The money you make now affects you 30 years later — so imagine yourself in 30 years and look after yourself. Underearning during a working lifetime inevitably results in poverty in retirement age. How much accumulated money could you lose over ca. 30 years by not negotiation a better salary or lesson fee from the start?
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A one-time negotiation handle
$568,834 was the accumulated difference in the financial retirement savings between two job candidates as the result of a single negotiation.
Linda Babock’s book ‘Women Don’t Ask‘ describes an example how $361,171 is the loss between one of two identically qualified candidates looking for their first job.
The first candidate accepts the first offer of $25,000 immediately whilst the second candidate refuses the first salary offer and negotiates an additional $5,000 (i.e. $30,000).
The example goes further by assuming the two people only receive:
- a yearly inflation raise of 3 per cent, and
- it’s a one-time negotiation, i.e. another raise is never negotiate.
Finally, Lind Babock’s example shows that if the second person puts his salary difference into a savings bank at 3 per cent interest, his accumulated savings would amount to $568,834 more than the first candidate.
The result of a one-time negotiation!
What parallels does the example hold for Freelance Teachers?
Many freelance teachers burdened by a lack of self-confidence fail to set a adequately priced lesson rate. They are not alone. Many, many people shy away from the thought of negotiating. At the negotiation table, most accept the first offer believing subsequent raises will soon make it up to the hoped-for income. Just like the example above.
Underearning during a working lifetime inevitably results in poverty in retirement age.
Mikelann Valterra, Money Coach and Financial Consultant, refers to an underearning pattern ? a pattern of not earning your potential.
How freelance teachers fall foul of underearning
Typical patterns of not earning your potential are explained in more detail in the ebook ?Freelance Teachers: What You Need To Know About Setting Your Prices?.
For example:
- How much accumulated money will a freelance teacher be unable to save (lost money) over ca. 30 years of his working lifetime when the lesson rates are first under-priced and then not raised regularly?
- Another way to ensure you don’t under price your lesson rates is to know your resentment number.
Stop! No entry if it goes past your resentment number!
Your resentment number represents the lowest fee you are prepared to work for. In negotiating your fees this is your absolute bottom line. Walk away from negotiations if they cannot pay the minimum ? your resentment number.
If you work below your resentment number it’s not just your current work that suffers, it’s your financial security in retirement age as well.
Your resentment number allows you to make decisions
Linda Babcock’s case study is just one demonstration of how much financial freedom in your retirement age you could lose. So imagine yourself in ca. 30 years time and look after yourself and the quality of your retirement life.
Deciding on your resentment number allows you to make decisions!
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Can You Do Me A Favour?
I’d love to hear about whether you think my article has hit the nail on the head concerning how underearning affects the quality of your financial plans for retirement. Leave a comment in the Add Your Comment box below.
Be specific. The collective insight of the Entrepreneurial Freelance Teachers community will help us all realize what we can or need to do to ensure a good retirement life.
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