It’s a sensitive topic – who wants to think that they’re not living up to their potential? ‘Underearner’ is not a particularly flattering label. But the key is about desire – many of us have the potential to earn more in different types of work but choose not to.
What is underearning?
Underearning, as I’ve seen it defined, is about earning less than you want to. Bringing in less than you need or than would be beneficial, despite attempting otherwise.
It’s not about raw numbers. Or the hours you work. Or ‘underachieving’.
It’s about the ability (could earn more) combined with the desire (want to earn more) but for whatever reason, it isn’t happening.
Especially in creative fields, I think there’s often a bit of reverse snobbery at play. Prejudices against money and toward the wealthy. We sort of believe and play into the idea of the nobility of poverty – of struggling for art. Making money is selling out. As Tessler points out, creative and self employed types often set fees too low – and don’t raise them often enough.
But as Stanny writes in her book, ironically, few people work harder or obsess more about lack of money than underearners do.
As the artist Willem de Kooning once aptly remarked, ‘The trouble with being poor is that it takes up all your time’.
Not having enough money is exhausting. Dealing with the realities of hardship is a constant grind.
I suspect as women, there may be an added dimension at play. We are, after all, relatively new to the workplace as we know it compared to men. Home is still considered the female domain, and we’re still considered the nurturers and caretakers. A point raised in an episode of The Broad Experience (a great podcast on women and success that I’ve recently discovered) was that often we perceive ‘doing well’ as being materialistic, or greedy. I’ve definitely encountered that in reaction to things I’ve written on the blog here and there! But more on that a bit later on.
How to overcome underearning
There are many external factors that affect how much we currently earn. Also, life happens and sometimes your income takes a hit.
Not to mention, there are factors that affect how much we CAN earn. Different fields are structured differently. Some will never pay much – choosing to stay in one of those will limit your options.
But as with anything else in life, it boils down to focusing on what you can control. That might mean steeling yourself to:
Ask for a raise
Start your own business and work for yourself
Staying in a job too long is a common trap – a job that’s comfortable like old jeans, doing things the way you’ve always done them. In most cases, changing companies is the fastest way to advance pay-wise.
But most importantly: learn to ask for what you’re worth. Even if that feels uncomfortable. Even if it seems outrageous. Negotiate salary offers, and ask for raises. That’s what it all seems to boil down to.
There’s a huge mental component to underearning. Most of us can’t just flick a switch and suddenly become a totally different person. Here’s where I’ve gleaned another tip from The Broad Experience: You need your own WWJD mantra. Think of somebody that you know – someone who’s direct and isn’t afraid to ask for what they want. What would they do? Channel them!
Enjoying what you’ve earned
Despite knowing the market, I feel ridiculously overpaid sometimes – like, how can my work be worth this much? And then I realise people around me are certainly earning 6 figures, and that reboots my perspective – and spurs me on. It would have been totally unfathomable before this; it almost feels like I’ve discovered a secret, tapped into a new level in the game of life, busted through a ceiling.
None of the six figure women interviewed by Stanny had any qualms about openly declaring their desire to profit. They took pleasure in reaping the rewards of their work. They knew that the more money they made, the more choices they had. Financial freedom is the ultimate flexibility.
Success goes beyond building up a bank account too; it also includes building up career capital, networks, etc along the way. And with more of these resources at your disposal, you can enjoy more freedom, security, and do more for others.
Have you struggled with underearning in your career?
Like all true Asian parents, mine drilled the work first, play later mentality into me.
(Though in fairness they were nowhere near Amy Chua tiger mother levels.)
And along with modelling delayed gratification, my Asian family also taught me a few things about money over the years that I’ve never forgotten.
Shop the sales
Apparently I once asked Mum, “why don’t you ever buy anything that’s not on special?”
She is the most frugal person I know. Never overpays for anything, and knows how to get the best price on everything.
Back when we were in primary school, I once went to the supermarket with my best friend in primary school to get snacks. We were so proud to find and buy bottles of Coke on special for 99c. Even my friend’s dad praised us for our bargain hunting ways!
Not my mum. At their lowest price, she informed us, you could get those bottles on special for even less than that.
She is the queen of thrift shopping and I didn’t really appreciate it until adulthood. Now I’m like, tell me all your secrets.
We spent a lot of time at garage sales when I was a kid and I watched the master bargainers in action. Whether it was a $2 doll or a $600 TV, they would always ask for a better deal (as it turns out, basically everything is negotiable).
Despite all that, I could barely bring myself to haggle at markets while travelling through Asia. And I think back on the times I didn’t negotiate salary and mentally kick myself.
I get the theory, but actually doing it is a different kettle of fish.
Needs vs wants
Wants never masqueraded as needs in our household, not even for a second. People bleat on about how extravagant parents are with presents for their kids, but we literally didn’t get gifts. I feel like we could have done with more wants, growing up.
