When I reflect on early financial decisions, there’s one biggie that always irks me. It isn’t about debt or misusing credit cards or even taking out too much in student loans. I’m so annoyed with how I failed to negotiate early on in my career.
Like so many people, I didn’t even think to counter a job offer and just leaped at the opportunity to be gainfully employed as a young 20-something. By taking a job with a low salary ($37,500 in New York City in 2012), I also had a low anchor as I moved through my career. So the next time I had an opportunity to switch jobs and negotiate, $50,000 sounded like a lot of money. When the potential employer didn’t even counter my $50,000 ask – I knew I’d come in low. But when it came time for my one-year annual review, I was ready. I managed to go from $50,000 to $70,000 in a single negotiation.
Negotiation is an important financial skill that most people don’t know much about. Here are six of the principles I have used (and still use) in negotiations.
Have (but don’t share) your bottom line
The delicate dance in a negotiation is partially about figuring out the other person’s limits. You don’t want to be figuring out your limits mid-negotiation. It doesn’t matter whether this negotiation is about compensation with a potential employer or calling up your cell phone provider to try and figure out a new plan. Come in knowing exactly the bare minimum you’re willing to accept and have an alternative option should this bottom line not be met. But whatever you do – don’t share the bare minimum.
Avoid giving a “range”
A classic negotiation tactic of headhunters, employers, and even that guy trying to pawn off his old lawn furniture on Craigslist is to ask you how much (or how little) you’ll accept. Think about it from the perspective of a potential employer. You’ve been asked your salary range and said, “$53,000 to $62,000.”
So, you’ve just told a potential employer that you’d accept $53,000 – why would they pay you $62,000? Do not give into the range trap.
One way to avoid it is to brace yourself that it’s coming and instead of letting it catch you off-guard, you can counter with something along these lines:
“I’d rather see if we’re a mutual fit for each other before discussing compensation.”
Have proof of your awesomeness
The easiest time to be negotiating on compensation is when you’re looking to change jobs. It’s a bit harder once you’ve gotten locked into a job. This isn’t to say it’s impossible. You may want to start by letting your manager know that you’d like to have a discussion about compensation, or you can just drop the bomb during an annual review. No matter what happens, you need to go into that conversation armed with proof of everything you’ve done to deserve a raise.
Save praise from clients, team members, and managers throughout the year. Track when you’ve exceeded expectations and have proof of projects that received great feedback or metrics that show something you worked on performed well. Perhaps you increased traffic to the company website by 10% in Q4 and you have the analytics to demonstrate how you were able to achieve this feat.
Be open to non-salary options
Your employer may not always be open to large salary hikes, so be prepared to negotiate on benefits. Try to get one day a week to work remotely or more vacation time or $50 a month toward your cell phone bill. It’s not desperate pleading; it’s all part of the negotiation.
Get some practice with the little things
You may not know exactly when a big negotiation opportunity is going to come your way, so practice with the little things. Did your internet bill just increase $10 a month? Give your provider a call and see if there’s an option to reduce the cost or get a better service. Threatening to go to a competitor (assuming you’ll actually do it) is a pretty effective way to make sure you’re taken seriously.
Did the landlord hike the rent, again? But you’ve always been a model tenant? See if you can get $25 or $50 knocked off.
Don’t buy anything off Craigslist or similar sites without engaging in some negotiation practice!
The worst they can say is no
Don’t let the fear of rejection keep you from negotiating. The worst someone can tell you is no and that just leaves you in the same spot you are right in this moment. You won’t know if you can hike your salary or reduce your cell phone costs without asking. And who knows, they might say yes.
Erin Lowry is a millennial personal finance expert, speaker, and author of the book, “BROKE MILLENNIAL: Stop Scraping By and Get Your Financial Life Together.” She lives in New York City with her boyfriend Peach and their spunky rescue dog Mosby.