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Overspending vs. Underearning

This article was written by in Salaries. 11 comments.


Are you an underearner? The general consensus for increasings savings in financial advice circles is to rein in your spending, since the expense side of the equation is easier to manage than the income side. You can cut back your spending on cable television by 50%, but getting an equivalent 50% increase in pay is more difficult.

If you are an underearner, this might not be the case. You may have already reined in your expenses, but you’re still not making much headway, even though you’re working hard. An article in MSN Money explores this topic.

Do you have these traits?

* You talk about your life as if you’re trapped or have no choices.
* You underestimate your worth; you often give away your time, experience and skills for free.
* You crave the “comfort zone” and are controlled by fear.
* You’re vague about money, often not knowing exactly how much you make or owe or own.
* You’re “anti-wealth” and have negative attitudes about people with money, viewing them as greedy, snobs or workaholics.

I know I match the first two on the list, and maybe the fifth depending on my mood and the news cycle. Number three doesn’t make any sense to me and it should be obvious to my readers that number four doesn’t apply. I’ve got great skills and most people would consider me quite intelligent, yet I’m in a dead-end job at the moment. I’ve been trying to do something about that, but it’s been rough. I know I’m underemployed and I should have the responsibilities that go along with a job making perhaps twice what I’m earning now, but it’s been hard convincing others of that.

How about you? Have you ever been an underearner? The first piece of advice the author in the article gives is to change your mindset — and start charging more for your services. That may be a good start, but it doesn’t control the day job side of income. If you were an underearner, how did you improve your situation?

Published or updated January 30, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

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{ 11 comments… read them below or add one }

avatar Caitlin

I’ve slowly come to realize I was a total “underearner” and I’ve been changing my ways for about a year (right around when I started blogging and getting my finances under my own power). I just finished Stanny’s previous book “Secrets of Six-Figure Women” which honestly sounds like the same topic of her new book but presented differently. That book gave me more insight into how I can continue to change and I thought it had some great stuff in it…for women AND men…who find themselves ID’ing with those traits above.

#3 is really the key trait IMO … if you are so afraid of failure that you don’t try, if you are so addicted to “comfort” that you never push yourself so you will never be “uncomfortable” even for a short time (for ex. giving up something you really like for a while in order to save for a more important reason etc) — the antidote is to just have the courage to “reach” and to stretch yourself.

If you find yourself pushing your own limits now and then and implementing change for long haul benefit, I doubt you’d ID with #3 :) But I see this in SO many people who claim they just can’t possibly save any money (for example) and in turn blame others (the world…whatever) for their lack of savings.

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avatar Loi Tran

I think I’m an underearner and have not gotten into the career I really want. I now know what I want to do. I am preparing for CFA and plan to get a job in money management.

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avatar Jerry Kindall

Yeah, don’t sell yourself short. My salary’s up more than 60% since 2000, just because I started asking for more. I’m the same guy with the same skills, I was just woefully underpriced before.

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avatar Luke Landes ♦127,435 (Platinum)

Loi — good that you’ve discovered what you want to do.

Jerry — 60% is a great improvement. My time will come… as long as I keep working on it.

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avatar RS

I think that I have a huge problem with #3. I make pretty good money at my job so I am just content and comfortable here. I would like to get into management, but it is tough because of the comfort zone that I am in. Therefore, I don’t push myself too hard to get where I want to be.

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avatar Steve Mertz

Flexo-I too liked the article and I’ve not read Stanny’s books but the person in the article claimed she made the turn around by attending stanny’s two day workshop. My general thought is that if underearners could of fixed the problem themselves, they would have done it. Do your readers have any feedback on whether workshops have worked for them?

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avatar Luke Landes ♦127,435 (Platinum)

Good question. I don’t attend many workshops as I’ve found the ones that I have attended to be glorified sales pitches… sales pitches that you pay to attend… but perhaps others have had better experiences than I have.

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avatar Madame X

The thing about that article that creeped me out was the story of Tami– she goes to a seminar, and basically decides that what she needs to do with her life is become the person who gives the seminar! Soon everyone will just be coaching each other on success but no one will actually DO anything!
But aside from that, it’s an interesting issue, and I think I have some of those traits. I’ve had underearning phases, at least, and maybe I’m in one now. I think a lot of people in publishing, like me, kind of fell into it and enjoyed it, so the low pay scales are sort of a lifestyle choice, but it’s hard to say everyone in this industry has a passionate calling that makes it worthwhile. Sometimes I think I’m coasting a bit and wish I’d made differnt choices, especially when I talk to some of my college friends who make way more than me. But then I think, I’m happier with my job than some of them are, and I have at times made good career moves and negociated raises and promotions. On one level I’m ambitious, but on another, I am glad I have time to pursue other interests outside of work. Maybe that’s the “comfort zone” thing!

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avatar mapgirl

Great post! It’s so true. Many folks undervalue themselves on the open job market. Having underworked one year and made $17K in 2001, I vow never to be underemployed like that ever again. I had tax & credit card debts out the wazoo from doing that.

So many times I talk to friends and they say they are trapped by their jobs. Whenever I’ve felt that way, I’ve just up and quit to retain my sanity. I’ve always been able to find another job and made more.

This last job leap I took, I gave myself a 40% raise by going elsewhere. I gave my last firm 2.5 years and if they couldn’t recognize my value with an appropriate salary, it was time to move on. The open market told me I’m worth $60K+, and I went out and got it. I know it takes courage to do it. For me, it was a lot of stupdity and frustration that got realizing my own value, to myself and to other employers.

Giving myself a raise was the best thing I did financially last year.

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avatar Terry

I’ve been underearning – I have a college degree and have always been at or close to minimum wage – for so long that even if I could flip a switch and make my underearning mindset disappear, age would now be a huge obstacle in getting a good job. I’d like to be a CFA but I can’t afford the required education and can’t even borrow for it.

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avatar Kamantha

I am in a dead end job myself. When I actually decided to leave, I decided to stay and become vested that way I can at least take my pension with me when I leave. Also I decided to go back to grad school to a get degree in a career that I actually like and use the school’s resources to find a better job upon finishing.

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