Originally Aired: November 17, 2015
Topic: Women Don’t Ask: How Married Women Can Advocate for Their Own Financial Protection, With Dr. Linda Babcock
The Lange Money Hour: Where Smart Money Talks
James Lange, CPA/Attorney
Listen to every episode at our radio show archives page.
Please note: *This podcast episode aired in the past and some of the information contained within may be out of date and no longer accurate. All podcast episodes are intended to be used and must be used for informational purposes only. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment strategy or plan will be successful. Investment advisory services offered by Lange Financial Group, LLC.
|Click to hear MP3 of this show|
- Introduction of Professor Linda Babcock, Expert on Economic Gender Inequality
- Men Are Four Times More Likely to Negotiate Than Women, Research Shows
- Negotiating Is an Invaluable Skill for Use at Work and at Home
- Employers Should Fairly Allocate Opportunities Regardless of Who Speaks Up
- Discrimination in Allocating Opportunities Can Occur Unintentionally
- Women Must Assert Equal Claim to Financial Decisions That Affect Them
- Women Must Educate Themselves About Financial Decisions
- Women Must Know What They Want and Ask Informed Questions
- Negotiation Is About Solving a Problem; It Doesn’t Have to Involve Conflict
- Role Playing Raises Comfort Level and Is Crucial for Exploring Options
- Use a Cooperative Approach to Get What’s Most Important to Both Sides
- Know Your Wants, Do Your Homework, Make a Plan, Negotiate Cooperatively
Welcome to The Lange Money Hour: Where Smart Money Talks with expert advice from Jim Lange, Pittsburgh-based CPA, attorney, and retirement and estate planning expert. Jim is also the author of Retire Secure! Pay Taxes Later. To find out more about his book, his practice, Lange Financial Group, and how to secure Jim as a speaker for your next event, visit his website at paytaxeslater.com. Now get ready to talk smart money.
1. Introduction of Professor Linda Babcock, Expert on Economic Gender Inequality
Dan Weinberg: And good evening and welcome to The Lange Money Hour. I’m Dan Weinberg, along with CPA and attorney Jim Lange. Our topic this week deals with a situation that most people don’t like to think about, but the numbers don’t lie. Millions of married women, either through divorce or by outliving their spouse, will end up on their own at some point, and too many of them just aren’t prepared. They find themselves in a compromised financial position because they didn’t ask the right questions during their marriage to protect their own financial interests. And tonight, Jim and his guest, Dr. Linda Babcock, will talk about the questions women must ask and how they can feel empowered to safeguard their financial future. Dr. Babcock is the James M. Walton Professor of Economics at CMU’s Heinz School of Public Policy and Management and a leading authority on economic gender equality. She’s authored two successful books, including Women, Don’t Ask: Negotiation and the Gender Divide. Dr. Babcock is also the founder and faculty director of the Program for Research and Outreach on Gender Equity in Society, or PROGRESS. It’s sure to be a fascinating and eye-opening conversation tonight, and we urge you to join us by calling in with your questions at (412) 333-9385. And now with that, let’s say good evening to Jim Lange and Dr. Linda Babcock.
Jim Lange: Welcome, Linda.
Linda Babcock: Hi. It’s nice to be here.
Jim Lange: The motivation for this show is … Linda is … Linda’s books, by the way, Women Don’t Ask and then the more recent book, Ask for It: How Women Can Use the Power of Negotiation to Get What They Really Want, I think are groundbreaking books, and I think it’s something that, frankly, every woman should have. Again, the first book is Women Don’t Ask, and her more recent book, Ask for It: How Women Can Use the Power of Negotiation to Get What They Really Want, and the reason I wanted Linda on this show, which is more of a financial show, is because, in my practice as a financial advisor, CPA, and an attorney, I often see women getting the short end of the stick if I don’t proactively stick up for them. And there are going to be four areas that I’m going to mention, although I think Linda’s probably going to say that some of the strategies that she talks about would go to all four of them, or actually six of them, but there’s some enormous problems that if women do not proactively address, that they could find themselves in a seriously compromised financial situation. The issue of when to take Social Security, and not just the issue of when a woman should take Social Security, but also when her husband should take Social Security, and particularly if using the old paradigm that he was the primary wage earner, or, at least, had a bigger earnings record for the purposes of Social Security benefits. A lot of times, although it’s a dying breed, many people still have options with regards to pensions. That is, getting a certain amount of money per month for the rest of your life. Obviously, a reduced amount if you’re going to get a certain amount for your life and your spouse’s life. Decisions regarding life insurance, investing decisions, fairness of equal income after the death of the husband. Some men think that after they die, it’s not so important to provide an equal income and some of the problems with traditional estate plans.
So, Linda is, basically, I think, in her books and please tell me if you think this is a fair characterization, trying to teach women how to stick up for themselves and what they can do to get a win-win situation. Now, of course, your book is more general and it might be work, but it also might be in the marital home. Is that a fair generalization that you’re trying to help women get more and look for win-win situations?
