Negotiation Secrets That Could Change Your Financial Future

Negotiation is a powerful tool that can improve your financial standing in many ways. It can help you get a higher salary, buy a home, grow your own business, and more.

Becoming adept at negotiating can significantly improve your financial trajectory if you do it right. It isn’t about being pushy in an unappealing way. It’s about being prepared, strategic, and confident—and being ready to negotiate in a variety of circumstances.

“Too often, negotiation is treated as a one-time win, notes Eric Dostal, J.D., CFP, and Managing Director at Wealthspire Advisors.

“But the real value is cumulative … the smartest negotiators don’t just fight for a bigger number, they structure for long-term flexibility, tax efficiency, and control.”

When to Use the Power of Negotiation

Negotiation is engaging in positive discussion to formulate a beneficial and satisfactory agreement for the parties involved.

Negotiation isn’t only used in large business deals made in high-rise office towers or when buying collectibles in foreign antiques markets. It happens every day, for all sorts of transactions.

Importantly, it’s a tool that you can use to improve your financial prospects in various ways, such as:

• Salary and career advancement: The person most responsible for advancing your career is you. So don’t be afraid to negotiate. Research industry standards for salaries and jobs so you know what numbers make sense. Clearly articulate your experience and expertise. Demonstrate how your contributions can specifically help your department, division, or company succeed financially. This preparation can help you make a strong case to managers for a higher salary or a move up the career ladder.
• Home buying and selling: Advertised home prices aren’t fixed prices, and there are a lot of ways to maneuver. Depending on the market, if you’re a buyer, you might offer a lower price or alternatively, ask for more than what’s already included. Negotiating can help change the purchase price, closing costs, agent fees, cost of renovations, and more.
• Small- and medium-sized business success: Launching your own business can be hard on your personal finances if you’re using your own money to get started. So getting the best deals is crucial. Negotiate with suppliers, customers, and other stakeholders to save money and foster strong relationships.
• Client contracts: You can also negotiate with clients when renewing contracts to ensure profitability.
• Large purchases: Whether for business or in your personal life, big-ticket items (like office equipment or a car) are the norm. Negotiating is key to saving money, getting attractive terms on a loan, and putting the funds you save to work elsewhere.

Strategies for Effective Negotiation

Negotiation is an art. With practice and mastering the right techniques, you can learn to do it well.

• Do your homework: Research the market you are attempting to negotiate, whether that concerns your salary or the cost of a home. Understanding the relevant data will give you valuable insight to improve your negotiating position.
• Communicate clearly and confidently: Speaking with confidence can strengthen your proposal, particularly if what you say is backed up with the right data. Confidence positively influences how people see you and your value proposition. Articulating your points well signals to others that you’re a professional with something of value to offer.
• Be an active listener: Listening to the other party and understanding their needs can lead to mutually beneficial deals, especially if, knowing their needs, you can easily pivot to a position that improves the chances of a favorable deal for both of you.
• Set your walk-away point: In the middle of a negotiation, it can sometimes be hard to know how flexible to be. By setting your absolute walk-away point, you ensure you don’t accept unfavorable terms. “Understanding your ‘BATNA,’ your Best Alternative to a Negotiated Agreement, is incredibly important,” says Dostal. “When you know what you’ll do if the deal doesn’t work out…you negotiate from a place of strength, not scarcity.”

Example

When negotiating a better salary, Dostal highlights the strategy of anchoring, or “the power of the first number on the table.”

This means that you should announce your figure for the salary you want before your employer makes an offer. That way, you establish the financial reference point, not your employer.

This can influence your employer’s perspective and their counter-offer so that it’s higher than it might have been if you hadn’t taken the lead and set expectations.

“You’ve reshaped the negotiation zone,” according to Dostal.

The Bottom Line

Knowing how to negotiate well is a valuable skill that can provide you with opportunities to improve your financial prospects, now and in the future.

Mastering negotiation is about being informed, calm, self-assured, and ready to walk away. The more you practice, the better you’ll get, and the more successfully you’ll be at getting the financial outcomes that you want.