The secret to planning for financial negotiations

Don’t worry—a negotiation doesn’t have to be adversarial, like in collective bargaining. It can be a cooperative conversation that improves clarity, fosters mutual understanding, resolves potential differences, forges win-win agreements and prevents future problems. 

Negotiation engine and steering

Captaining a ship to a destination is a good metaphor for navigating negotiations to arriving at win-win agreements. It points to two skills you need for successful negotiating: prep and communication. 

Financial preparation (setting goals, limits, acceptable trade-offs and more) comprises the “engine,” propelling you forward in the conversation. Your communication skills “steer” you on course when encountering obstacles, like hidden agendas and hardball win-lose tactics. 

The actual negotiation conversation requires emotional intelligence (EQ) and communication skills as taught in my book Straight Talk: Influence Skills for Collaboration and Commitment (Matt Holt, 2022). But you also need EQ (an understanding of how emotions can impact behaviour) when planning for the interaction. Here are five EQ preparation steps for “tuning up” your financial thinking before meeting to negotiate. 

Step 1: Examine your money experiences and emotions 

Our personal histories, upbringings and life experiences shape our attitudes, values and feelings around money and financial negotiations. They can lead us to plan goals and conversation postures that are self-defeating and passive, or selfish and aggressive. 

Money experiences, math anxiety, budgeting issues and financial hardship can cause us to avoid thinking or planning about money. But tension and conflict can bubble up down the road if we aren’t self-aware and crystal clear on our negotiation-related emotions and financial goals. 

Before you negotiate, take time to think, talk and write about your levels (low, medium, high) for the following:

• comfort with money matters;
• trust in others during money conversations;
• avoidance when planning for a negotiation; 
• and tendency to be too passive or too aggressive when planning or conducting money talks.

Step 2: Monitor your self-talk

Controlling your feelings and impulses around money and financial negotiations requires managing self-talk. That is the voice in your head—what you say to yourself about you, your job, your future, everything. It also includes thoughts and feelings about money and negotiations. This can either sabotage or support your planning and communication about money. 

Identify any self-talk that could be counter-productive to an upcoming financial negotiation. Write down those internal statements that trigger unhelpful reactions.

Self-talk statements like these can lead to feelings of fear and could make you passive in your negotiations:

• “I shouldn’t push hard in this salary negotiation.” 
• “I’m a rookie compared to other candidates.”
• “I’d better not ask for much.” 

And statements similar to the following can lead to feelings of anger, and to becoming aggressive and unreasonable:

• “Last time I bought a car from this aggressive dealer, he bullied me.”
• “This time I’m not going to take his threats of ‘take it or leave it.’”
• “I’ll make him sorry he tried to scare me.”  

Step 3: Change how you talk to yourself

Imagine your mind as a television—and switch channels. Take a negative thought and spin it into one that is positive and more realistic and has a less pessimistic, upsetting perspective. For practice, take the above examples and adjust the problematic self-talk.

Instigate feelings of self-assurance and a bold “ask” for your negotiations with statements like these:

• “I’ve done my homework on the industry.”
• “I bring fresh energy to the job.” 
• “I’m confident about what I’m asking for.”

Create feelings of cooperation with firm but fair straight talk, as in these examples:

• “This car dealer isn’t my enemy; he’s just doing his job. He might have a hard-nosed boss breathing down his neck.” 
• “To build rapport, I can listen non-defensively.”
• “Knowing my bottom line, I can share how my offer is in line with how other dealers are pricing.” 

Step 4: Plan your negotiating points

Most people skip the first three steps and start their negotiation prep here. But your negotiation points are crucial to managing your mindset and emotions. Now you’re ready to map out the following financial thinking elements:

Desired goal 

Ask yourself: What are my financial targets for the negotiation? Would adjusting my self-talk help you to be more appropriately bold and assertive, or less demanding and aggressive? 

Opening strategy

Decide whether your goal is your opening offer or if you’ll employ the common tactic of starting high, so there’s room to get to a lower but acceptable resolution. A higher-than-acceptable offer followed by gradual concessions can protect you from prematurely acquiescing to a lowball offer, but it may also block or drag out resolution. Know when and where you are willing to bend.

Your walk-away limits

Whether you are borrowing money, discussing kids’ allowances, arranging your finances or working on a business contract, know your bottom line—your red line—and other options. That’s called BATNA (best alternative to negotiated agreement). It prevents you from buckling to a lowball offer. It also buffers you against intimidation, “take it or leave it” bluffs and other hardball tactics.

Boundaries, trade-offs and terms

Ask yourself some important questions: Could other settlement terms compel me to adjust your walk-away limits? What assumptions should I avoid? What boundaries do I want to set up?

Some people don’t make their expectations explicit, which can lead to surprised disappointment later. Knowing your acceptable trade-offs helps you negotiate astutely.

Motivations

A win-win mindset is less critical in transaction-based conversations, such as talking to a car salesperson or haggling with a street vendor. 

In on-going relationship negotiations—like working out finances with a romantic partner, crafting a co-ownership agreement with a relative or forging a business partnership—a win-win mindset paves the way to goodwill, mutual satisfaction, fair solutions, and lasting commitment versus grudging compliance. 

If you suspect the other person won’t play nice, Robert H. Mnookin’s book Beyond Winning: Negotiating to Create Value in Deals and Disputes does a good job of explaining how to tackle win-lose situations.

Step 5: Visualize the conversation and outcome

Mark Twain wrote, “My life has been a series of terrible misfortunes, most of which never happened.” He was highlighting how we expect negative outcomes even before they occur. Actors have “dress rehearsals,” but instead do you have “dread rehearsals”? That’s where you imagine the bad outcomes of a negotiation.

Instead, train your brain to expect good outcomes by mentally rehearsing a positive negotiation. Vividly picture each step of the conversation—the numbers you first offer, your communication skills and the win-win resolution. Include visualizing some setbacks, like yourself reacting defensively or the other person using a hardball tactic. Then picture yourself regaining poise by taking a breath and using encouraging, positive self-talk.

The bottom line

By using self-awareness and positive self-talk while you plan, you can improve your financial thinking. Applying these internal emotional intelligence skills is just as important as employing your external communication skills during the negotiation itself. 

Rick Brandon, Ph.D., is president of Brandon Partners, a global corporate training firm offering workshops on Interpersonal Savvy and Political/Organizational Savvy. His new book, Straight Talk: Influencing Skills for Collaboration and Commitment, comes after his Wall Street Journal bestseller Survival of the Savvy: High-Integrity Political Tactics for Career and Company Success. With 30 years of performance improvement experience, Brandon has trained hundreds of thousands at companies worldwide through his courses, including scores of Fortune 500 companies. He is a distinguished faculty thought leader for the Institute for Management Studies, where in one year alone he appeared in 21 cities as the institute’s most-requested speaker. Brandon received his B.A. in psychology from Case Western Reserve, an M.A. in school psychology from St. Lawrence University, and a Ph.D. in counselling and business management from the University of Arizona in counselling and business management. 

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