Linda Babcock: Absolutely, and to think of using negotiation as a proactive tool to get what you want, because in our society today, so many things are negotiable, and especially things that didn’t use to be negotiable. You know, we negotiate certainly in our families, we negotiate at work, but we also negotiate with our contractors, our insurance agents, we negotiate with Verizon, all kinds of things, and being successful today really requires knowing how to negotiate, knowing how to ask for what you want, and it’s just critical that women speak up for what they need and negotiate.
Jim Lange: Well, you wrote that “Women don’t ask for what they want, and they suffer severe consequences as a result.” Could you elaborate on that?
2. Men Are Four Times More Likely to Negotiate Than Women, Research Shows
Linda Babcock: Sure. We’ve been doing research for about 10 years at Carnegie Mellon with my colleagues, and what we’ve found is that men are about four times as likely as women to negotiate for what they want. So, women are more likely to just wait to be offered what it is that they want, or they accept the status quo, and you can imagine that this has a lot of consequences for the lives of women. In terms of economically, it might affect her earnings and her promotion abilities at work. At home, it affects her equality about household duties. And so, it has a lot of consequences for women if they don’t speak up because men are just more likely to negotiate for all kinds of things. And again, as I said, women are more likely to just wait, or accept the status quo without negotiating.
Jim Lange: All right. So, you mentioned that sometimes women don’t negotiate as much at work. Is this very important for a woman’s long-term financial future?
Linda Babcock: Absolutely, because you can imagine, of course, the impact on your salary if you don’t negotiate. We did some examples in our book that not negotiating a first salary can cost you over $2 million over the life of your career. That’s a lot of money, lots of money to use when you retire. And so, it’s of course about negotiating over your salary, but it’s also about negotiating at work over things like promotions, about opportunity, about experiences to get where you want with your career, and if you don’t do that, you’re leaving a lot on the table and you’re leaving a lot of power with the people that you work for.
3. Negotiating Is an Invaluable Skill for Use at Work and at Home
Jim Lange: All right. So, in your book Ask for It: How Women Can Use the Power of Negotiation to Get What They Really Want, you don’t just limit your discussion to negotiating salary at work. You actually use it for many other types of negotiations. What might be, let’s say, a non-work negotiation that might be important for women to connect with?
Linda Babcock: Well, I might negotiate with my in-laws about where we’re going to have Thanksgiving, for example. I might negotiate with my insurance company about a claim. In fact, I did that just this very afternoon about paying a claim that I wanted to have paid. It would be negotiating with a partner about division of household duties. And so, just the number of times you could negotiate throughout the day is really just endless.
Jim Lange: Well, I know that you’re certainly not going to condone sexual discrimination, but is it your starting point that women have to be more proactive themselves about initiating negotiations when, maybe by nature, they are not as willing or as prone to negotiate?
Linda Babcock: Yeah, how I think about encouraging women to negotiate is that we’re just trying to level the playing field for women, because men are already negotiating a lot, and as a result, there’s a lot being left on the table for women. And so, I’m just encouraging them to speak up so that they can gain equality in our society.
Jim Lange: And can you give us a few examples … let’s even do one or two work examples, and maybe one or two non-work examples, where, let’s say, failing to ask or failing to negotiate can really have a negative impact on a woman’s career, both salary and enjoyment of work, et cetera?
Linda Babcock: Yeah, so I’ll tell you one work example that I hear a lot from women that I talk to, and that is that women often work very hard and are very good at their jobs, and what happens is that they just get a lot of work piled on top of them, so they just keep adding and adding and adding to the amount of responsibilities that they have without then getting a better title, a better salary, about actually getting a promotion. And so, I think women are often waiting for their supervisor to say, “Oh, you’re doing so much! Let’s promote you.” And that usually doesn’t happen, and so what I like to advise women is that if they are taking on responsibility, to think about the job title that is commensurate with what they’re doing and to negotiate for that change in title, change in responsibility, change in salary. So that would be an important work example of things that women would be leaving on the table by not negotiating.
Jim Lange: And I’m a boss myself, and I try to be as fair as I can. On the other hand, frankly, if I notice that one person is competently doing a lot of things that I ask them to do, and then if I ask them to do something that might be a little bit outside of their job description and they do it well, it’s very tempting to just give them the next project, and then if I’m not thinking and then at review time say, “OK, you know, you deserve a 4 or 5 percent raise,” but perhaps they have elevated their position in a way that they deserve more. Is that fair?
4. Employers Should Fairly Allocate Opportunities Regardless of Who Speaks Up
Linda Babcock: I think that’s fair, and it’s not that you are trying to discriminate against your employees. I’m sure, Jim, that that’s the last thing that you’re doing! I know you well. That’s not the kind of thing that you would do. But it’s that supervisors don’t always have everybody all the time on their radar screen thinking about what they need and what they want. And so, you may be overlooking some employees because they’re not speaking up, and that’s what I’m really trying to get people that manage others to think about is to try to allocate resources, allocate opportunities more equitably, not just based upon who negotiates because women may not be speaking up.
