Having spent most of my adult life in a pattern of underearning, I wish it was a topic that more people talked and wrote about because it’s a soul crushing state to be in with a relatively easy solution.
When you think you don’t need much money to get by – guess what?
You won’t earn much money.
And that’s a shame because it’s not that hard to do.
For years I told myself that I didn’t need a lot of money to be happy. So I earned enough to get by – barely – and never challenged myself to earn more. The turning point for me was discovering that a worthy goal was financial independence and I could take one of two routes – becoming a complete ascetic and spending even less than I had been and getting there very, very slowly, if at all, or maximizing my income and getting there in a much faster time frame.
I even tried the ascetic route about seven years ago when I moved to a rural area, bought a piece of shit house for $20k and worked two days a week for a whopping $12/hour. I told myself that time with my kids was more important than working 50 hours a week at a soul-crushing job. I don’t know why I’d assumed that since I’d just come out of one crappy job environment that ALL jobs were the same. I’ll blame it on a tendency towards catastrophic thinking that I used to struggle with.
Unfortunately, I couldn’t actually DO anything but stay home with my kids because there was no money. And spending that much time with kids isn’t that much fun for me either. (YMMV – this is just my perspective – different strokes). It took a year to burn through my savings and get to a net worth of zero again.
What have I learned over the last few years of earning many multiples over what I made back then?
Jobs that pay a lot are actually more fun and freeing than crappy jobs. It’s the lower paid people that have to always be at their desks, now I get to come and go as I please.
The knowledge that you can walk away from a work situation that you don’t like and not have to worry about how you’re going to pay the mortgage or buy food is incredibly freeing.
Thinking small is nothing more than a really bad habit that spreads into a belief system. The energy – and time – you focus on making that $3 selling used books can just as easily be spent figuring out how to add value at your job and making an extra $3,000 (hopefully more) a year.
For more on underearning, check out the literature on Underearners Anonymous.
And for any women that have an issue with earning what they’re worth, I highly recommend Barbara Stanny’s book and blog – especially this article: Tips for Earning What You Really Deserve.
Quite frankly, I don’t know a single woman that doesn’t struggle with feeling deserving of getting paid what they’re worth – well, maybe Fabulously Broke. And I know very few men that struggle with this issue.
It just pisses me off because it’s so unnecessary.
And to think Fabulously Broke is lives extremely minimalistic. Yeah to her for a glorious retirement.
I do earn good though, yet am chained to my desk – well because I haven’t put $ away. *sigh* But is about to change – because I’m about at that point where 1.5hr one-way commutes and not working at what I love are about done in my book. So, I am trying hard to put away some EF to cover 6 months, find out if we can go under my husband’s medical insurance, etc… and then I can transition. Glorious goal!
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Hey Funk! I have a post that I’ve been meaning to write for the longest time on attaching goals to money and working explicitly for those goals. I think your goal is freaking awesome!!
Yeah, I think FB has the best of both worlds, but the girl knows how to live a little too. And when you’re freelance, there’s always downtimes and that’s one thing to watch out for.
My feeling has always been: What’s the point of having money if you can’t spend it?
*lovingly pets her laptop(s)*
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The funny thing is that I don’t feel like I’m an extreme minimalist. I ought to do a post on this but I can’t quite grasp it yet.
It’s like I’ve learned and now LOVE a new level of minimalism, so it becomes more of a pleasing habit rather than something I do to save money. If that makes any sense.
I’m hoping my retirement will be peaceful and filled with good food and family
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Well, here’s one man who struggles with it. It’s not cool, not masculine, so we don’t talk about it enough. I suspect there are a lot more of us out there.
It’s gotten better, but there’s still work to be done. This blog post helped.
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Hey Lyman! You’re right, men probably talk about it even less than women. I know my friends do talk about it a bit, but seem resigned – and jokingly call me a lucky bitch when I make more. But it’s something I still feel a bit awkward about – and maybe part of that is just human nature.
I liked the point “(t)hinking small is nothing more than a really bad habit that spreads into a belief system.”
It’s so systemic that it often goes unnoticed and consequently unchecked. Personally, I think this topic has relevance regardless of how much one earns.
Good point Roshawn – I’ve held myself back from promotions before as I was afraid that if I took on the job, it would require extra responsibility – but ended up doing the work of the incompetent manager that was hired for the job anyway while he earned 1.5 times what I made.
And most of us have experienced great managers who really do know how to balance their lives properly – so it’s likely a fear-generated poor excuse. After all, if you’re the boss, the buck stops with you. You also stop being everyone’s friend upon becoming “the boss” and that can be kind of scary.
Would you share what line of work you are in?
Hi zara, I’m an accountant by training – specializing mostly in corporate reporting (putting together those dreary annual reports for investors), corporate wind-downs, and a general “fixer” when companies have accounting issues or to revamp processes. Probably all boring to someone else, but I really love it.
Lol, thank you Jacqueliine.
Are you a chartered acct/CPA? Just asking because my daughter was considering studying accting and was wondering about job prospects.
