What I Wish I Learned in School About Money Management 9 of 12: The Basics of Financial Negotiation
Negotiation isn’t just for boardrooms or car dealerships. It’s a powerful life skill that can help you lower your bills, increase your salary, reduce your debt and save thousands over time. Yet many people shy away from negotiating when it comes to money — either because they’re uncomfortable, unsure how to start or worried they’ll come off as rude.
The good news is that anyone can learn to negotiate. Even better, financial negotiation is often expected — whether you’re talking to your internet provider, credit card company, employer or landlord.
Here’s what you need to know about negotiating financially.
What is financial negotiation?
Financial negotiation is the process of discussing and reaching an agreement about money. It may be for any number of reasons, including:
Asking for a higher salary or raise
Lowering your credit card interest rate
Reducing medical or utility bills
Negotiating rent
Settling debt
Adjusting the price of a service or product
Why negotiation matters
Here’s why it pays — literally — to negotiate:
Instantly save money. Many companies build wiggle room into pricing. Negotiating for a lower price can help you save on your bills month after month.
You gain confidence. Negotiating builds assertiveness and self-advocacy, which can come in handy in many situations.
You increase your lifetime earnings. When you negotiate salaries or freelance rates, you can increase your earnings for life.
You set better financial terms for yourself. Less interest, lower payments, better deals — it all adds up to increased financial health.
Before you negotiate: Do your homework
Preparation is your secret weapon. Here’s what to do before you jump into a financial conversation:
Know your numbers. Do your homework before you start negotiating. How much are you paying currently? What do competitors charge? What can you realistically afford?
Know your leverage. Are you a loyal customer? Are you bringing in business? Do you have other offers? Use all available leverage to ask for a better price.
Know your goal. Be specific: Do you want a 10% discount? A $2,000 raise? A lower APR? Know what you’re asking for.
Practice. Rehearse what you’ll say, either out loud or with a friend. The more you practice, the less likely you are to freeze up or lose focus.
A step-by-step guide to negotiating financially
Here’s a framework you can use for almost any financial negotiation:
1. Be polite but assertive. Start with a friendly tone. You’re not demanding — you’re having a conversation. Use phrases like:
“I was hoping we could talk about …”
“I noticed that …”
“Is there any flexibility on this rate?”
2. Present your case. Explain why you’re asking for a better rate or higher salary, using facts and logic. For example:
“I’ve been a customer for five years and noticed that new customers get a lower rate.”
“I did some research, and competitors are offering similar services for less.”
“Based on my performance and market rates, I believe a salary adjustment is warranted.”
3. Pause and listen. Don’t fill the silence. Let the other person process what you’ve said and respond.
4. Be ready to compromise. You may not walk away with exactly what you ask for, but they might offer something close. Be flexible and look for a win-win.
5. Get it in writing. If you reach an agreement, make sure it’s documented. Hold on to that email, contract or revised bill for future reference.
Real-life examples of financial negotiation
Here are some examples of negotiating scripts for common scenarios:
Negotiating a credit card rate: Call your issuer and say: “I’ve been a long-time customer, and I noticed my interest rate is higher than average. Can you lower it?” They may reduce your APR on the spot. You can also say, “I’m really trying to pay down my debt, but the high interest rate makes it challenging. I’m thinking of making a balance transfer to another card; I’d reconsider that if you would lower my interest rate.”
Lowering a medical bill: Ask the billing department: “Do you offer financial hardship discounts or payment plans?” Often, hospitals will reduce charges or let you pay over time without interest.
Asking for a raise: Set up a meeting and say: “Over the past year, I’ve contributed to [specific wins]. I’d like to discuss an adjustment in my compensation that better reflects my impact on the company.”
Saving on a monthly bill: Call your internet provider or phone company and say, “I’m looking to reduce my monthly expenses and noticed promotional pricing for new customers through other providers. What can you offer to keep me as a customer?”
Tips for successful negotiating
Follow these tips to negotiate successfully:
Be confident, not apologetic.
Stay calm and respectful — even if you hear “no”.
Don’t accept the first offer unless it’s fabulous.
Be prepared to walk away. Sometimes, the best leverage is your willingness to take your business elsewhere.
Remember: You’ll never get what you don’t ask for.