Jim Lange: OK, so are there examples where, let’s say, people who are enlightened or do believe in equality and have, let’s say, a feminist side to them where they might find themselves in a position that they’re not giving women really a fair or equal opportunity just because women aren’t asking?
5. Discrimination in Allocating Opportunities Can Occur Unintentionally
Linda Babcock: Absolutely. So, let me tell you a story, and it’s about my husband. Hopefully, he’s not listening here on the radio. So, we both work at Carnegie Mellon. I’m a professor there, and at the time he was an assistant dean of the Public Policy School, the Heinz College, and one day, I had a bunch of the female PhD students in my office, and at that time, I was the Ph.D. program director. And these students come into my office, and they’re obviously very upset, and they tell me about why they’re so upset. So, here’s what they said. They said that the male Ph.D. students had been assigned to actually teach courses, and the female students had been assigned to be teaching assistants. And of course, being an instructor for a course is much better than being a TA because you’re paid more, you have more interesting responsibilities, you get to teach rather than grade assignments, and teaching looks great on your resume. And so, the male students had the opportunity to teach classes. The women were being the teaching assistants, grading papers and holding office hours.
So, they came to me and they said, “This isn’t fair,” and I agreed with them that this certainly wasn’t fair, and so I marched down to the associate dean’s office because that was the man who handled teaching assignments. Of course, that’s my husband. You know, he’s in big trouble, so I went to his office and I said, “Mark, what’s happening here? Why are the men teaching and the women are TAs?” And he said, “Well, that’s really weird. How did that happen?” And what we did was we pulled out the list of students and we looked at the assignments, and sure enough, the men were teaching and the women were TAs. And I said, “How did this happen?” And he thought for a minute and he said, “The women didn’t ask.” And I said, “Well, what do you mean?” And he said that each of the male Ph.D. students had come to him over the summer and said, “Hey, I want to teach a class. Can I teach a class?” And our students are really great teachers. We would love to have them in the classroom, so he found opportunities for them to teach, and what he realized is none of the women had asked to teach a course.
So, I go back upstairs to my office to talk to the women, and I told them what my husband had said, and they said, “Wow! That’s really weird. We were waiting for an e-mail that would ask us if we wanted to teach. We were waiting for the opportunity.” And it’s actually why I started the research program that I embarked on for the next decade, is I just noticed this phenomenon happening in my college. Men were getting opportunities that were going to help them advance in their career and would get them paid more, and women were waiting for the opportunity. Now, I think what’s important about this story is that my husband didn’t set out to discriminate against women, but that was in fact what he did by the fact that he wasn’t paying attention to who asked and who didn’t and therefore allocating these opportunities more fairly. So, I think it was kind of an eye-opener for everybody, just that this discrimination can happen without us meaning it, and certainly, we want to take steps to correct that.
Jim Lange: Well, interesting that you mentioned your husband, because I do want to veer the conversation a little bit to negotiating with your husband because when we talk about these financial issues, things like when should you take Social Security, it doesn’t sound like it’s really a negotiation-type issue, but, for example, Jane Bryant Quinn actually thinks it’s a women’s issue, because let’s take the paradigm of the old-fashioned, let’s say, economic paradigm where the husband was the primary earner, and he now reaches age 62 and he wants to take his Social Security early so he can have some additional money to spend. But that actually has some very serious long-term financial impact and a very negative impact on his wife. First, they’ll get much less Social Security while they are together, and perhaps even more importantly, if he predeceases her — and if they’re the same age, he is likely to predecease her by maybe five to nine years — then she will have a very reduced lifestyle because A) she won’t be getting two Social Securities, and B) if he takes it early, she’s going to have a reduced Social Security, particularly if that’s a major part of their income. So, how would we, let’s say, address the issue when … let’s even say that the man is not trying to be sexist. He’s just saying, “Hey, I’d like to take my Social Security early.” What are some of the lessons that we can take from women not asking in these work settings, and maybe use them towards negotiating with your husband a little bit on Social Security, and other financial issues that we’ll get to?
6. Women Must Assert Equal Claim to Financial Decisions That Affect Them
Linda Babcock: Well, it’s a great example, Jim, because any time there’s this decision that affects more than one person, it becomes a negotiation. And so, a woman, first of all, needs to recognize it as an opportunity to negotiate and understand that she has an equal claim to how that decision gets made, and so really recognizing this is something we need to talk about, we need to think about, we need to brainstorm options about what we could do, and then we really need to play out how this would affect both of us, and then make decisions that are in our interests going forward.
Jim Lange: What would you say to a woman who has been in the habit … and I really fight this, but what would you say to a woman who has been in the habit of letting her husband make financial decisions, and kind of going along with more or less whatever he wanted to do?
