Those who become rich know one very important thing that most others don’t and it’s that you don’t always get what you ask for but you never get what you don’t ask for. Because of this, the rich cultivate the skill of negotiating to get ahead in their financial pursuits as well as their life as a whole. Let’s dive into how you can apply negotiation skills into your own life in order to get head!
Method #1: Salary Negotiations
Did you know that you can make more money if you negotiate your salary? I believe that most people know that already, however, only a few actually go through with it. Why? The main reason people don’t negotiate is that they are afraid.
Let me ask you this, have you ever thought that you deserve to be paid more money than you are currently earning? If you have thought of it then you may be earning less than you should. Look around for people with similar skills and the same level of experience as yourself and find out how much they are earning. If you want to earn as much as they do, you can either look for another job or simply negotiate your salary with your employer.
I understand that most people don’t feel comfortable talking about money and this also affects them when it comes to negotiating their salary. However, negotiating your salary is not hard when you know what to do and how to go about it. I will show you the best way to negotiate your salary whether you’re new to the working world, are a salaried employee or work as a freelancer.
One of the first things that you need to do is to think of the benefits that negotiating your salary will give you. Thinking of these benefits can help you overcome your fear of negotiating. First, earning more money means that you’ll have more money to spend and save. Also, if you negotiate your base salary, you would earn more money in the future as future pay increments would be applied to a higher salary.
The power of negotiation is extra prominent when it comes to the freelancing world. If you increase your rate as a freelancer, you will earn more while working the same hours and sometimes even less. Talk about getting the best of both worlds! Let’s look at some examples so we can understand this idea better.
Let us assume that you make $4,000 every month as your take-home pay. If you negotiate your salary and get a 5% increase, what this means is that you will have an extra $200 every month or an extra $2,400 every year which you can save or invest. Another example is if your employer offers to pay $1,500 as the base salary but you can negotiate and get $2,000 instead. If the salary should increase by 5% of the base salary, you would get an extra $70 on $1,500 and an extra $100 on $2,000. And as a freelancer you could increase your hourly rate from $50 per hour to $75 per hour, you would earn an extra $25 for every hour you work. Another thing you have to do before you negotiate with an employer is to research as much as possible. The more information you have, the easier it will be for you to negotiate. Know what people with similar skills and experience as you earn in other organizations. And if you are just applying for a job, understand the nature of the job such as your responsibilities and the expectation of the organization.
The next step is to ask for a salary increase. Analyze your strengths and find a way to use them to your advantage. Let the company see how much you can contribute with your experience and what they stand to benefit from your presence.
Method #2: Home Buying
Most people wish to buy a home one day but what most of them don’t know is that they can negotiate a home’s price. Many home sellers expect you to bargain on the price of a home therefore, they may give you a price that is slightly higher than the money they want for their property. Unfortunately, if you take the first offer without negotiating, you may end up paying more for the property.
Now, negotiating the price of a home is not a bad thing and you should never see it as such. Negotiating is a way to get the best deal for any offer. If you are patient enough, you may be able to get an offer that is less than the original price by anywhere from 5% to 15% depending on the supply and demand in the housing market you’re in. Assuming you were able to get a 10% reduction in price for a property that is worth $250,000, you may be able to save as much as $25,000 which would be a good amount to stash aside for a rainy day. If you are buying the property with a loan that requires a 20% down payment, you would have to pay $50,000. However, if you can get a 10% reduction through negotiation, you would only have to pay $45,000 as your downpayment, again leaving you with more money on hand. What this means is that you have more cash to do whatever you want and you may pay a lesser amount as interest.
For you to negotiate effectively there are a few things you need to employ. The first thing, is that you should never take the first offer from a seller without asking for a reduction. They may refuse to reduce the price but you’re never going to know if you don’t ask for it. You have to do your homework before negotiating with a seller. Find out how much it costs to buy the same type of property that you are bargaining for. You can find out by doing a little research on some similar property in the neighborhood. The more knowledge you have about the price, the more confident you will appear.
