The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

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What Are The '3 Universal Currencies'?

In every negotiation, there are 3 Universal Currencies on the table:

Focus on the appropriate trade-offs between the parties to find Common Ground in these Currencies.

By mixing these currencies in different ways, it's easier to reach an agreement that the parties can agree with.

Josh Kaufman Explains The '3 Universal Currencies'

In every negotiation, there are 3 Universal Currencies: resources, time, and flexibility. Any one of these currencies can be traded for more or less of the others.

Resources are tangible items like money, gold, oil, etc. Resources are physical: you can hold them in your hand. If you want to buy some furniture, you can offer money in exchange. If you’re selling your car, the purchaser could (with your agreement) give you a bar of gold or a mint first-edition issue of Action Comics #1, which features the first appearance of Superman in print. You’re simply trading one resource for another.

Time is the second major currency. If you go to work as an hourly employee, you are trading a certain amount of time and effort for a certain amount of resources. You can also trade resources for time: you can offer to pay other people in exchange for their work, which is the essence of employment, contracting, and freelancing.

Flexibility is the third universal currency—one that is usually quite underrated. Becoming a salaried employee isn’t a straightforward exchange of resources for effort—you’re also giving up a certain amount of flexibility. There’s an implicit agreement that you won’t work on other things when you’re supposed to be working for the company, which is a very real Opportunity Cost. While you’re working, you’re giving up the flexibility to do something else.

It’s entirely possible to negotiate for a greater or lesser degree of flexibility by trading off effort or resources. For example, you can decrease your effort and increase your flexibility by working part-time, in exchange for less resources—reduced salary and benefits. Purchasing a house requires less time if you agree to a thirty-year mortgage vs. saving up to buy it outright, at the cost of additional resources (interest) and dramatically decreased flexibility.

It’s possible to gain more of any of these desired currencies by finding appropriate Trade-offs between one or more of the others. If you’d like additional compensation in the form of a raise or larger contract, you can give up time or flexibility (such as the ability to use what you make for other purposes) as a trade-off. If you’d like a bit more flexibility or time off in your working arrangements, you can negotiate a decrease in salary to compensate. If your employer or client wants you to work more or benefit more from your work, you can ask them for more compensation in return.

Keep the Three Universal Currencies in mind when negotiating, and you’ll be amazed at the range of potential options you’ll be able to present to the other party, making it easier to find an option that works for all parties involved.

Questions About The '3 Universal Currencies'


"Time will take your money, but money won't buy time."

James Taylor, musician


From Chapter 3:

Sales


https://personalmba.com/3-universal-currencies/



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The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

Buy the book:


About Josh Kaufman

Josh Kaufman is an acclaimed business, learning, and skill acquisition expert. He is the author of two international bestsellers: The Personal MBA and The First 20 Hours. Josh's research and writing have helped millions of people worldwide learn the fundamentals of modern business.

More about Josh Kaufman →