(For years we didn’t have a TV – before broadband, before streaming, and so I never got to participate in conversations about last night’s TV shows at school. #firstworldproblems)
OTOH, sometimes needs can be disguised as wants…
Props to them for trying to pass off buying me a sleeping bag (you know, for school camp) as an early birthday present. (Spoiler: didn’t fall for it.) Even 10-year-old me knew better.
I’ve always stood by the belief that gifts are for things you want, not things you need. That will never change.
Sometimes financial progress is slow. Like any other habit, getting sorted with money is an ongoing process.
Sometimes, you just need an easy win.
Here are a few quick financial wins I’ve found recently – there’s nothing quite like that sense of accomplishment!
Check your credit report
A quick win if there ever was one – requesting your credit report doesn’t cost any money and only takes a few minutes of your time. Hopefully there are no surprises! If all looks good, you get to sit back and relax for awhile. If there are any errors, it’s better to know about them now and get onto addressing them sooner rather than later.
Organise financial paperwork
I feel like I’m constantly chasing a pile of papers, even though I’ve transitioned to getting most things by email. Banking, mortgage, tax, investing, insurance and any other kind of financial documents lying around deserve a place to live. I sat down awhile ago and sorted them into various folders. Having some semblance of order there felt like a massive step forward!
Make an extra payment
Whatever amount you can throw at that loan, credit card, mortgage! Every little bit counts and results in less interest paid overall. WIN.
Set up an automatic transfer to savings/investing
For the first time, I have an automated investing plan (outside of KiwiSaver). It’s only $100 a month ($50 into 2 different funds) but you know, it was really hard to push the button on. I still have a massive fear of financial commitments but I am so, so aware of the power of paying yourself first.
Start tracking net worth
I kind of did this a couple of times, randomly, between the time I started working full time and the time I took a six-month leave to travel. I was pleasantly surprised, upon returning home, to see that the number wasn’t quite as low as I expected! Obviously I’d drained most of my liquid funds, but the investments I had kept growing, and so the total sum looked a little healthier than I anticipated. Anyway, since buying a house I’ve started tracking my net worth every month. It’s incredibly motivating to see the steady progress!
And while I’m on a roll, here are a few more ideas I came up with! All it takes is ONE thing for each of these – a single focus at a time.
Pick 1 thing to cut back on buying
Delicious pies. Overpriced juices. Skincare that never lives up to its miraculous claims. Whatever. Choose a line item and reduce spending there! Not saying cut it out – just trim it back.
Review 1 bill
You know, those boring but important and regular-as-clockwork bills. Power. Internet. Insurance. Choose one, do some research, shop around for a better deal. Maybe even negotiate with your current provider – they might sharpen up the price on your package. (Confession: I seriously never make time to do this, and I should!)
Track spending for 1 month
If you’ve never really tracked your spending, have fallen out of the habit, or perhaps had major changes to your financial situation, give it a go – it might be illuminating. People always go on about the hidden costs of home ownership – in my case I’ve been making do as much as possible and haven’t really spent much on the actual place, but between setting up a veggie garden, the chickens, and the dogs? Yeah…
Got any money moves to share that give you that sweet, sweet feeling of accomplishment?
Have you ever had a financial vampire in your life?
Some people are just financially toxic. They are in the shit moneywise, and by merely being present in your life, will drag you down too.
You may feel obligated to help, or they may explicitly pressure you to do so.
Whatever their situation, do not risk your own financial wellbeing on their behalf.
When you step into the role of the money martyr, odds are you’re not just damaging your own financial health but also doing a number on your emotional and physical health as well in the process.
Those who truly love us and have our best interests at heart will not expect this of us.
I mean, it feels good to be selfless, if you can afford it. Not to get all The Secret-y on you, but I swear little windfalls have correlated with times that I’ve given more.
Beware of giving up too much to the people closest to you.
There’s a difference between supporting someone through a temporary rough patch, vs enabling consistently poor choices and habits. The trick is making that distinction and it’s not always easy to see where that line falls, particularly in a newer relationship.
I’ve spoken to so many people recently who’ve been in relationships where a significant other has taken advantage of their financial goodwill. In some cases it’s been about subsidising their slacker partners; in others it’s been about taking responsibility for a partner’s debt, or even incurring new debt on their behalf.
We all agreed on one thing: we’d be much better off today if we’d wised up earlier. Sexually transmitted debt – it’s a thing, and in the worst cases can take years to bounce back from.
We only get one shot at life, and it’s okay to put your own financial wellbeing first. Start by helping yourself and securing your own needs, then you can turn your attention to helping others.
When it comes to financially toxic relationships, it’s best to cut those losses earlier rather than later. As a wise friend said, we aren’t just hurting our current selves by staying – we’re also hurting our future selves.
