Note: I wrote this as an email to my Dream Career Project subscribers in 2018. I've updated it to republish here. I also have made a video on YouTube on how to answer this question

Congratulations! You've applied for an exciting job and received an invitation to have an informal chat on the phone with the hiring manager (or, heaven forbid, one of those dodgy recruiter people) about the role. This is a good sign. Apart from giving you a bit more information on the role and selection process you can expect that they're going to ask a few questions to validate your relevance to the advertised job.

Including one dreaded question:

"What is your current salary?"

I remember the surge of fear I would feel when asked this in the early years of my career. I was afraid of saying the wrong thing and selling myself short.

What if I told them my current salary and then they only offer me that when I think I am worth so much more? What if I ask for 5k more but they would have been happy to pay me 10 or 20k more? What if…what if….what if?!

But, for the majority of situations, that's not how that question works. Let me tell you why.

Why (most) hiring managers ask about your salary

It's about not wasting people's time.

Imagine if a hiring manager only had a $80-90k salary budget for a role and they have a face-to-face interview with this awesome candidate who they think is almost too good to be true. They seem way overqualified. Why are they even wanting this role? Then they ask about salary and find out they are looking for $150k.

Bugger.

They cannot afford that, not even close, so now they have to let this person down AND keep looking for more realistic candidates.

If only they had asked about salary upfront they would not have wasted hours of everybody's time.

Knowing current salary places you in the market

Knowing current salary helps identify your place in the market. This can actually be a good thing.

Imagine someone else is recruiting for a role and they think the budget is $110-130k. Then they interview you and, by asking your salary, they know you are currently on $100k.

Contrary to what most scare-mongers want you to believe, this would not immediate ruin your chances. In fact it might actually help your chances.

Why? Because they would know that you might be on the move up in your career and even if you don't have all the boxes ticked this role might be the perfect stretch for you. Then you interview blindingly well and it comes down to you or the experienced gun who is $30k more expensive…now they have an interesting choice to make.

Depending on the mindset of the hiring manager you could very well get that offer.

But if you had kept the salary data in the dark, made them assume a level playing field, then you would almost never be offered. The obviously more experienced person would be offered because they'd be considered 'more bang for the buck'

When it comes to comparing you with other candidates, by knowing everyone's actual/expected salary, they can use that as a metric to assess everyone on. You might be slightly less experienced but much 'better value' but, if they don't have this data, they have to assume everyone is paid the same and thus compare you to other applicants who are at the higher end of skill spectrum (but also the higher end of the salary spectrum).

Sharing salary information is not the evil thing everyone makes it out to be. That's just assuming the worst of everyone, believing that every person is a malicious player in this game just trying to screw you down.

That's just not the case.

Side note: I'm speaking from my experience and my own personal philosophy but I think the vast majority of hiring managers are not trying to screw you down over a few dollars. Hiring managers are not incentivised to screw people down on a few dollars. They are incentivised to get someone good to join the team within their budget. When they ask about salary they mostly just want some context on you and some indication of your level relative to the rest of the market, and their budget

But there are ways to answer this question so it gives you the best possible outcome.

How to answer the salary question

It can feel like a tricky question to answer and, if you are not prepared beforehand, your off-the-cuff answer is probably doing yourself more harm than good.

Trust me, I've been there.

Let me tell you about the terrible ways I used to answer the salary question.

(Be nice. These stories are from younger times when I was…well I was a bit an arrogant jerk)

Bad Answer 1: Fumbling unprepared rubbish

This happens when you're not prepared for the salary question and while your brain tries to figure out the optimum salary to say based on fictitious game theory your mouth is just vomiting words.

"Oh ummm I'm on…I mean I'm not sure what the actual figure is…I think I get $X…well no so I get paid in monthly cycles based on the tides and the direction of the trade winds…and it includes a special bonus calculation…and they pay for my gym….so it's probably slightly more than $X"

This was my standard method for answering the salary question for years.

Don't do this. Don't be surprised by the question and don't pretend like you don't know how much money you make.

Bad Answer 2: Lying

When I got sick of sounding like a fool who had just suffered a stroke I decided to be a bit more prepared by picking an aspirational salary and lying straight up.

"Oh yeah, I'm currently earning a billion dollars a month….including superannuation."

I remember inflating my current salary by 40% or even 50% some times in a display of sheer youthful arrogance.

This didn't really work and reliable honesty is actually a personal philosophy of mine so in the end I was just disappointed with the results and myself.

Bad Option 3: Be aggressive

Finally, sick of lying through my teeth to no success, I switched to the aggressive fuck you approach.

"I'm not telling you my salary. That's personal. You tell me how much you want to pay me and I'll tell you if I'm interested."

Younger Zac was certainly not going to write any books about how to win friends and influence people that's for sure.

And surprise surprise, none of these methods worked in my favour. The first one made me sound like an idiot, the second just put me way out of contention on most roles, and the third was just unnecessarily aggressive.

Now I know better. Let me tell how to answer the salary question smoothly and in your best interests. There are three good options I will cover below. But if you prefer to watch my ugly beautiful mug talk through these options you can watch the video here:

Good Answer 1: What is the budget for the role?

This is the ol respond to a question with a question trick. Not everyone's cup of tea and some hiring managers might even find it annoying but if they are coming from the place of just ensuring you are both in the same ballpark they should not have problem with it.

If the role has a specific budget they should be willing to be completely clear and upfront about it.

If a recruiter is cagey or avoids answering it's a warning sign. They might just be one of the dodgy ones.

Say this and then wait. No one has a right to demand you tell them and if you really do not feel comfortable divulging your current pay you don’t have to.

Having a firm belief or behaviour that you stick too is ok. Just don't waver

A smart recruiter will find another way to figure out where you sit in the market. As an example I often ask "What sort of money would you expect a role like this to pay?" or "What money are you looking for in your next role?"

Good Answer 3: The Double Truth (I'm on $X and I'm looking for $Y)

This is a great answer because you're being 100% upfront. Most recruiters will respect that.

It also gives you an opportunity to get feedback on your expected salary. If you have overshot the market you will quickly be told that. This is great information to have early rather than going through the hassle of interviewing only to be disappointed with the offer.

The trick to really making this approach work for you is that you must be able to justify why Y > X. Wanting a 40% pay bump 'just because' is not a good answer. You must be able to sell them on why you are worth $Y (hint: knowing and justifying your own value is extremely important in interviewing).

This is my preferred answer, both from a personal perspective and from the hiring manager's perspective. Try it next time and see what response you get.

There you have it. Hopefully you laughed at the examples of my early stupidity but also learned some techniques for answering the dreaded salary question.

If you use any of these in your next interview I'd love to hear the result. Send me an email with your stories.

Also, let me know what other methods you have tried to answer the dreaded salary question.