5 Reasons Entry-Level Employees Need To Start Talking To Each Other About Money

Screen Shot 2015-04-22 at 3.19.10 PMEvery week I go to happy hour with the same group of girls. There’s five of us and when we started the tradition, the break down was: 1 PR girl, 1 girl in advertising, 2 Hollywood assistants and 1 girl in fashion. So, in other words, a typical break down of five 20-somethings in LA.

Most of us are from New England, though, and thanks to the modesty that can be chalked up to the influence of our puritanical roots, we don’t talk about money very much. We were taught to work hard and save money and never, ever ask people how much money they made. We stand by this for the most part, but our relationship finally reached the point where it was less taboo to talk about money. No one gets bogged down on the nitty-gritty details of who makes $12/hour versus who makes $19/hr, but it has became kosher for us to share who was salaried, who had a good benefits package, and so on.

Around the same time, I started getting close enough to my coworkers to start talking dollars and cents. In this atmosphere it is very much about the nitty-gritty, and once I got over the shock of talking openly about money, I found it really helpful.

If you’re an entry-level employee, these are the five biggest reasons you should be talking about money more with your peers:

1. The person sitting next to you at work could be making more money than you for doing the same job.

After working at my company for six months, I got a very small raise for making a lateral move. My close friend had worked at my office for a full year and then made a lateral move but got no raise. So after two years with the company she was making less than I was when I hit my year mark. She would never have been motivated to do something about it if we hadn’t talked about it enough to realize the discrepancy.

2. It’s easier to stick to your budget if your friends know that you need to be on a budget.

It’s the sad truth. You’re much more apt to stay on budget if you announce to your friends that you’re not going to over spend this month. If you say you’re not spending money on alcohol this month to people who will hold you accountable, you’re less likely to order a drink at happy hour.

3. You will learn how different industries compare in salary.

If your friends are in a similar age group but a diverse set of industries, you start to gauge how your job compares to an entry-level job elsewhere. What industries pay their employees overtime? Which companies offer a 401(k) right away? You’ll find that some of your friends don’t pay for their benefits at all through their company, while others pay more than you do per month.

4. You will adopt money saving habits of your friends when you actually share them.

When you’re honest with other entry-level employees about how tight your budget is, you can start sharing where you each cut corners. The day you and your favorite coworker admit you can’t afford to go out to lunch together as often as you do, and instead both start bringing lunch from home, is a milestone in your professional life.

5. It’s humbling.

Your first year in the professional world is filled with some startling and unsettling realizations. For example, the realization that you brought home more money on a busy night at your old waitressing job than you do after spending 8 grim hours in a cubicle. You think that your job is safe and well-cushioned, then learn that your coworker has been laid off and it could’ve just as easily been you, because unfortunately the bottom of the food chain is usually the first to get cut.  When you start talking to your coworkers or close friends more about money. you’ll realize what perks — monetary and otherwise — you take for granted.

The point is, talking to other people around your level about money is just one more way to help you determine whether you’re being compensated fairly by your industry standards. It’s also good practice to learn to talk about money amongst peers without being boastful or catty. I still rarely ask people, flat out, what they make. But when I do, or when people ask me, it becomes a way to talk openly about money with someone who’s clearly looking out for me financially, or needs help shaping their budget.

Maya is a writer in Los Angeles. She is on Twitter.

  • I agree, people shouldn’t be so guarded about what they make. More transparency is going to be better for everyone in the group in the long run.

    I will say that you should be a little bit careful with the who & how. This kind of thing can make people a little bit pissy unless you reeeally know them well enough to know it won’t. You can see the potential for eye-rolling if the friend who makes the most is the one who wants to split the check even though she got the most expensive thing.

    Also, you should never talk to a coworker at the same company about who makes what, ever, ever, ever, ever even if you’re best friends. Nothing good will ever come of it.

    • chelseafagan

      Could you elaborate on your last point? I’m not sure I agree, but I’m interested to hear your reasoning there.

      • Sure. Just based off of my experience and people I know, way too many people end up getting burned by this.

        Happened to my wife. Went to happy hour with some work friends, ended up in a 1 on 1 convo with one of them after a few drinks, “Hey, we’re all friends here.” Next thing you know, the guy is using what he knows about her salary as leverage for a raise. Then she gets chewed out for it.

        It might be different at some companies, where if you’re at a certain level, you make a set salary. But other places are more merit-based. One employee might make more than another at a similar level based on accomplishments or tenure, even though they both have the same title. As a business owner, you don’t want these two talking about the discrepancy in their salaries… and if you find out they are, you’re going to be pissed.

        I guess if you really trusted a coworker with your life, or maybe you worked in totally separate departments or something. But I feel like it’s probably not worth the risk barring an enormous level of trust.

        • chelseafagan

          I can definitely see how people would and do get burned doing this, but I also think a lot of companies depend on this lack of transparency to keep some employees working for much less than they’re worth. In fact, some companies are now moving towards a model of total transparency when it comes to salaries, company-wide. I think it’s definitely a question of trust and judgment, but I’ve had such conversations work out really well in the past for myself and other people.

          • Oh yeah, I’d definitely agree that companies count on it. I guess it depends on what you think the outcome might be base on how your company operates. If airing things out might get you a slap on the wrist but ultimately move you toward fairness and transparency, it might be worth it. If someone’s going to get fired when management finds out you’ve been talking, maybe not.

        • Amanda Bee

          I’ve always been taught the same thing. I make ~$8k/year more than coworkers in the same exact position and I’ve been cautioned against repeating this information. Frankly, sharing this info could hurt me more than it helps any coworkers.

          • chelseafagan

            I think that employees making MORE have definitely less incentive to share this information, but considering employees in the private sector usually have little to no collective bargaining power, it can sometimes provide, if nothing else, the impetus for someone being paid LESS to either move on or negotiate for more (without mentioning the other salaries).

          • That’s interesting food for thought, even going back to the scenario of talking about money with non-coworker friends.

            If I made shit & knew it, I’d probably be happy to parade that around in front of my friends so we could all commiserate and laugh about it. But if I had a feeling I was one of the better paid members of my friend group, I’d definitely be a little more apprehensive about sharing it. Wouldn’t want people to assume that I was more well off than I am. Or something.

            Hmmm…

  • Amanda Bee

    Discussing finances with family and friends has been VERY beneficial for me. Knowing exactly how much my sister had saved up for a downpayment on her house gave me figure to start building up to. It’s one thing to know a downpayment is expensive, but it’s another to know that it costs approx. $XXX,XXX. Kind of forces you to think seriously about your priorities.