Give generously. But never, ever sacrifice your own financial stability for anyone else’s sake.
When it comes to money, ALWAYS put yourself first.
Every experience we go through – good and bad – shapes us, makes us who we are.
The flip side of this is that we have somewhat of a blind spot when it comes to things we haven’t experienced. For me these include:
I graduated into a recession. Yet I haven’t struggled with unemployment so far and I don’t think I’ve interviewed for a job I didn’t get (career wise, not counting the part time jobs I held before starting my career!) I know it’s not easy and have seen others around me deal with unemployment but I have not personally been through it, and thus am probably not as understanding or empathetic as I could be.
Lifestyle inflation/mindless spending
I’ve never been much of a shopper. I worked in journalism for a few years, so pay rises weren’t exactly a thing. When I changed paths to make more, I had an unemployed partner, so we weren’t exactly rolling in it. These days we spend a little more on groceries (hummus, fruit and cheese ain’t cheap) but it’s really just having pets that I would put under the ‘lifestyle inflation’ bucket for me.
Student debt isn’t as insane here as in some countries, but student loans are still a significant burden for many of my peers. Thanks to my scholarship, I simply don’t know what it’s like to graduate with a huge debt load knowing it would follow me through my twenties or beyond.
The notion of being stuck in a lucrative job simply for the paycheck is not something I have experienced. I don’t imagine I will, either. It’s worked out so far that I have loved all of my jobs and I hope to maintain that to a healthy degree going forward. Earning more is a goal – but not purely at the expense of maintaining balance in other aspects of what makes a good job to me. Will I retire early? Don’t imagine so, but that doesn’t worry me.
More money than time
Time is absolutely a constraint at times. But money has always been the bigger factor. That’s my reality, and the reality for most people around me.
My parents are ageing. Luckily they seem reasonably healthy so far and they are not financially struggling. Rather than me needing to worry about their retirement it’s more a case of them worrying about my financial future in today’s world.
So, what DO I know about, then? (For any of the above, there are many blogs that cover each of these subjects – bloggers who are reformed shopaholics, bloggers who are financially responsible for extended family, bloggers who have jobs that pay very well but which they loathe, etc.) I guess the stuff I cover here includes:
Being a female breadwinner
Not a position I thought I’d be in, but it’s one I’ve found myself in. See: here and here. And another post is brewing…
What happens when a saver meets a spender? It’s been a process, through various iterations of joint vs separate accounts, paired with sporadic employment, etc. Probably got another on this in the pipeline, too…
In relation to the saving vs earning more spectrum, you’ll find me leaning toward the latter. As a naturally frugal person I’ve never really come across any groundbreaking saving advice. What’s dramatically altered my financial trajectory and pumped up my financial security is making more money. I still worry about the future, all the time! But I am less worried than I have ever before.
What about you – what are your areas of financial expertise and weakness?
It’s funny how things work out sometimes. A couple of months ago I was part of a Twitter convo about finance apps/platforms for New Zealanders – and although it wasn’t yet available to us, Simply Wall St came up. And what do you know … just the other week I received an email informing me of their NZ launch and inviting me to try it!
Simply Wall St is one of the new breed of fintech companies making stuff simple and visual. Essentially, it’s designed to help you understand how publicly listed companies are performing in order to make better investment decisions. Is a business undervalued or overvalued? In a solid financial position? What might you expect in terms of future earnings and dividends? Simply Wall St can offer some insights to help you reach a conclusion on questions like these. There is lots of delicious data to feast on, served up in an accessible and digestible way.
For NZ investors, Simply Wall St links up with Sharesight, which is handy. This integration didn’t actually do much for me as I only invest in funds (not individual stocks). After connecting my Sharesight and Simply Wall St accounts, only one of my Sharesight-tracked funds was in the Simply Wall St database but as it’s comprised of ETFs Simply Wall St couldn’t provide much analysis on it.
That said, one of the two example portfolios served up to me was the Harbour Australasian Equity Fund, which invests in local companies and that I actually have a small holding in!
Here’s what Simply Wall St had to tell me me about the fund:
A look at the value of the portfolio based on price relative to market and future cash flows – are you paying a fair price? Looks at metrics like PE, PB and PEG ratios.
A look at average expected growth in earnings.
A look at metrics like Return on Equity, Return on Capital and Return on Assets over the past 5 financial years.
Financial Health / Dividends
A look at debt levels and the stability of the company.
All of this gets distilled into one neat overview graph: The Snowflake. You can see it below – top right and in the left hand nav too. It’s a visual summary of the areas described above. The shape and colour of the snowflake is meant to give you a snapshot reading and enable easy comparison against other investments.
I was also able to see an overview of the individual companies this fund holds.
