Negotiating is an important personal finance skill that can help...

Negotiating is an important personal finance skill that can help you earn more and pay less. Credit: Getty Images/iStockphoto/fizkes

Negotiating is an important personal finance skill that can help you earn more and pay less. Whether you’re discussing a job offer, dickering at a car dealership or just trying to work out a budget with your significant other, the ability to bargain effectively can have a huge impact.

You don’t have to be a jerk to be persuasive. The best negotiation tactics allow both sides to win, says Kwame Christian, host of the "Negotiate Anything " podcast and director of the American Negotiation Institute. Confrontational approaches — debating, badgering or insisting on your own way — make other people defensive and less willing to come to an agreement, Christian says.


Most managers expect job candidates to negotiate their salaries, but many people don’t even try when they’re offered a job, according to surveys by Robert Half, a human resources consulting company.

You can prepare for your negotiation by checking salary ranges from the U.S. Bureau of Labor Statistics, salary comparison sites such as Payscale or, company review sites such as Glassdoor, or Robert Half’s salary guides.

"People make the mistake of not preparing enough, and that’s one of the single best things you can do to be effective in a negotiation," Christian says.

In general, the person with more information should make the first offer because that’s the "anchor" around which the discussion will revolve, Christian says. Wait for the person hiring you to name a figure so that you don’t inadvertently ask way too much or too little. (If you’re negotiating a raise for a job you already have, you probably have as much information as your manager and can be the first to name a dollar amount, he says.)

Settle on the salary before switching to other forms of compensation, such as a flexible work schedule, a new title, the ability to work remotely and paid time off, he recommends.

"If you start off with the creative options, they might feel like they’ve given you enough," Christian says.

Buying a car

In most negotiations, you’ll want to preserve a good relationship with the other person. Buying a car, however, is typically a "purely transactional" interaction so you can bargain harder, Christian says.

Research the car you want thoroughly before you go to the dealership. Look for the invoice price on car comparison sites such as and ask several dealerships to give you their best price on the car.

"Find the lowest-price comparison, and then use that as your starting offer," Christian recommends.

Knowing your bottom line — the maximum you want to spend on the vehicle — is particularly important because dealerships will often draw out the negotiating process to wear you down and get you to pay more, Christian notes.

"I need to know very clearly what my walk-away point is," Christian says.

Budgeting with your partner

A recent survey by Fidelity Investments found that couples who communicate well are more likely to expect a comfortable lifestyle in retirement, rate their household’s financial health as excellent or very good and say that money is not their greatest relationship challenge.

But communicating well about money is hard, because "money is emotional," Christian says.

He cites the experience of starting his own business, when his wife was distressed at the amount that they were spending. Christian was raised in an affluent family and didn’t worry much about money, while his wife was raised by a single mom and experienced bouts of homelessness.

"Money is survival to her," Christian says.

Rather than discounting her experience or arguing, Christian says he asked a lot of questions and acknowledged that her emotions made sense, given her past.

"If you just jump to problem-solving, the person doesn’t feel validated," Christian says. "The emotional problem is still there."

Only after summarizing what each partner wanted did the couple start negotiating an outcome to meet both needs:

Liz Weston is a columnist at NerdWallet, a certified financial planner and the author of "Your Credit Score." Email: Twitter: @lizweston.

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