The Hidden Opportunity Within Negotiation

For the average wage-earner in the US, a single dollar represents 0.4% of their daily earnings, or 0.000017% of the annual income. With that comparison, a dollar bill seems rather insignificant. But it turns out that an American dollar is actually much more valuable than it looks on the face of it.

Lets do a little bit of math for a minute. Imagine that you invest a single dollar into a venture with a 10% compounding annual return. By using the formula A=P(1+r)^t where A is the final amount, P is the principle investment, r is the rate of growth, and t is the number of years, you can calculate the forecasted progress of the investment at any given year. Here is a table showing 10 years of growth at 10% using a principle investment of one dollar.

If you look at it in this light, a dollar is actually worth much more than its face value. After only 7 years, that dollar has almost doubled and it just gets better from there. If you keep that dollar growing for 50 years, by the end to that period you will end up with more than 117 times what you began with. Does that change the way you look at your money?

In short, every dollar counts. This perspective has the potential to completely change your future in multiple ways.

1. How you spend your capital.
2. How you negotiate, whether it be for spending or earning.

We'll start with the first one, spending. As the saying goes, "A dollar saved is a dollar earned." From the perspective of an investor though, its more like, "A dollar saved is dollars earned." In this light, minimizing unnecessary costs becomes very important, both in a business setting and in a household setting. Imagine this scenario. By removing a $10 monthly subscription which you never use, you save $120 per year. Then, by growing that $120 at 10% annual growth over the next 50 years, you will end up with around $14,100, greater by orders of multitude.

Of course, this only works if you actually grow the capital you save. If you don't invest it and grow it, you will be limited to, "A dollar saved is a dollar earned."

Now for the next one, negotiating. 55% of wage-earning people in the US always accept the original wage the hiring company offers. But why?

First, let me tell you the meaning and purpose of negotiating, for anything, salaries, goods, and so on. Negotiate is defined in the Oxford Dictionary as "to formally discuss terms with someone to reach an agreement, particularly regarding pay, contracts, or disputes". What is the purpose of negotiation? To come to a point in an agreement where both parties are satisfied with the outcome.

Lets consider this for a moment. First, we'll start by listing some of the pros and cons of negotiating your wage or salary.

Pros:

• Employer discovers what you are looking for.
• Employer tells you what they're willing to give.
• If you both agree, its great. If you disagree, its also great, because you will discover that this isn't the right job for you.

Cons:

• Slightly uncomfortable

Anything else? Well, it looks like the only thing that would stop you from negotiating would be that it is uncomfortable to discuss it. Negotiating doesn't bother the employer. They have the power and the money, and they get the final say on the wage or salary. But you always have the option for not taking up the job. So its a win win scenario. If you don't negotiate though, it's a lose-win scenario. You lose, they win. So why don't you all just both win?

Another layer to negotiating is the hidden opportunity that lies wherein. Obviously, to get the best scenario for both you and the employer, you want to get the most pay that the employer is okay to pay you, even if it is more pay than the minimum you would be okay with. But if it's more than your minimum, what happens to the rest of the money? Well, usually it goes into a bank account or is used to buy something you really want, or something of the sort. But what if you applied the same principle of investing which I showed earlier?

Consider this: You need a job and you're looking for a minimum salary of $50k per year. So you apply for a job with the $50k salary. But you don't just go with the $50k. You negotiate with the employer. You say $65k, he says $55k, you say $60k, and he says ok. Bang. You're happy, he's happy, everyone's happy, and you have $10k per year more than what you originally wanted.

But imagine that you pretended like you still only got the $50k salary, and set aside the other $10k into an investment with 10% annual growth. Listen to this. In 7 years: $20k, $10k made. In 50 years: $1,170,000, a $1,160,000 gain. Can you believe it?

So negotiating is more than just getting better pay. It unlocks a whole other dimension to you which, if you can tap into it, will completely revolutionize your life. So push past the awkwardness of negotiation, and release unto yourself the potential for exponential growth.

Good luck negotiating!