reach the top.

If you feel stuck in a low-paying career, you can always try switching to a higher-earning one. Nowadays, it is more common for people to switch careers than it used to be. Research shows that most people will change careers at least once in their lives. The highest-paying careers that deserve your attention typically fall into a few broad categories, such as:

• Healthcare Professionals: This field consistently ranks high in terms of earning potential, with specialties like anesthesiologists, surgeons, and orthodontists topping the charts.
• Business and Financial Professionals: Jobs in this category, such as chief executives, investment bankers, and financial managers, often involve significant responsibility and high levels of expertise and hence are paid very well.
• Tech and Engineering Professionals: The growing demand for skilled professionals in fields like artificial intelligence, software engineering, and petroleum engineering fuels high salaries in these domains.
• Legal Professionals: Lawyers, particularly those specializing in corporate law, intellectual property, or litigation, can command high salaries due to the demanding nature of their work and the specialized knowledge required.
• Aviation and Maritime Professionals: Pilots, airline captains, and ship captains earn high salaries due to the specialized skills, extensive training, and significant responsibility associated with their roles.

You can also check publicly available sources like Indeed or Robert Walters to identify which jobs are currently in demand in your area and offer decent salaries. I will describe how to make a career switch in the next issue of my newsletter. Additionally, you can find a comprehensive guide on this topic in my book.

2. You are stuck in a low-paying company

Companies adopt various compensation strategies that align with their overall business goals. Some aim to attract top talent and are willing, and most importantly, able to pay for it. Others keep salaries low as they prefer (and need) hiring rather a large workforce at a lower cost. Therefore, it is essential to choose your company wisely if you want to maximize your earnings.

However, it’s crucial to be aware that the best companies to work for are often not the highest payers. Many companies recognized as “best places to work” may offer average salaries but compensate with a strong employee value proposition, including a strong brand, positive company culture, learning and development opportunities, recognition programs, and a sense of purpose. They may also provide benefits like comprehensive healthcare plans, flexible work arrangements, remote work options, and more.

Conversely, the top-paying companies are often those that struggle to attract employees. While working for them can be financially rewarding, it comes with challenges. These companies may suffer from issues such as a toxic culture marked by low morale, poor communication, discrimination, demanding work conditions, long hours, high pressure, or a lack of resources. They may offer limited growth opportunities or have location disadvantages that make working for them less appealing.

Before deciding to join such a company, it’s essential to weigh all the pros and cons. While a fat paycheck may be attractive, you should be prepared to pay a price for it.

3. You did not handle your offer negotiation well

When negotiating their salary before joining a company, many people don’t realize that every cent matters. Consider this: the global average salary increase forecast is projected to be around 5.0% in 2024 (according to many sources). If you accept a starting base salary of, let’s say, $50,000 a year and receive the average salary increase every year, your salary after five years in the company will be $60,775 a year. However, if you negotiate a bit more skillfully and manage to start with $55,000, after five years you will be able to earn $66,854 per year, which is $6,079 more. In the cumulative expression, the difference is even more considerable. While in the first case your cumulative earnings over the five years would total $276,281, in the second example, you would earn $303,912, which is $27,631 more! (We take just the gross base salary into account here to keep the example simple.) You can see the calculations in detail in the table below:

	Salary of an employee who couldn’t negotiate effectively	Salary of an employee who mastered the art of negotiation
Starting salary = 1st year	$50,000.00	$55,000.00
2nd year	$52,500.00	$57,750.00
3rd year	$55,125.00	$60,638.00
4th year	$57,881.00	$63,670.00
5th year	$60,775.00	$66,854.00
Cumulative earnings	$276,281.00	$303,912.00

As you can see, not being able to negotiate a higher starting salary can cost you a lot of money in the long run. If you want to avoid being lowballed and earn what you are truly worth, learn proven salary negotiation techniques in my book.

4. You have been staying with one company for too long

I am normally not an advocate of job hopping; however, statistically, changing jobs every two to three years, especially in the early phase of your career, can help accelerate your salary progression significantly compared to staying in one company for a longer period of time. This is because, while companies are usually conservative in giving raises to their current employees, they surprisingly have no problem paying the market rate to attract talent from outside.

Therefore, you should have a career plan and actively steer your career. Having a plan will help you leverage your strengths, boost your confidence, and thus allow you to achieve higher professional goals, earn a higher salary, and increase overall life satisfaction. Treat every job not as your final one but rather as a stepping stone that should prepare you for your next job. In your current company, try to seize all opportunities to hone your skills and gain experience. It’s almost like being permanently on a job hunt—monitoring the job market for opportunities, applying to the best ones, and assessing how much you could potentially earn in another company at any point in time.

Learn how to put together and execute a sound career plan in my book.

5. You were not prepared for your salary review

Although staying too long in a company usually doesn’t pay off, you should still spend a couple of years there. Changing jobs too often can label you as a job hopper, which could adversely affect your future career chances.

However, staying in one company doesn’t mean that your salary should remain stagnant. Many, especially larger companies, have established a regular salary review cycle during which they allocate a dedicated budget to increase employee salaries. They do so primarily to counteract inflation and rising living costs, remain competitive within their industry and geographical area, and align salaries with prevailing market rates.

While, on average (see above), you may get a 1-5% salary increase, proper preparation can yield significantly more. If you convince your manager, he should be able to push through an exceptional raise of at least 10% for you. To achieve that, come to the salary review discussion prepared:

• Research Market Rates: Understand the industry standards and market rates for your role and experience level. This information provides context and helps you make a more informed argument for a competitive salary.
• Document Achievements: Compile a list of your accomplishments, contributions, and any additional responsibilities you’ve taken on since your last salary review. Quantify your achievements whenever possible and highlight how your efforts have positively impacted the team or company.
• Assess Your Skills and Development: Evaluate any new skills, certifications, or training you’ve acquired that enhance your value to the organization. Demonstrate your commitment to professional development and how it aligns with your current role.
• Gather Feedback: Seek feedback from colleagues, supervisors, or clients. Positive testimonials and endorsements from others can add credibility to your case for a salary increase.

In companies that don’t have a regular pay review cycle, you should initiate the discussion yourself at a suitable occasion, such as after completing your probationary period, on a service anniversary, or following a significant achievement.

Another way to escape the narrow increment range is to prepare your case for a promotion. Salary hikes after promotion can range from 5-15% or even higher. Familiarize yourself with the company’s policies regarding promotions and the criteria for advancement. This will help you tailor your arguments to align with the company’s expectations.

Remember, the more you manage to increase your salary in your current company, the more you can ask for when negotiating your salary with your next employer.

Additional tips

Additionally, there are other approaches that can help you further increase your earnings. Depending on your job and industry, you may consider trying these tips:

• Specialize in a niche: Focusing on certain high-paying niche areas in an industry (like e.g. cybersecurity, machine learning, or cloud computing in the IT) can lead to higher salaries.
• Pursue relevant certifications: Earning industry-recognized credentials can validate your expertise and make you a more attractive candidate for higher-paying positions.
• Take on leadership roles: Mentoring junior developers, leading projects, and demonstrating initiative can position you for promotions.

Conclusion

While it is important to recognize that motivation is a complex and multifaceted aspect of the workplace, with different individuals being motivated by various factors and their priorities varying based on personal values, career stage, and job characteristics, salary is often a significant factor for many employees. However, navigating the complexities of salary negotiations and career progression requires a strategic and proactive approach. By incorporating the above insights and employing a proactive mindset, you can position yourself for long-term financial success in your career.

Good luck!

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