This post is tackling personal finance because it impacts your career. For my Forbes column, I have a running theme that features mistakes even smart professionals make – communication mistakes, networking mistakes…and now Financial Mistakes:
I’ve been lucky that I enjoy all things personal finance. While I was a music major in college, I also doubled in economics, and my piano teacher was an investor. We spent my lessons talking about the financial markets. So I had a running start in my 20’s with good financial habits. This helped my career dramatically over time because my solid cash foundation enabled me to absorb career moves that required extended periods of time living with less income (like taking a few years off to act and launching a business). Now that I coach people, often on career change, that bugaboo of money comes into play as smart, experienced professionals are stymied in their career moves by financial obstacles. Here are five ways that even smart people get tripped up by money:
Not prioritizing money
When I graduated college in my 20’s I wanted my own apartment in NYC, and I didn’t have parents, grandparents or the rich aunt to subsidize me. So I picked a career that was at the intersection of my interests AND my target compensation. Cold hard cash was high on my decision criteria, and it was the best move I made. I enjoyed that first career even more because I could afford my life outside of my career, and years later I could take more risks and even take time off because I prioritized the money at the time I didn’t have much. That isn’t to say that you only prioritize money. But I hear from so many people who feel guilty talking about compensation requirements or taking a job because of the pay. Depending on your circumstances, it could be a great move. You can keep track of your money metrics using a home-grown Excel spreadsheet or online resources, such as Personal Capital or Mint.
Failing to negotiate
I have recruited for over 15 years at all levels and in a variety of industries, and I have NEVER had an employer pull an offer because someone negotiated. The worst thing a company can do is say No. But you will still have the initial offer, and you will likely get a better offer, if you ask. When I had my second child, I wanted to work part-time AND continue my creative pursuits AND move industries AND maintain a six-figure salary. I created a situation that accommodated that – it took networking to identify a special opportunity, opportunism to jump on special openings where I could add unique value, and negotiation to craft a role that works. But it’s doable, if you dare to ask and when you ask the right way.
Setting expectations too low
As per the above example, I didn’t buy into the assumption that you have to take a pay cut after a maternity leave, or you have to take a cut to get a flexible schedule, or you have to take a cut when you change industries. That is not necessarily the case if you can show you are adding value equivalent to the compensation you’re seeking. Don’t assume you can’t negotiate or you have to take a lower salary or you can’t ask for flexible arrangements because you may set the bar too low and be undercompensated unnecessarily.
Setting expectations too high
That said, there have been times I have taken a cut. When I went from corporate work to acting, I didn’t expect (and didn’t achieve) my six-figure corporate salary. In fact, I went from six figures in corporate to three figures (yes, I earned $300 in my first year of acting). I did a lot of free work to build up my resume. I paid out a lot in classes, mailings, marketing, union dues and more before ever seeing a return on my investment. As a recruiter and as a coach I have seen candidates with expectations completely misaligned with roles they are seeking because they are using metrics from a flush industry to a lower-paying industry, or from an established company to a start-up, or going from a management role to an individual contributor. When you set the bar too high, you appear as if you’re not serious about making a change or you’re not self-aware enough about your value.
Not realizing that personal finance impacts the professional
Employers may run your credit as part of the employment application process. This is particularly true for finance positions, but even for other positions some employers feel that the way you manage your money is an indication of character, discipline, integrity and other attributes desirable in a good hire. If you don’t manage your credit, then you’re not fully managing your career. I check my credit three times per year for free. I use AnnualCreditReport.com to access my credit report from each of the different reporting agencies: Experian, Equifax, and Trans Union. I do this three times a year, so I only have four months in-between checking, a short enough time to catch mistakes or identity theft before it becomes a big problem. I use all three agencies (one every four months) so I can make sure each agency is correct (they are separate entities). This is not a difficult process because I set my calendar every year to remind me to check my credit. When it’s time to check my credit it shows up on my calendar and I just do it. A few minutes a year is all it takes to ensure my file is in good standing, so if any employer ever did pull my credit, I know where I stand.
Do you a financial hit or miss to share? Let us know about it!