Hey again, I’m in the process of helping my niece go the same route – one of the reasons is because of the really diverse things you can end up doing – and the security and income potential is quite high. I wouldn’t go into it myself for those reasons however. If she has a good facility for numbers and puzzles, that’s the best indicator as to whether she’ll be good at it and enjoy it or not. I spent too many years thinking I should be doing something else other than accounting, but have been fine since I’ve accepted and embraced my inner geek. There’s definitely quite a few entry level jobs in the field here where I am. Like any job, the key is to get her foot in the door and make a good impression. She’ll probably never have to worry about having a job then. Best of luck to her!
Great post Jacqueline. I think it’s really important to be ambitious in creating wealth for yourself. Money isn’t everything but it makes many things a lot easier. But I do think there is a place for knowing you can get by on less. I was stuck in a well paying job I hated for many years because I was terrified of trying to live on less. I think this comes from a similar mindset to the habit of underearning. It’s a lack of self worth. You don’t believe you’re worth more, or you think you got lucky and don’t believe you’ll get as much if you leave the job you hate. Once you can start to value yourself and your contribution, it becomes that much easier to ask for what you’re worth.
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Absolutely true Nicola! I know in the last period of time when I tried out early retirement, saw my stocks go down and kind of freaked out, I had a knee jerk reaction of taking a job where I earned less than I did before and did work I didn’t care for. I didn’t trust that something better for me would come along. Such a learning process!
Since I began writing, I’ve started to read a lot of blogs. The one thing that I’ve learned is that earning more money is usually the fastest way to take control of your finances.
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Thanks for stopping by Khaleef! You’re very right, whether that’s the two job route like fellow Yakezie + pizza guy http://www.deliverawaydebt.com or just making more in your main job, it’s definitely the faster – and usually less painful way.
While I understand that people can hold themselves back from higher earning options because of unnecessary fears, it could also be that some of those fears are reasonable. Where I am in my career, most of my opportunities for advancement would require doing things I really don’t want to do–extensive travel, long commutes, or having to manage teams of workers on the other side of the world. I struggle with the desire for greater financial freedom and the desire for the day-to-day freedom I have now without those added headaches.
–Maria
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Hi Maria, thanks for stopping by and commenting! I know what you mean unfortunately. I have a few friends that are holding themselves back from making more because they just don’t want to manage others period – and in their case that’s the right decision for them because it just doesn’t suit their personalities to have that kind of leadership role. So they’re right to not be confident. One of them keeps looking though and the other doesn’t seem to like change and wants security. There’s definitely no one size fits all solution.
I’ve been giving this post some thought before writing a solid response to really give your post the respect it deserves.
I think people can hold themselves back on making more from any number of these reasons (not saying everyone does this but these have been my observations):
1. They’re scared to earn more. This sounds silly but they are afraid no one will take their rate or salary expectations seriously, so they undervalue themselves to show that they’re humble.
My take on this is: SCREW BEING HUMBLE! When you pull in an extra $15,000 more than someone who didn’t negotiate just because you asked for it, you are going to feel a lot better earning that $1000+ extra per month than eating humble pie each month.
2. They’re scared NOT to work. As a freelancer, I understand the ups and downs. Most people are scared to take off even a month, much less a year (*raises hand*) and chill out and not work.
That being said, I can do this as you and Money Funk mentioned above, because my expenses are pretty low. It’s kind of a give and take situation. You have to understand what you value and what you don’t, and I chose valuing time and earning good money in a shorter amount of time, than to force myself to work 50 weeks of the year for the same amount of money I could earn in 3 months.
Given the choice, most people would tell you: YES! I’d love to earn my salary in 3 months!
But they don’t really mean it when you mention that you have no control over which months you work, IF you will work those 3 months (which goes the other way too) and the fact that they will have to learn how to budget like a mofo to keep those expenses on an even keel and not blow a single paycheque in a month buying crap they don’t want or need.
3. You need another motivation to keep your expenses low.
Enter: minimalism for me. It doesn’t work for everyone (I never expect anything anyone does to work for me, so why would I ever expect the reverse?).
Either you’re getting out of debt, or you just want financial security in knowing that saving $10,000 means you can live 10 months off that money instead of 5, because you’ve been reasonable with your spending (a very controllable variable).
It’s a very romantic and beautiful idea to think that you don’t need much money, but actually putting it into practice is a whole other story. Money is an essential tool in life and if you don’t have it, it’s actually a pretty big deal when you can’t put food on the table. When you have money, you can also take it for granted by overspending and not taking care of your expenses.
Lastly, money is just a way for me to have the opportunities and experiences I otherwise wouldn’t have.
If I was still earning my same salary at my same job (no big surprise there, seeing as my former colleagues are still in the same boat as they were 5 years ago, earning the same salary, working at 150% billable rates)… I would not be able to just decide to take off for a month or two and spend $10,000 on a trip with BF.
The balance really comes in watching your expenses, pushing yourself to earn more money and be strong in your conviction that you are worth what you are asking (well, make sure you really are worth it before shooting off your mouth) and understanding the demand and market for what you are selling.
