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Why You Should Talk About Salary With Co-Workers, Even If Your Boss Forbids It





Many people consider talking about money tacky or even taboo. That’s especially true at work, where knowing who earns more or less in the office can create an awkward vibe.

But is there ever a good reason to bring up salary with coworkers? Yes, and it could be crucial to both your happiness at work and your bottom line.

Why some companies try to keep salaries a secret.

Talking about salaries at work is often frowned upon by the higher-ups, and some companies actually impose pay secrecy policies that prohibit employees from discussing their salaries with coworkers. These policies might be laid out in the employee handbook, or they could take the form of a non-disclosure agreement that employees must sign.

Usually, companies that follow this type of model are those that go out looking for star performers to add to their teams ― talent that’s likely to be bid up to a higher-than-average salary, explained Denise Rousseau, professor of organizational behavior and public policy at Carnegie Mellon University.

“What [employers] are trying to avoid is an internal equity issue when people who are hired recently let folks who are already employed know what money they make,” Rousseau said.

Even if management only implies that salaries ought to be kept secret, it’s tough for them to enforce it. All it takes is one too many drinks at happy hour, or a window left open on a computer screen, for salary information to get out.

“If you have transparency, people are more likely to be paid what they’re worth.”

– Denise Rousseau

Not to mention, these policies are actually illegal. According to NPR, the National Labor Relations Act protects private-sector employees’ right to discuss important, work-related matters, including pay. So, even if your boss would prefer you keep the details of your salary hush-hush, they can’t punish you for blabbing.

Further, according to Rousseau, research has shown that employees are more likely to feel mistreated when a pay secrecy policy exists, and the policies increase the likelihood they’ll believe they’re underpaid relative to their peers.

“Pay secrecy is likely to undermine the sense of pay equity or pay fairness in the organization,” said Rousseau.

And, if you think your company is trying to keep salary information secret because some people are either underpaid or overpaid, you’re probably right.

Making salary information public has its pros and cons.

Some companies take the opposite approach, making salaries completely transparent across the organization. Usually, salaries are based on some sort of formula that ensures pay levels are fair. This model has a few benefits for the employer and employees.

For instance, when you’ve worked for the same company for several years, you may become less in tune with your value as a worker, since you’re not actively interviewing, according to Rousseau. By instituting a quantitative salary structure, employers are tying salaries to some sort of real market data.

“Over time, if you have transparency, people are more likely to be paid what they’re worth,” said Rousseau. “That’s beneficial for both retention and a sense of organizational justice. And we know that organizational justice and trust in senior management are very closely tied.”

When salaries are public knowledge, employees tend to be paid more fairly, stick around longer and trust the leadership more.

“I wouldn’t sit around the water cooler and swap salaries.”

– Vicki Salemi

But it’s not all sunshine and rainbows. Rousseau pointed out that when you make things transparent, the inequities become obvious. No matter how fair the system is, employees are going to want to know why some people are paid more than others. “The critical issue with transparency is having a compensation framework that is rational, and that people understand why differences exist,” she said.

In other words, your boss has to have some pretty compelling reasons for those pay differences. Still, even objective reasons can’t stop some people from feeling hurt. Hey, you can’t make everyone happy.

When and how to talk about salaries with colleagues.

Clearly, there are benefits to having open conversations about salary. But if your company hasn’t instituted a transparent salary structure, it’s important to tread lightly when talking about people’s pay.

“I wouldn’t sit around the water cooler and swap salaries,” said Vicki Salemi, a career expert for Monster, explaining that it makes others feel obligated to share their salaries because you did. That puts them in an awkward situation if they’re not comfortable divulging that information.

Instead, reach out to a trusted co-worker privately. “You can say, ‘I think it’s important to know what we’re worth, and I’m doing some research. If I tell you what I’m earning, will you tell me what you’re earning?’” said Salemi, adding that you should promise to keep that information confidential.

Rousseau said it’s also worth talking with anyone in the office who’s recently threatened to leave and received a counteroffer to stay. Not only are they likely to be among the highest-paid employees, “that person is really key in terms of getting good market information,” she said.

What to do if you think you’re underpaid.

So, what do you do when, after polling a couple coworkers, it seems like you’re getting the short end of the stick?

Salemi suggested contacting the professional organization for your industry to get a ballpark range of salaries. For instance, if you’re an accountant, talk to the American Institute of Certified Public Accountants. If you’re in human resources, contact the Society for Human Resource Management. Explain that you want to know your worth based on factors such as geographic location, education level and number of years of experience. This is information you can bring to your boss when you ask for a raise.

However, Salemi pointed out that in general, the longer you stay at a company, the worse off you’ll end up financially. Spending a few years with one organization to gain experience and then moving on to another company ― ideally, every four to five years ― is one of the best ways to increase your salary and expand your network. You might want to take the salary information you’ve gathered straight to the hiring manager of your dream job rather than attempt to negotiate a better salary at your current company.

