Here are 4 times I used negotiation to improve my cash flow.
Negotiating is a skill that, if used properly, can significantly improve your cash flow by allowing you to either save more or earn more. Over the years, I have successfully used this skill to help me lower my bills or improve my income on several different occasions.
While it won’t always make a huge difference, learning how to negotiate will save you some serious money over the years, and could potentially make you a bunch more.
Today, I’d like to share with you four of these occasions, and the lessons learned that can help you take your negotiating skills to the next level.
I lowered my phone bill by 10% for a full year
This was the first time that I successfully negotiated with a large corporation. Before this, I never really considered negotiation as a possibility and knew nothing about how to negotiate. I just took whatever rate was given, trusting that companies would provide the fairest rate for consumers because “they must know best.”
I had been with the cell phone company for two years. It had generally been smooth-sailing, until one day I received a hefty $200 phone bill for going beyond my monthly limit of long-distance calls. As a student struggling between two different part-time jobs and school who still had difficulty breaking even every month, that $200 bill was a major blow to my personal finances.
Dismayed, I decided to give the company a call. Of course, I had very little hope in mind because it was technically my fault, but I was also disappointed that the company provided no warnings and no way for consumers to track their own minutes during the month. I merely wanted to work out a plan to pay the extra expense over the next few months, hopefully interest-free.
To my surprise, the customer representative who answered the phone was quite accommodating. He ended up giving me a 20% discount on the $200 bill. That was a good step, but I was still stressed. He then went one step further, and actually reviewed my account and put me on a promotional plan that saved me 10% every month for a full year.
- Change your mindset about rates companies quote you. Not all of them are set in stone.
- Do not be afraid to reach out if you genuinely need help. Customer service representatives are willing to help you. Remember that losing a customer is a lot costlier than keeping one for your service providers.
- Companies are willing to negotiate because some money is better than nothing for them.
I lowered my car insurance premium by 15%
Fast forward a few years and I was no longer a timid student. Armed with the confidence I gained from successfully negotiating down my phone bills, I decided to take a more proactive approach when it came to negotiating.
My attention first went to my car insurance. When I first purchased the car insurance, I had no idea what I signed up for. I was overjoyed by my new car ownership. The insurance was just an obligation that came with it. Little did I know then how much more I was paying unnecessarily.
By the time I finally reached out to the insurance company, I had researched a bit more into negotiating, and had read the pamphlet the insurance company provided more carefully. I proactively asked for all discounts that could be applied, and requested a comprehensive review of policy and adjusted all details that could impact my premium. For example, since I only drove from home to work, I reduced my yearly mileage significantly, which translated into a lower premium.
After all the discounts and adjustments, my premium went down by 15%. That is a few hundred dollars that could be put towards increasing my net worth!
- Know what you sign up for, and ask questions if you come across things you don’t understand. Companies could sometimes add in completely optional items without your explicit awareness.
- Don’t be afraid to ask for discounts. It can help even just to ask, “are there any discounts that are applicable?”
Increased my tutoring rate
When I was in school, one of the side jobs that I did was tutoring. I initially wanted to advertise online myself. However, I quickly realized that it was more difficult than I thought since I didn’t have any established credibility.
I ended up getting hired as a tutor for an agency with an extensive presence in our city. As an undergraduate student with only a reasonably respectable transcript and no formal tutoring experience, I was offered a starting hourly wage. It was reasonable, but was still substantially lower than what I thought I could be making. Nevertheless, I took the opportunity anyway, because, frankly speaking, there wasn’t any better alternative at that time.
I knew that I had to prove myself first before asking for a wage that was closer to my initial expectation. In the following few months, I made sure that I showed up on time well-prepared for every session, and, when other tutors had emergencies, I was always willing to be the back-up tutor for them.
When the quarterly performance review came around, I mustered up my courage and asked for a raise. After reviewing the positive reviews that students and their parents left for my tutoring sessions, the administrator decided to give me an 8% raise. It was a wonderful day.
- Know your worth and demonstrate it.
- Be patient, and keep in mind that recognition doesn’t come overnight.
- Be willing to go the extra mile. Most people will remember it and will reward you for it.
- Try your best to keep your customers happy (without sacrificing your own integrity, of course). Their opinions of you are important.
- Don’t be afraid to ask. If I hadn’t asked, I wouldn’t have been given the raise.
Received employer’s support for my further education
After graduating from university, I went into the workforce, but further education had always been on the back of my mind. After some careful research, I decided to pursue a financial designation to help advance my career.
While many companies offer a tuition reimbursement policy, my company unfortunately did not have a formal policy in place for non-executives.
But I decided to give it a try anyway, and provided the following documents to the human resources department:
- A detailed written document outlining my request, including my rationale for pursuing this degree and the benefits it would bring to the company
- My transcript from the courses I had already taken
- Reference from two senior executives who knew me well.
In the end, my strategy worked, and I was awarded some financial assistance. I was able to advance my knowledge, skills, and save some money.
- Don’t be afraid to ask for something even if it doesn’t exist. Exceptions do happen.
- If you do decide to ask, be polite, professional, and prepared. Spend your time researching how to make a good case, and have all your supporting documents ready.
- Find your allies. They are the people with more influence and can vouch for you. Who are the senior leaders in your work place that you have a good working relationship with? Identify them, and reach out for their support if needed. If they genuinely believe you are a good asset to the company, they will lend you a hand.
Of course, although I have had some successes as outlined above, I personally am still learning how to negotiate.
Negotiation is a skill that requires time and plenty of practice to master, and you will fail many times along the way, just like I have. However, every failure you encounter will push you one step closer to getting something you desire.
Half the battle is getting up the courage to ask, but make sure you’re also prepared. Be sure to know your plans and the options when negotiating bills. Be sure to do your homework and demonstrate why you should be given a raise or other benefits at work.
Learning how to negotiate can be scary at first, but it’s worth it in the end.
This article originally appeared on Money Saved is Money Earned and has been republished with permission.
Bella Wanana is the blogger behind bellawanana.com, a personal finance and lifestyle blog. She loves sharing with her readers the best tips and tricks on personal finance and how to live a balanced but fulfilling life. She is also a freelance writer, and she has been featured on sites like MSN.com, Reader’s Digest, The Financial Diet, Yahoo Finance, and GOBankingRates.