Linda Babcock: Well, I think it could have consequences for her, especially the example that you said, in terms of the man taking Social Security early means that the couple would get a reduced amount, and that that’s likely to have a bigger impact on her because of her longer lifespan relative to his. And so, a woman really needs to take control over these decisions and these negotiations that affect her economic financial future.
Jim Lange: And would you also … a lot of times, I actually, when I’m working with a husband and a wife, I actually require both of them to come in, and the only exception I’ll make is if somebody isn’t ambulatory, or maybe there’s an extreme situation, because I do want it to be a full education for both parties. But if the woman is just not used to questioning her husband, do you think that she should just say, “Hey, this is really important. It’s my financial future, and I’m not just going to sit back and listen to whatever he says”?
7. Women Must Educate Themselves About Financial Decisions
Linda Babcock: Well, let me say a couple of things about that. Jim, what you said first is really important, and that is that it’s critical to have both people in the room at the same time discussing financial issues because you don’t want to be in a position where it’s filtered through someone else. So, being there in the room having the discussion is the first point. I guess the second point is really to be knowledgeable about whatever it is you are making decisions and negotiating about. And so, if a woman doesn’t have a lot of experience, or a lot of expertise in the area of financial decision making, she needs to learn a little bit about that so that she can make good decisions for herself. So, getting that information and expertise is really critical. And then, of course, it’s a matter of speaking up for your interests, and knowing what it is you want. But it may not be that you know how to solve the problem, but certainly you know how to express your interests and concerns, and then the husband and the wife, and you, Jim, as the financial advisor, can have a dialogue and a conversation. OK, now that we know what is important to people, what are some options? What are different ways that we could do these things? How could it work out? And then the couple can really look at the portfolio of options on the table and decide what is best for them, given what’s important to them.
Jim Lange: We are here with Dr. Linda Babcock, who is the author of Ask for It: How Women Can Use the Power of Negotiation to Get What They Really Want. I highly recommend this book for women. We’re talking about it in more of a financial context, with how wives can talk to their husbands, but I’m going to really recommend it to every woman, and probably I found it enlightening also. Men should purchase and actually read Ask for It: How Women Can Use the Power of Negotiation to Get What They Really Want.
Dan Weinberg: And it is time for our first break of the evening. Give us a call with your specific questions: (412) 333-9385. The Lange Money Hour will be right back.
Dan Weinberg: And we are back on The Lange Money Hour. This week, Jim is talking with CMU professor Dr. Linda Babcock, a leading authority on economic gender equality. To call in with your questions, give us a ring at (412) 333-9385.
Jim Lange: And Dr. Babcock is the author of Ask for It: How Women Can Use the Power of Negotiation to Get What They Really Want, and even though the show is really more in the financial area, the book really covers negotiation in general, and I’m going to give it an unqualified A-plus very high recommendation for every woman, and actually men, too, who want to get a better perspective. So, Linda, earlier, you said that one of the really important things for a woman, even women who are not used to becoming involved in financial decisions, is that they really do have to be involved, and at least get a certain amount of education and learn what’s going on because it has such an impact on their lives.
Linda Babcock: Absolutely. Education and expertise are really important to becoming a good negotiator. So, let’s just take an example of something that everyone has negotiated about, which is buying a car, right? You would do research and figure out everything about what the car is like and how much people have paid for it in the past before you negotiate for that car, right? Everyone does that. But it’s the same thing in the area of financial decision making. If you’re going to set up an estate plan, if you’re going to set up a financial plan for your retirement, you have to also become expert in that area to understand what are the key terms, what are the key issues, all the things, Jim, that you do in your business, to really understand what the options and possibilities are before you make any decisions. And so, the first piece to being a good negotiator is learning the terrain of what you’re negotiating about.
Jim Lange: Well, I’m going to switch the tables on you a little bit because what often happens, when I have a client that comes in, or a potential client that comes in to see me, when they walk out, they walk out with a huge box of information. They walk out with several books, they walk out with about maybe nine or 10 hours of my workshops that are DVDs on Social Security and estate planning and IRA planning and Roth IRA conversion planning, they walk out with actually the CDs of a bunch of the better radio shows that we’ve done, and a lot of times, the wife will say, “Oh yeah, he’ll go through all this. You know, I’m not too interested myself.” And I want to be polite, and I don’t want to lose business because I’m being pushy. On the other hand, I try my best to say, “No, this is really important.” And then I might even say, “Well, if you’re only going to listen to one thing, or view one thing, or read one thing, here’s what you should do.” So, how would you advise me to get women to be more proactive to stick up for themselves? And then, what would you tell women who typically just haven’t done that because that hasn’t been their role?
Linda Babcock: Yes, and so if they have less expertise than their husband, they may be more intimidated about really being involved in the discussion, and so what you’re doing is absolutely right is giving them material for them to become their own experts. Now, you might want to think about the CliffsNotes version so that it’s a summarized version of that, but absolutely, I think pointing out if you’re going to read one thing, if you’re going to look at one piece of material, what is the most important thing, so that you can make a wise decision for yourself. And that’s really all I’m trying to advocate is people making wise decisions through negotiation.