Of course, some people don’t want to job-hop every few years, and that’s OK, too. Maybe “they know their 401(k) is being matched every year, they have a great commute, they know their job with their eyes shut and they’re happy,” said Salemi. “So if you do stay longer, I say try to move around internally.”

The bottom line is that you should talk about salary at work ― with discretion ― because it allows you to hold your company accountable for fair pay practices and ensure you’re getting paid what you’re worth.

As Salemi pointed out: “Employers need to be fair not only because it’s the right thing to do, but because employees can walk at any time and find a better paying job elsewhere.”

If you find out you’re being underpaid, that’s probably what you should do.


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4 things kids need to know about money





(NC) Responsible spending includes knowing the difference between wants and needs. Back-to-school season, with added expenses and expectations around spending, is the perfect time to not only build your own budget for the year ahead, but also to introduce your own children to the concept of budgeting.

The experts at Capital One break down four basic things that every child should know about money, along with tips for bringing real-life examples into the conversation.

What money is. There’s no need for a full economic lesson,but knowing that money can be exchanged for goods and services, and that the government backs its value, is a great start.
How to earn money. Once your child understands what money is, use this foundational knowledge to connect the concepts of money and work. Start with the simple concept that people go to work in exchange for an income, and explain how it may take time (and work) to save for that new pair of sneakers or backpack. This can help kids develop patience and alleviate the pressure to purchase new items right away that might not be in your budget.
The many ways to pay. While there is a myriad of methods to pay for something in today’s digital age, you can start by explaining the difference between cash, debit and credit. When teaching your kids about credit, real examples help. For instance, if your child insists on a grocery store treat, offer to buy it for them as long as they pay you back from their allowance in a timely manner. If you need a refresher, tools like Capital One’s Credit Keeper can help you better understand your own credit score and the importance of that score to overall financial health.
How to build and follow a budget. This is where earning, spending, saving and sharing all come together. Build a budget that is realistic based on your income and spending needs and take advantage of banking apps to keep tabs on your spending in real-time. Have your kids think about how they might split their allowance into saving, spending and giving back to help them better understand money management.

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20 Percent Of Americans In Relationships Are Committing Financial Infidelity





Nearly 30 million Americans are hiding a checking, savings, or credit card account from their spouse or live in partner, according to a new survey from That’s roughly 1 in 5 that currently have a live in partner or a spouse.

Around 5 million people — or 3 percent — used to commit “financial infidelity,” but no longer do.

Of all the respondents, millennials were more likely than other age groups to hide financial information from their partner. While 15 percent of older generations hid accounts from their partner, 28 percent of millennials were financially dishonest.

Regionally, Americans living in the South and the West were more likely to financially “cheat” than those living in the Northeast and Midwest.

Insecurity about earning and spending could drive some of this infidelity, according to industry analyst Ted Rossman.

When it comes to millennials, witnessing divorce could have caused those aged 18-37 to try and squirrel away from Rossman calls a “freedom fund”.

“They’ve got this safety net,” Rossman said. They’re asking: “What if this relationship doesn’t work out?”

As bad as physical infidelity

More than half (55 percent) of those surveyed believed that financial infidelity was just as bad as physically cheating. That’s including some 20 percent who believed that financially cheating was worse.

But despite this, most didn’t find this to be a deal breaker.

Over 80 percent surveyed said they would be upset, but wouldn’t end the relationship. Only 2 percent of those asked would end the relationship if they discovered their spouse or partner was hiding $5,000 or more in credit card debt. That number however is highest among those lower middle class households ($30,000-$49,999 income bracket): Nearly 10 percent would break things off as a result.

Roughly 15 percent said they wouldn’t care at all. Studies do show however that money troubles is the leading cause of stress in a relationship.

That’s why, Rossman says, it’s important to share that information with your partner.

“Talking about money with your spouse isn’t always easy, but it has to be done,” he said. “You can still maintain some privacy over your finances, and even keep separate accounts if you and your spouse agree, but you need to get on the same page regarding your general direction, otherwise your financial union is doomed to fail.”

With credit card rates hovering at an average of 19.24 percent APR, hiding financial information from a partner could be financially devastating.

But, Rossman adds, it’s not just about the economic impact but also the erosion of trust.

“More than the dollars and cents is that trust factor,” he said. “I think losing that trust is so hard to regain. That could be a long lasting wedge.”

Kristin Myers is a reporter at Yahoo Finance. Follow her on Twitter.

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7 Examples Of Terrible Financial Advice We’ve Heard





Between television, radio, the internet and well-meaning but presumptuous friends and family, we’re inundated with unsolicited advice on a daily basis. And when it comes to money, there’s a ton of terrible advice out there. Even so-called experts can lead us astray sometimes.

Have you been duped? Here are a few examples of the worst money advice advisers, bloggers and other personal finance pros have heard.

1. Carry a balance to increase your credit score.

Ben Luthi, a money and travel writer, said that a friend once told him that his mortgage loan officer advised him to carry a balance on his credit card in order to improve his credit score. In fact, the loan officer recommended keeping the balance at around 50 percent of his credit limit.