Another thing that may help you get a good price is to find out the need of the seller. You need to know what is motivating them to sell the house. For some sellers, they may be moving to a new location and just need someone to offer them a good price to sell the house. You need to know if the seller has more time or if they want to sell urgently. Some sellers are emotionally tied to their property and they would prefer a particular type of person in that house. You need to ask yourself if you fit the type of person that they want.
Method #3: Car Purchasing
Another good place to save some money is bargaining a car purchase. As with all the other negotiation methods I have talked about so far, you have to do your homework before visiting a dealer’s shop to get a good price. Remember that the dealers you meet are experts who are trained to sell hundreds of cars every year. They can easily convince you into believing that you are getting the best price even when you are not.
Having more knowledge about the price of the car you want will help you bargain better. In preparation, you can do a quick search online for the average price of the car that you want to get. There is a saying that knowledge is power and it is definitely true in this case. Your bargaining power is related to how much knowledge you have. If you know the cost of a car and how much profit the dealer expects to make, you will appear more confident and you could easily bargain the price.
You also need to be patient to get a good deal. Don’t give the dealer the impression that you are desperate for the car. They may be unwilling to cut down the price if they find out that you have no other option. The car dealer may make you sit in the car or go for a test drive. They are doing this to make you love the car and desperately want it. Remember that it is a business transaction so don’t allow your emotions to get the best of you.
So how much money can you save on your new car by negotiating? You may be able to get as much as a 10% to 15% reduction in the price of the car by following these tips. The best part is that if one dealer won’t accept your price then chances are another will so always remember you’re the one in the driver’s seat (pun intended).
Method #4: Credit Card Balances
Credit card debts usually come with high-interest rates that can be as high as 21%. This means that if you have a credit card debt of $1,000 and you cannot pay on time, you could end up paying up to $210 extra per annum. This amount can even go up through compounding and you may have to pay more money as interest. If you want to pay up your debt faster and even save more money, you can negotiate with your credit card company for a lower interest rate.
If you have $5,000 worth of credit card debt with an 18% interest rate and you only make the minimum payment each month, you may end up paying about $2,900 as interest alone. However, if you can lower the interest rate to 13%, you would only pay about $1,800. That’s a savings of $1,100 and to me that’s a big win! Ask yourself, how would you use an extra $1,100? I’m sure you would have many better uses for it than paying a creditor so let’s talk about how you could negotiate your credit card interest rate.
Many companies issuing credit cards will respond well if you ask them to lower your credit card interest rate. They would rather lower your interest rate and collect some money rather than have you continue to default on your debt repayments. Having lower interest rates on your debt will help you pay off your debt faster, avoid the accumulation of interest, and lower your monthly payment.
A 20 minute call to your credit card company is what it takes. However, most people avoid this call for the fear of rejection. The truth is that most companies would rather lower their interest rate than lose a customer.
Schedule a phone call and make sure you are speaking with someone who’s got the authority to help you. Get straight to the point and remember to tell the truth. They have all your history with them and telling lies may hurt you. You will have an added advantage if you have a good credit score and a history of paying back your debts on time. Mention this while speaking with the person to show that you are a loyal customer.
Method #5: Routine Bills
By cutting how much you pay on your monthly bills like phone, electricity, and cable, you could potentially save a lot of money every month. About 1 out of 4 people use credit card debt to pay for some of these routine bills and not many people know that they can do something to reduce it.
Before calling your service provider, it is important to research and find out if there is a competitor offering a lower rate. If you call your service provider and they tell you that you already have the lowest rate, you can tell them you found a competitor with a lesser rate. Another way to negotiate with your service provider is to try to cancel your subscription. Most of these services will direct you to their retention department for follow up. They would want to do everything possible to retain you and may even offer a discount if you continue using their services. Don’t wait till the weekend or off-hours to call your service provider.
Most customers are also free at that time and it may be difficult to get the attention of the reps. The best time to call is during the regular business hours between 9 am to 5 pm. There you go! By employing these methods, I am confident you’ll be able to grow your wealth by negotiating in as many situations as possible!