You: “Hey Boss, please pay me more money.”
Your Boss: “Sure, here’s your raise!”
Yeah, it pretty much never goes like that! So in order to get what you want, it’s vital that you negotiate like a pro.
Central to the advice we give our clients is that the #1 area of focus in your financial life should be on earning more money to help achieve financial freedom. This has far and away the biggest impact on your financial future.
The #2 most important area of focus is saving more of what you earn.
Negotiating like a pro can have a substantially positive impact in both of these areas.
Keys to Successful Salary Negotiations:
- Know What You Want: If you go into a negotiation of any sort without a clear idea of exactly what you want, it’s unlikely you’ll be thrilled with the outcome and you’ll be left feeling as though something got left on the table. Clearly define your goals in advance of the negotiation.
- Do Your Homework & Prepare: It is helpful to know who you are negotiating with, what they are trying to get out of the negotiation, and what is most important to them. If it’s a new job you are seeking, dissect the job posting word-by-word to understand exactly what they want, and then practice delivering your “pitch” confidently. Your pitch should detail precisely how you would succeed in each individual job responsibility.
- Value-Add, Leverage, and a Fallback Plan: Most often, a negotiation involves some sort of trade. Therefore, the more value you can add, the more you should be able to ask for in return. Having leverage and a fallback plan allows you to truly take a stand for what you want based on your goals (see Step #1). It also helps to have things you are willing to budge on (such as expanded responsibility in exchange for more pay). As an example, if you are in a job in which you feel you are under-paid (who isn’t, right?!), we recommend that you use the negotiation techniques above to figure out all the areas where you can further add value to your company, while simultaneously determining your true worth in the marketplace. With this information in hand, you can negotiate with your current company based on your true value, additional value-add you can bring, and your other realistic options. Your preparation and leverage should result in a positive outcome.
- Know Your Floor, but Don’t Make the First Move: Going into any negotiation, you need to know your floor, or lowest amount you are willing to accept and be happy with. It is also imperative that you don’t share this information before finding out the range that the specific job may be offering. This is most common when negotiating w/ a professional recruiter as they will always ask, and if your floor is below the range for the given job, you’ve already left money on the table!
Negotiating to Save in Unlikely Places
Saving on Home & Auto Insurance
Suffice it to say we are all pretty well numbed by the overload of insurance commercials on TV these days, but don’t let this annoyance keep you from seeking out lower costs on your home/renters and auto insurance:
- Check to see if you have the right amount of coverage: There are a number of considerations for this, so either reach out to us or you can click here to read about how to determine this.
- Know what you have and how much you pay: Collect the details of your current policies and understand exactly what your coverage and benefits are and how much you pay. Only then can you compare apples to apples to see if you’re actually saving money.
- Shop around and get quotes from numerous firms: Request quotes that match either the coverage you have, or the coverage that you’ve determined you need. If what you need differs from what you have, get a new quote from your current provider as well. It’s advisable to stay w/ larger, reputable firms, like Geico, AAA, USAA, Allstate, Progressive, and State Farm, to name a few.
Re-Finance Your Car Loan
Most people don’t know you can do this, but you can find a broker on www.Bankrate.com and in some cases reduce the % rate on your car loan by 2-3% in the current low interest rate environment.
In a recent example, we helped a current client to refinance a 4.99% 5-year car loan down to a 1.9% rate. His monthly payment dropped from $1,150 to $800 over 5 years, with a total cost of $280 in fees and 30 minutes with a notary. Result was total savings on remaining payments of about $7k!
Negotiating Medical Expenses
Everyone’s health insurance is different, but in many cases, simply asking up front or negotiating on the back-end for a reduction in cost can go a long ways with little time investment, particularly if there is going to be any sort of cash payment.
A recent example of this from another client, a dermatologist bill came in at $874 and insurance ended up not covering any cost or applying it to the deductible since it was related to a pre-existing condition.
A 3-minute phone call with an explanation of the situation and a request for consideration resulted in a 20% reduction in the cost (savings of about $175 for 3 mins of time).
Reduce/Eliminate Phone, TV, Internet Costs
This is often as easy as doing your homework, knowing what other offers/options are out there, and calling to negotiate. Most companies value your business and in almost all cases will work with you to reduce your cost if you just ask.
If you want to get even more aggressive on cutting your entire cable/satellite TV bill, you can convert to using Internet TV services with some basic server hardware for your house. This allows you to watch virtually anything via the Internet, on your TV. Details on how are on Andy’s Blog.
There are countless areas where negotiating can positively impact your finances. Call us if you’d like to explore more of them or just would like a little help.