“This is the absolute worst financial advice I’ve ever heard for several reasons,” Luthi said. For one, carrying a credit card balance doesn’t have any effect on your credit at all. “What it does do is ensure that you pay a high interest rate on your balance every month, neutralizing any other benefits you might get from the card,” Luthi explained. “Also, keeping a 50 percent credit utilization is a surefire way to hurt your credit score, not help it.”

Some credit experts recommend keeping your balance below 30 percent of the card limit, but even that’s not a hard-and-fast rule. Keeping your balance as low as possible and paying the bill on time each month is how you improve your score.

2. Avoid credit cards ― period.

Credit cards can be a slippery slope for some people; overspending can lead to a cycle of debt that’s tough to escape.

But avoiding credit cards on principle, something personal finance gurus like Dave Ramsey push hard, robs you of all their potential benefits.

“Credit cards are a good tool for building credit and earning rewards,” explained personal finance writer Kim Porter. “Plus, there are lots of ways to avoid debt, like using the card only for monthly bills, paying off the card every month and tracking your spending.”

If you struggle with debt, a credit card is probably not for you. At least not right now. But if you are on top of your finances and want to leverage debt in a strategic way, a credit card can help you do just that.

3. The mortgage you’re approved for is what you can afford.

“The worst financial advice I hear is to buy as much house as you can afford,” said R.J. Weiss, a certified financial planner who founded the blog The Ways to Wealth. He explained that most lenders use the 28/36 rule to determine how much you can afford to borrow: Up to 28 percent of your monthly gross income can go toward your home, as long as the payments don’t exceed 36 percent of your total monthly debt payments. For example, if you had a credit card, student loan and car loan payment that together totaled $640 a month, your mortgage payment should be no more than $360 (36 percent of $1,000 in total debt payments).

“What homeowners don’t realize is this rule was invented by banks to maximize their bottom line ― not the homeowner’s financial well-being,” Weiss said. “Banks have figured out that this is the largest amount of debt one can take on with a reasonable chance of paying it back, even if that means you have to forego saving for retirement, college or short-term goals.”

4. An expensive house is worth it because of the tax write-off.

Scott Vance, owner of, said a real estate agent told him when he was younger that it made sense to buy a more expensive house because he had the advantage of writing off the mortgage interest on his taxes.

But let’s stop and think about that for a moment. A deduction simply decreases your taxable income ― it’s not a dollar-for-dollar reduction of your tax bill. So committing to a larger mortgage payment to take a bigger tax deduction still means paying more in the long run. And if that high mortgage payment compromises your ability to keep up on other bills or save money, it’s definitely not worth it.

“Now, as a financial planner focusing on taxes, I see the folly in such advice,” he said, noting that he always advises his client to consider the source of advice before following it. ”Taking tax advice from a Realtor is … like taking medical procedure advice from your hairdresser.”

5. You need a six-month emergency fund.

One thing is true: You need an emergency fund. But when it comes to how much you should save in that fund, it’s different for each person. There’s no cookie-cutter answer that applies to everyone. And yet many experts claim that six months’ worth of expenses is exactly how much you should have socked away in a savings account.

“I work with a lot of Hollywood actors, and six months won’t cut it for these folks,” said Eric D. Matthews, CEO and wealth adviser at EDM Capital. “I also work with executives in the same industry where six months is overkill. You need to strike a balance for your work, industry and craft.”

If you have too little saved, a major financial blow can leave you in debt regardless. And if you set aside too much, you lose returns by leaving the money in a liquid, low-interest savings account. “The generic six months is a nice catch-all, but nowhere near the specific need of the individual’s unique situation… and aren’t we all unique?”

6. You should accept your entire student loan package.

Aside from a house, a college education is often one of the biggest purchases people make in their lifetimes. Often loans are needed to bridge the gap between college savings and that final tuition bill. But just because you’re offered a certain amount doesn’t mean you need to take it all.

“The worst financial advice I received was that I had to accept my entire student loan package and that I had no other options,” said Gina Zakaria, founder of The Frugal Convert. “It cost me a lot in student loan debt. Now I tell everyone that you never have to accept any part of a college financial package that you don’t want to accept.” There are always other options, she said.

7. Only invest in what you know.

Even the great Warren Buffett, considered by many to be the best investor of all time, gets it wrong sometimes. One of his most famous pieces of advice is to only invest in what you know, but that might not be the right guidance for the average investor.

In theory, it makes sense. After all, you don’t want to tie up your money in overly complicated investments you don’t understand. The problem is, most of us are not business experts, and it’s nearly impossible to have deep knowledge of hundreds of securities. “Diversification is key to a good portfolio, and investing in what you know leads to a very un-diversified portfolio,” said Britton Gregory, a certified financial planner and principal of Seaborn Financial. “Instead, invest in a well-diversified portfolio that includes many companies, even ones you’ve never heard of.”

That might mean enlisting the help of a professional, so make sure it’s one who has your best interests at heart.

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