Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

The One Wealth-Building Skill Your Kids Must Master

By Casey Kelly-Barton - Jan 25, 2015 at 11:25AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Learning to negotiate well is crucial to earning and saving -- and the earlier you start, the better.

Negotiation is a skill worth learning. Depending on whose statistics you're looking at, proper salary negotiation can add anywhere from $500,000 to $1 million dollars to the average American worker's lifetime earnings. Negotiating can also save money on car, home, and other major purchases, and a good negotiator is almost always a good listener, which can mean stronger relationships at work and beyond.

With all of these benefits, you'd think everyone would negotiate whenever possible. But according to a survey PayScale published this month as part of its salary negotiation guide, more than half the respondents said they have never negotiated their salaries. Not once.

Why not? According to PayScale, almost half of the workers (47%) who've never negotiated said discomfort with salary negotiations and the fear of being labelled "pushy" are holding them back. And that discomfort and fear are costing people real money -- again, anywhere from $500,000 to a million dollars over the course of a career.

Make negotiation a lifelong practice
The secret to getting comfortable with negotiation -- and not coming on too strong -- is practice. Many of us only negotiate when the stakes are high, such as when we're buying a car or a home, or we're seeking a better starting salary or a raise. No one likes practicing under pressure.

But if you make a family habit of encouraging your kids to negotiate and modeling your own efforts at negotiation, your kids are more likely to ask for, and get, the salary they want when they start working. How likely? According to PayScale, three-quarters of the surveyed workers who negotiated a raise got at least some increase in pay. Forty-four percent got every dollar they asked for, just by using their words. And a higher first salary is the basis for bigger raises down the line. How do you start teaching your kids this wealth-building skill?

Teach your kids to plan before they ask
Planning and research underpin good negotiations. If there's something your children want -- a larger allowance, different chores, or the right to stay up later -- have them make a request that includes facts to support their position. Ask questions about how the changes they want would make things better for them and benefit the family as a whole. If their reasons aren't strong enough, make a counteroffer, or tell them you need to see better reasons before you'll consider the change.

Teach your kids to listen well 
Getting what you want while making the other party glad to deal with you is the holy grail of bargaining. The first step to win-win deals is teaching your kids to listen to what the other person wants and find ways to work together. This approach is especially crucial for women, because research shows that women who advocate for themselves at work are disproportionately likely to be penalized for it.

A study cited in the Harvard Business Review found that the only negotiating strategy that eliminated that backlash for women was what Kennedy School senior lecturer Hannah Riley Bowles calls the "I-We" strategy. It involves making sure the person you're negotiating with knows you're on their side even as you advocate for yourself. It's a good strategy across the board, but it's especially helpful for girls and women.

Make negotiating a game 
Family game night and car trips are ideal times for mock negotiations, preferably for something so outrageous -- a unicorn, the Dallas Cowboys -- that your kids won't be tempted to turn it into a real dealmaking session halfway through. When the faux deal is done, you can have other family members give an Olympic-judge style number rating to each negotiator and explain their reasons.

Do dress rehearsals for real talks
Practicing an actual negotiation and getting feedback is recommended by University of Michigan professor George Siedel in his book Negotiating for Success: Essential Strategies and Skills. (Full disclosure: I'm currently enrolled in an online course on negotiation taught by Seidel.) Because we can't predict exactly how a negotiation will go, rehearsing a few outcomes is smart preparation. This can help teens who are looking for jobs or who want to appeal a grade at school without alienating the teacher. You can find more negotiation activities for kids by age group here.

Do your homework and show your report card
When your bargaining skills score you a bigger paycheck, cheaper house, or lower car payment, make sure your kids know about it, and tell them how you did it. If your skills are weak, brush them up. PayScale's salary-negotiation portal has step-by-step resources for working adults and new college graduates. For a broader perspective, Harvard Law School's Program on Negotiation blog covers everything from win-win strategies to family disputes and the Syrian conflict. Make negotiation a habit, and you'll give your kids a tool that helps them earn more at work, pay less for big purchases, and build wealth.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
652%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/08/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.