Jim Lange: All right, well, thank you. That does help. For whatever it’s worth, both the radio archive and the material that I give out, I am very big on table of contents, and it might point to a page. It might point to a timeline in the material if it’s a video or an audio, so somebody can go right to where they want so they don’t have to wade through hours and hours. But I will try to do that because it’s so important. So, we talked a little bit about Social Security. By the way, the difference between getting Social Security right and getting Social Security wrong — you had mentioned $2 million for salary — it can easily be a million dollars. So, if you have somebody who is shortsighted, and then, let’s say, a namby-pamby advisor who isn’t pushing hard, or maybe even doesn’t know the issue, we’re talking about an enormous difference in the quality of life, and particularly if the woman survives.
8. Women Must Know What They Want and Ask Informed Questions
Linda Babcock: Well, that’s when, I think, you have to be ready with questions with your advisor, and this is also a part of being a good negotiator is asking a good question. And so, if you know what you want, you can say to a financial advisor, “Well, tell me the different ways that we could do this,” so that you can have options on the table to then decide upon. And so, to not just have one plan, but what are several plans? What do they look like? And then we can discuss which one is going to be the best for them. But really, to do that, you have to be able to ask questions and know what you want, and that’s where some of this expertise really plays a role.
Jim Lange: Well, this might sound a little self-serving, but I do these workshops every month, and frankly, a lot of couples do come, to be fair, but there’s probably more men than women, and married men. Would you encourage women to get involved and learn, whether they learn best by reading or attending a workshop or listening? Would this be really an important thing?
Linda Babcock: Well, Jim, maybe you should have “women only” workshops where women might feel more comfortable, if they have less expertise, to come and ask questions. You know, students are always asking me in class, “Oh, you know, this may be a stupid question, but …” And I always say the only question that’s stupid is the one that you don’t ask. And so you might think about having a different kind of environment where people with different levels of expertise could ask questions.
Jim Lange: By the way, that is a really interesting idea. So, you heard it first from Linda, which is a “women only” workshop. I have thought about that, and then I thought, “Well, gee, isn’t that discriminating against the men?” Then I thought about having a couple’s workshop but men weren’t allowed to ask questions.
Linda Babcock: Wow, how are you going to enforce that?
Jim Lange: That would be a tough one! But I actually think that that’s a very good idea, and I actually have thought about that, and now I’m going to take that a little bit more seriously.
Let’s go to another financial issue that I often run into. So, let’s assume, for discussion’s sake, that somebody has a traditional pension plan. That is, at their retirement, they’re going to get so much money per month. In your world, as a college professor, in the old days, a college professor didn’t get a retirement plan like a 401(k) or a 403(b), that they could do whatever they wanted to after they retired. They had to, what’s called, annuitize, or basically, take a pension, and they, just like other pension beneficiaries, would often have a choice where they could get … let’s just say, to make up a number, $6 thousand a month that will cover just for the husband’s life, or maybe $5 thousand a month that would cover the husband’s life and a 50 percent benefit to the wife, if he dies first, and then maybe a $4 thousand benefit if the benefit protects both of them. And I know that a lot of advisors, you know, really try to talk people, “Oh, take the maximum and buy insurance,” and all of the numbers I’ve read, not only read, that I’ve run myself, indicate that unless the wife has a serious health problem with a significantly reduced life expectancy, the best course is to take a hundred percent pension for two lives. Husbands don’t want to do that very often. How can I, let’s say, help educate women? How can women, even if they are educated, stand up to their husband, if you will, or negotiate with them to make sure that if he dies that she’s going to be able to maintain lifestyle?
Linda Babcock: Well, I think the first step is obviously being in the room when this is discussed. If you’re not in the room, it’s likely that your interests may not be met, that your concerns might not be addressed as fully as if you were in the room. So, be a part of the discussion. And again, ask questions. You know, “If we did the pension this way, what would it mean? If we did it this way, what would it mean?” And then make your concerns known, and if there’s an option that you like best, you need to ask for that.
Jim Lange: All right, and what do you do if, let’s say … and I have a lot of quantitative types. If you look at my invitations and the way I think, I tend to attract quantitative people, and I think that that’s certainly changing, but the old paradigm is the more quantitative type tends to be the man. Although, by the way, it’s the opposite in my own home. Both my wife and my daughter are engineer/computer science people, including my wife, who by the way, has a master’s in electrical engineering from CMU, which is certainly more quantitative than I am. But let’s say that I tend to attract some quantitative people, and maybe the husband might be a little bit more quantitative, and the wife is less quantitative, but you’re still saying she has to be in the room, she has to understand the issues and she has to look out for her interest?