That kind of goes back to when you start working in high school to get the grades to get into college — everything in life is about demand and worth. If you choose a degree that isn’t in demand, then you are not going to earn the same as someone who chose a different, perhaps more difficult path.
For me, thinking that I need about $1000/month to live is more of a security blanket than a life choice. I feel happy knowing that I COULD pick up a job earning $25,0000 a year (gross) and keep living the way I do, but that doesn’t mean I want to hamstring my earnings to do so.
Anyway, sorry for the long comment. Maybe I should have made a post out of this !!!
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Hey FB, Thanks for the post! Er… comment…
I totally agree, although I can’t get by on $1,000/month – I could quite easily do it if I didn’t have my mortgage. But the next house will be mortgage-free. It’s just that my rate is so low and I feel more secure having cash in the bank and stocks rather than all tied up in my house.
For me now, money is just a means to make life a bit easier for myself. There really are some problems that literally just go away when you throw some cash at them. And I like the security of knowing I can walk away and not look back from any job that I don’t like. Or be really, really picky about what job I choose in the first place. At this point in my life, I’ll choose to make a little less if I have to just for the pleasure of being in a job that I like. But I won’t take A LOT less (working for a non-profit or similar) because I know there’s plenty of good jobs out there if I am just patient.
Sorry, my last comment (FB still here)… is that you don’t find men having the same problem because men have bigger egos and confidence to say: I am definitely worth it (L’oreal style).
They don’t hamstring themselves (most of the time) in thinking that they don’t deserve the money.
“Deserve” is a very strange word for me, because if they’re willing to pay you market rate but you feel like you should earn half that if less, then STFU and take the money while smiling like a Chesire Cat all the way.
Guys feel like they deserve more because they feel like they work harder and they want to see the results of that (much like when you realized that your first job for the psycho company was not a pleasant work environment).
Women I find, tend to downplay their skills and strengths, they can’t believe they can earn that much (so they don’t) and GENERALLY don’t like to fight (read: negotiate or discuss) about hot topics.
These are all general stereotypes, but from observing behaviours in men and women, I find it to be somewhat true.
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You’re totally right, it’s fear of judgment and thinking someone will – I don’t know – laugh at you and say – Ha! You’re not worth that much.
I walked out of the psycho job a week after they gave me a bonus that was less than I felt I deserved and took my time finding my next one. Fortunately, that one was a winner.
I think I’ve been fortunate in a way being a single parent because I’ve been forced to earn more to have any kind of decent life.
That’s exactly it. I am slightly afraid of when I name my rate, but if I ever do a quick poll on jobs being offered, I know I am not off in my rate. In fact, I am apparently reasonable (newest broker).
This made me want to raise my rate until they squeal mercy
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I can totally relate to this post. I am a total under-earner but I’ve been changing that by going to college recently. I didn’t think that I was smart and good enough to learn the knowledge for the higher wage careers. I really struggled with my confidence and self-esteem.
That has been changing in my late twenties. I decided to go back to community college in my late twenties. Right now I have a 3.7 GPA at community college. In my early to mid-twenties I struggled with overcoming a lot of things that had happened to me when I was a teen.
What really did it for me was that I realized I wasn’t living up to my potential. I was getting good grades last semester in college and I thought “hmm what else can I excel in?” Once you get good at something, you want to get good at something else. I was a poor student in high school so having a 3.7 GPA was a pretty big deal for me.
It made me realize that I needed to quit wasting away my potential.
Having low paying jobs where you’re micromanaged to death isn’t very fun. I’ve worked in retail, a fast food place, and a nursing home, all the positions there were low paying ones and not very fun. My
co-workers for the most part didn’t like their jobs either.
Lower paying jobs also tend to be very micromanaged because managers don’t want lower level workers making decisions. It’s not that the managers are bad people, it’s that they don’t expect you to think for yourself because you’re not paid to think, you’re paid to do an unskilled job. Whereas someone with a degree is paid to think and is paid to make decisions.
I work as a customer service rep now, but I can tell you this isn’t my potential either. I want to do something bigger with my life than working minimum wage as a rep. I don’t like jobs that are VERY repetitive which minimum wage jobs tend to be. There’s a reason why minimum wage jobs have a high turnover rate.
I think if a person wants freedom then it’s worth it to go for the higher skilled and higher paid job where there is more independence. You are paid to use your brains, talents, and not be a robot.
Jaime, there’s one thing the wealthiest of my uncles told us years ago: “you’ll never get rich by working with your hands.” I don’t technically think that that’s true, because it is possible to be wealthy through your labour alone, but it’s generally harder.
I see so many people that are so overqualified for what they’re doing but don’t want or are afraid to pursue something else. The best thing for them is a mentor that will help them out of their comfort zone, but if that’s not possible to find, then they simply must mentor themselves. Self-confidence is HUGE and I had next to none for many years so I know where you’re coming from.
I’m so happy for you that you’re figuring this stuff out at your age! Some people never do.