5 tips for better bartering

Bartering has long been a part of good personal finance practices. If you’re low on funds, why not trade for goods and services? You’re getting what you need and, in return, you’re providing someone else with what they need. I think it makes perfect sense to trade haircuts for babysitting or trade music lessons for laundry services. It’s practical, saves money, and is relatively convenient (particularly if you’re trading with a neighbor). Bartering worked out well for pioneers, too, and you can see it in the way they helped each other build houses, raise barns, and plow fields. This system benefitted everyone involved, particularly as the pioneers were not often flush with cash.

Personal finance experts still recommend bartering. I completely agree with their advice and in fact, it’s something I do with a couple of friends. Having been doing it for a few months now, there are definitely some rules that, if I could go back and implement, I would. It would make the whole arrangement much smoother. And if you’re contemplating bartering, I don’t want you to make the same mistakes. To avoid them, here’s what I suggest:

• Be clear. Make sure that both parties understand what you’re doing–bartering or trading one service for another good or service. It does not mean one person works for another. If the arrangement starts to favor one side,  one party is putting in more work than the other or one party is not adhering to her side of the agreement, then it’s time to revisit the terms and reclarify them.
• Be specific. Detail exactly what you are trading for. Detail hours, dollar value, amount or volume of services or goods, and length of bartering agreement. Both sides need to know, and agree upon, the working arrangement. The terms of the bartering should not go outside those specific terms without consent from both sides. By doing this, you avoid confusion or one side taking advantage of the other. 
• Be fair. This should go without saying. While fair is a subjective term, you know if an agreement is good for you or if you’re going to get screwed. When it comes to bartering, both sides should be willing to compromise to make sure that the arrangement benefits both sides equally and fairly. If you know the cost of what you’re offering and what you’re receiving, it should be easy to make the arrangement fair, so take time to do some research, too.
• Get it in writing. If this is going to be a long-term bartering arrangment, put it in writing. Spell everything out in clear and specific terms and have both parties sign off on the terms. This way, there’s a document to rely on if the arrangement starts to go awry. However, if it’s just you helping a friend move in exchange for beer and pizza, there’s no need to write that down. That’s just something that (really good) friends do.
• Know when it’s time to walk away. Sometimes a bartering arrangement doesn’t work out. If you’re trading for housecleaning services and the person fails to show up or does poor work or consistently breaks your belongings, then maybe it’s time to break off the agreements. Bartering might adversely affect a friendship and, depending on how important the friendship is to you, it might be better to stop the bartering to salvage the personal relationship. The arrangement just might not be convenient for you anymore. It’s fine to walk away.

Bonus tip: Never feel pressured to say yes to a bartering agreement, even if it seems like a good deal on the surface. If it makes you uncomfortable or feels wrong, say no. Bartering should be helpful and positive, not awkward and sketchy.

Bartering is a great way to build a resume or portfolio, get services or goods in exchange for a skill, other service or good, and to save money. And if it’s done carefully and with some planning, everyone wins.

Do you, or have you ever, bartered for services? How did it work out for you? What suggestions do you have?