Linda Babcock: Yes, absolutely, because these are things that are going to be critical for a woman throughout her lifetime, in terms of the assets that she’ll have, the income streams that she’ll have, and so she needs to think carefully for herself, you know, “If my husband or my partner dies before me, what is it I need to survive? What is it I need to live on? And how am I going to ensure that the plan that we, as a couple, decide upon is the one that’s best for us?” And I guess that’s the key phrasing is to think about this, this is a joint decision that couples are making together, and so both voices really need to be heard.
Jim Lange: All right. We’re here with Dr. Linda Babcock, who is the author of Ask for It: How Women Can Use the Power of Negotiation to Get What They Really Want, and even though we’re talking today in the context of financial planning and estate planning, and frankly, protection for women, the book is more general than that, and I think is something that every woman should have, and particularly women going into the workplace and into relationships. So, where you have some quantitative types who think that they’re very smart about investing, and they do some very unusual and unorthodox investments that are, let’s say, risky at best, and if you’re single and you have some stupid investments and you get hurt, well, you know, you made that decision and you have to live with it and life goes on.
But what happens if you’re married? Let’s say that you see your husband doing some things that you don’t think are appropriate. In one case, the woman knew that what her husband was doing was fantastically inappropriate, and if I hadn’t stepped in at one point and said, “If you don’t declare bankruptcy, you’re just going to lose your entire IRA,” and they’re going to be forever compromised because they actually fired me, they went their own way because he wanted to do something unusual. She knew it was a bad idea but didn’t stick up for herself. What would you tell a woman in that situation, let’s say in the two areas: one where the husband is being at least a little bit reasonable, and one where he’s not being so reasonable?
9. Negotiation Is About Solving a Problem; It Doesn’t Have to Involve Conflict
Linda Babcock: Yeah, and it is a matter of, again, sticking up for what you want, and be willing to have a dialogue and a conversation about the issue. You know, when people think about negotiation, I think, especially for women, our research shows, that women find it very anxiety producing. They think it’s a lot about competition and it’s about conflict and it’s about aggression, and so when I think about having that kind of a conversation with my partner, it doesn’t sound so appealing. But the way to think about negotiation is that it’s problem-solving. It’s a dialogue. It’s a discussion. And when you phrase it that way, when you really conceive of a negotiation as a more cooperative endeavor like that, having those difficult conversations like you mentioned, Jim, are going to be a little more easy because I’m thinking about talking to my partner, having a dialogue about his financial decision making that might be questionable, rather than having a conflict about it. And so, I think that can sometimes ease people’s minds to know that it isn’t about conflict, but it’s about cooperation. It’s about discussion. It’s about problem-solving. And approaching negotiation that way can make it a great process for both people involved.
Jim Lange: So, you’re really looking for a win-win here?
Linda Babcock: That’s right. That’s a very popular term, win-win. What it means is, you find an agreement that’s better for both sides than an alternative agreement.
Jim Lange: Yeah, and by the way, the Social Security example is a great one because if Social Security is done right, it’s going to end up being more money for the husband also, as well as a better protection for the spouse.
Dan Weinberg: All right, and when we come back from this quick break, more on economic gender equality with Jim Lange and Dr. Linda Babcock.
Dan Weinberg: And we are continuing our discussion on economic gender equality, marriage, and money with Jim Lange and CMU professor Dr. Linda Babcock.
Jim Lange: And Linda is the author of Ask for It: How Women Can Use the Power of Negotiation to Get What They Really Want, a book that I would recommend really for all women, and also for men. So, Linda, you have emphasized the importance of A) a woman being in the room, and actually, during the break, Dan commented on the commercial where it said “Spouses are encouraged,” and he said, “It should be ‘spouses must attend,’” which I thought was a good edit and particularly appropriate. So what are some of the, let’s say, relevant negotiating basics for talking with your husband about money?
Linda Babcock: So, negotiation, fortunately, is not rocket science. There are a few basic principles that, if you master these, you can negotiate just about anything, and fortunately, the basic principles apply across the board no matter what you’re negotiating about, and Jim, as we’re talking about, especially in the financial domain. So, the first of the basics, and I think we’ve covered this quite a lot, is really knowing what you want. What’s important to you? Is it security? Is it autonomy? Is it independence? In the financial area, it could be do I want risk? Do I want safe assets? What are the things that are really important to me? So, first of all, knowing that.
Jim Lange: Actually, if I could interrupt you for one second, it is surprising how many people don’t know that and they don’t think about that, and the other thing they don’t think about is sometimes, there is an assumption that if the husband dies first, which is actuarially more likely, that the surviving spouse doesn’t need as much money, or doesn’t need nearly as much money, and “Oh, it’s OK. She’s just going to sit around at home and babysit the grandchildren,” when she might want to travel and provide education for the grandchildren and do things that cost just as much as when they were both alive. So, I might throw that in as one of the goals, just to maintain or do better in your current lifestyle after one of you is gone.
10. Role Playing Raises Comfort Level and Is Crucial for Exploring Options
Linda Babcock: Absolutely. So thinking about what is it that is really important to me? What is it I want to be doing with my life? What are the resources that I need in order to do that? So, that’s really the first piece of the negotiation puzzle. The second, we’ve talked a little bit about it already, is preparation. Having some expertise in the content area that you’re negotiating about and really thinking hard before you go in. What are the things that I really need? What are the things that I’m hoping for? The third piece of negotiating is really planning a strategy, and that is thinking about what techniques and tools am I going to use to have this discussion? How am I going to open the conversation? What topics do I want to stay away from? How do I want to make sure that the conversation is moving in a positive direction? And so, that preparation, really having a kind of a dialogue in your head about how you want things to go.
Now, things aren’t always going to go as planned because there are two people usually in the room when you’re negotiating, but kind of have some ideas about the ways that you want to move the conversation. Practice is really important, too, which is a fourth piece, and for important negotiations, I usually call up one of my friends and say, “Hey, let’s role play this.” And it might seem kind of silly, but it is really beneficial to make sure that you are clear in your communications, that what you say is effective, and I think the practice can also make you feel a lot more comfortable. So, if I’m going to be negotiating with someone, I’ll have one of my friends play the person I’m negotiating with and say, “Hey, be really tough on me. Yell at me.” Or have the conversation go in a negative way and really do that practice and role play so that you feel more comfortable and less anxious during that negotiation.
Jim Lange: By the way, I think that we just got a gem, as there’s many gems in Ask for It: How Women Can Use the Power of Negotiation to Get What They Really Want, but it is the idea of actually visualizing how the conversation will go, and then actually rehearsing it, and I love the idea of you and maybe a friend or somebody else playing the role of somebody who might not just be a pushover, and then say what you might expect them to say. A husband saying, “Well, gee, Social Security, that whole system is going to go bankrupt. We might as well get everything we can right now.” And you might be able to anticipate certain things, and then develop a response for that in advance.
Linda Babcock: Absolutely. You know, I always think about it as have them say the worst thing that I’m expecting. You know, how is it could go so bad, so if it does, I’ll know what to say and I’ll know also how to turn the conversation around to a more productive angle, to a more productive way of having the discussion. And so, the preparation is really for the things that might go wrong, as well as the things that might go right, and really how to get out of those things that might go wrong. You know, practice can also help you to handle your emotions a little bit better. Sometimes, these discussions can be very emotional, and while emotions can help us in negotiations, for example, emotions, like being in a good mood and being happy, can really create a positive tone. Getting upset, angry or sad can steer the negotiation in a negative direction, and actually practicing a difficult negotiation can help us anticipate those negative emotions that may arise and may help us to prepare for them if they do arise.
Jim Lange: By the way, will you probably recommend something like that even if you’re going in for a review and you are fearing that your boss isn’t going to give you what you want? Or, let’s say, you’re even deciding which restaurant you’re going to go to, and you know your friend is going to want to go to that lousy restaurant that’s noisy and is unpleasant. Are these a couple examples that just actually go beyond the financial world?
Linda Babcock: Oh, absolutely. I tell people to really practice those very important negotiations, that you make sure that it’s really important for you to go in a positive way. So these are tools you can use across the board in financial decision making, as well as other kinds of decision making at home and at the workplace.
Jim Lange: All right, and is it fair that you’re also looking for a win-win? So, in my example of which restaurant to go to, my main criteria for a restaurant is actually not alcohol, it’s not price, it’s not even the quality of the food. I happen to like a quiet restaurant because I enjoy conversing with whoever I’m with, and if it’s noisy or if there’s just bad acoustics in the room and I can’t hear people well, it’s not as much fun for me. So, I try to say, “Well, you know, I really enjoy your company and I’d like to really hear what you have to say. Would it be OK if we went to a place that wasn’t as noisy so I can really hear what you say?” Is something like that where you’re thinking about win-wins, and actually trying to use that as an example?
11. Use a Cooperative Approach to Get What’s Most Important to Both Sides
Linda Babcock: This is a great example, Jim. So, in your situation, you care most about the atmosphere and the quiet. Maybe I care most about that they have great vegetarian food, OK? And so, a win-win would be looking for that combination of restaurants that’s vegetarian and quiet. And so, it’s really recognizing that each person is going to get what’s most important to them, and that those don’t necessarily conflict, and that we can find a solution where both sides are well off. That’s a win-win. Now, of course, a lose-lose would be a noisy steakhouse, OK? So, we want to stay away from that, but think of the things that are really important to each side and use a cooperative negotiation approach to get those. And the other thing that you said, which I like — and this is really important when you’re negotiating — is to tell the other side what’s important to you. So if we were choosing a restaurant and you said to me, “Hey Linda, I care about a quiet restaurant,” I’d say, “Oh wow, that’s great. That’s really important to Jim. Let’s make sure we do that.” You wouldn’t want to hide that, right? Because some people think when I negotiate, I have to hide what I want. No, you need to be open and upfront. What’s important to me? That’s the only way you’re going to get it.
Jim Lange: All right. So, if we bring this back to money, what’s important to me is to be able to maintain lifestyle, for example, for the rest of not only both our lives but also for the rest of my entire life if you should predecease me. That the investments are at least well-diversified enough and sound enough so if the market does go down, we’re not going to have to change our life, and these kinds of things. Is that fair?
Linda Babcock: Absolutely, and maybe you’ve never expressed to your spouse what it is that’s really important to you. This is a person that you’re married to, though. You should be able to share that kind of information and not feel like you don’t deserve it or it’s not appropriate. And so, saying what you want, being clear about it and having a dialogue around it.
Jim Lange: Well, I think having a dialogue around it is great, and frankly, I often can tell that couples have not talked about money. They might have talked about individual purchases like cars, or some other, you know, furniture or a TV or whatever it is, but they haven’t really talked necessarily about what their long-term goals are. And even things like if a man wants to move to Florida and a woman really doesn’t, maybe what she really needs is six months being near her family and what he needs is a couple months in the warm weather in the winter, and maybe both can be accommodated.
Linda Babcock: Exactly, but the only way that both sides are going to be accommodated is if both sides discuss what it is that’s important to them, and then finding those trades, just like the quiet vegetarian trade we talked about earlier. Finding a time where we can go and have some warm weather. Finding some time where we can spend time with our family members. Both sides getting some of what they want. That’s really what it’s about is searching for that win-win outcome.
Jim Lange: All right, and the other thing that I’d like to talk about a little bit is fairness, because I actually don’t think it’s fair that if a husband predeceases, that the surviving spouse will have to endure a significantly reduced lifestyle, and I’m always looking to protect both people, and it would be easier for me if I didn’t … I feel I have to stick up for a woman whether she’s saying anything or not, but it would certainly be a lot easier — and plus, a lot of people here are obviously not going to come to me — if they went into the idea, and I don’t think that there are that many husbands who are actively trying to be unfair, but maybe just say, “Well, as a matter of fairness, do you think that I should be able to maintain the same lifestyle whether you’re here or not?”
Linda Babcock: Exactly, and just raising that as an issue to be discussed. It’s not a demand. It’s not an ultimatum. It’s a “Here’s what’s important to me, and this is the implication that it has for me. Let’s talk about this.”
Jim Lange: All right. And so, again, we’re talking about getting some background, some education, being in the room, all right? And that’s a big one. I just had a relative whose husband was typically taking care of these things, and she was very upset about it, and she didn’t really want to be in the room. She wanted me to tell her husband that hey, maybe what you’re doing isn’t so wonderful, but then realized, no, I should be in the room.
Linda Babcock: Yeah, and maybe, you know, if she saw it as being a conversation, that’s a lot less intimidating than when … sometimes, people think of negotiation, you know, that seems like a scary word, but it’s really not. It’s really about discussion, about dialogue, about win-win, about problem-solving, generating options, and then making some decisions.
Jim Lange: All right, and let’s just do one more quick review. You actually mentioned that there are four important, let’s say, parts of negotiation, and by the way, we are talking with Dr. Linda Babcock, the author of actually two. Her classic book is Women Don’t Ask, which I think is wonderful, and I think that that has had a big impact, sold more than 100,000 books, and is a very important book, and the one that I prefer, which is her more recent book, Ask for It: How Women Can Use the Power of Negotiation to Get What They Really Want, and, of course, many of these points are highlighted and written about in much greater detail. But if you could just do the four major negotiation points again, I think that would be a good thing for our listeners.
12. Know Your Wants; Do Your Homework; Make a Plan; Negotiate Cooperatively
Linda Babcock: Yeah, and my book Ask for It really is the kind of CliffsNotes of negotiating. It’s a workbook that really tells you about these four things: knowing what you want; doing some homework, having some expertise in the area that you’re going to be negotiating about; having a plan; and negotiating in a cooperative way. And when you can do that, you can be a tremendously effective negotiator.
Jim Lange: All right. Well, I think that that is great advice, and I think it’s critical advice in the workplace, at home, and obviously, what I’m talking about is in the financial area, and for the protection and security of both spouses, and also the woman, particularly if she survives her husband.
Dan Weinberg: All right. Terrific discussion tonight, and a reminder, if you tuned in partway through our program and you’d like to hear the entire thing, you can catch an encore presentation this coming Sunday morning at 9:00. Also, all of The Lange Money Hour episodes are archived soon after they air on the Lange Financial Group’s website. That’s www.paytaxeslater.com. Just check under “Radio Show.” Finally, join us again in two weeks, that’s June 17th at 7:05 p.m., for our next live show, when Jim will talk investing with our guest, Paul Merriman. Special thanks tonight to the Lange Financial Group’s marketing director Amanda Cassady-Schweinsberg and to KQV’s Alexandria Chaklos. I’m Dan Weinberg. For Jim Lange, thanks for listening and we’ll see you in two weeks for another edition of The Lange Money Hour, Where Smart Money Talks.