Plus, you can use Simply Wall St to find new investment ideas. For example, you might mine the database for stocks that are potentially undervalued, stocks with room to grow, or for stocks in certain industries. Grid views serve you up collections based on criteria you set.
I’m definitely a hands-off investor. That said, if that were to change, I would absolutely want Simply Wall St on my side – I can imagine making full use of it to research companies and guide my decisions.
Things Barbara Stanny and I have in common: We were female writers who didn’t earn huge amounts. Things we don’t have in common: Rich families, trust funds.
That aside, this is not a book about Stanny, it’s about the many high-earning women she interviewed and the insights she has distilled into 11 chapters in Secrets of Six-Figure Women. Even though she began writing it before the GFC, her foreword notes that these women either survived the recession well, or were able to rebuild despite knockbacks. And as we find out, resilience is a key trait among high earners, among others. They aren’t groundbreaking secrets, but they are important reminders, and I suspect this is the kind of book you could come back to over the years for a fresh dose of motivation.
Read it if you: Struggle with underearning (want to earn more, and are capable of earning more) and having belief in yourself.
I had a bit of a wakeup call in 2015 when I realised I was putting other people’s happiness ahead of my own, and making myself miserable. It was also severely damaging my own financial situation. I really needed to read this book back then – if only I had known about it!
Gold Diggers and Deadbeat Dads mixes Rinds’ own story of financial hardship with other true tales of people who faced financial ruin thanks to the wrongdoing of other people. It’s entertaining, engaging and educational. And it’s a cautionary tale – choose your partners wisely, because they can make or break you financially. Rinds plays it straight – there’s no judgement here, just real stories told by real people.
I think there’s often a fine line between victim blaming and accepting responsibility for your own choices; it’s definitely one I have struggled with myself. If you have caretaking and enabling tendencies, you may very well find loved ones taking advantage of you financially. It may not seem like it at first, it may not feel like it, and it’s an ugly, painful thing to wake up to.
Read it if you: Struggle with financially supporting other people in your life and have trouble saying no.
Caveat: The Art of Money is a little hippy dippy, particularly to start off with. It’s not everyone’s cup of tea, but if it doesn’t put you off, then you might just find this a refreshing read.
What spoke to me was the heavy emphasis on the emotional aspects of money. The first half is devoted to untangling your relationship with money, and the second tackles more practical aspects of money management, interwoven with the values and emotions that are all tied up in what we bring to the table when it comes to personal finance.
I came to this book with a certain amount of regret and baggage that’s been weighing me down, and somehow I felt lighter for having made my way through it. Tessler’s incredibly compassionate approach and frameworks are the polar opposite of tough love – more like a warm bath or sustained hug. Sometimes, that’s just what you need.
Read this if you: Struggle with bad money juju that you need to get past and let go of
It sucks that books like this exist, but IMO they are a necessary addition to the landscape. I will say right now that I didn’t find any new practical strategies in here, but it was at times thought provoking and most importantly, it brought voices to the forefront that are otherwise stifled.
In an ideal world, it WOULDN’T matter who earned how much. But we live in the real world, with flawed workplaces and human relationships. How we feel about these things matters, just as much as how we deal with them.
And that’s where I got the most value out of this book: reading stories of other women struggling with inequality, resentment, and navigating complicated dynamics. The emotional turmoil, I would argue, is the hardest to reckon with, and this book is a reminder that you are not alone.
Read it if you: Struggle with being the breadwinner (there’s no shame in that)
I am not in law (or finance, or consulting, or any of those types of industries) and this book is definitely more targeted toward women in similar fields. I also count myself fortunate to not really have personally encountered sexism in the workplace so far. However, I know it exists and I have seen others run into it. And as I progress in my career and start thinking about how having a family might mesh with that, I found it interesting to read about the extra tightropes that working mothers walk. After all, career progression underpins finances, for most of us.
What Works For Women At Work identifies the four main issues women encounter in the workplace – Prove It Again, the Tightrope, the Maternal Wall and the Tug of War – backed by research. It’s non judgemental and tries to take a big picture view as much as possible: it’s not just you, the system is actually broken. The advice on actually dealing with those biases is a little light, but as we all know, there are no quick and easy fixes in this area. We can do as much as we can as individuals, but real change and real solutions go beyond that.
Read this if you: Struggle with progressing in the workforce and wonder why you aren’t getting ahead
“Money is the biggest stressor in Kiwis’ lives, and it is the young that are feeling it most.” – Stuff
Man, do I know that feeling. Money was the number one source of stress in my life for the majority of 2014 and 2015, and it was THE WORST.
We spend most of our lives working for money, and you can’t get by in the world without it. My life has only improved as my income has risen. It is not the #1 factor in my career decisions, but it is a significant factor.
I’m no longer ashamed to proclaim that I like, nay, LOVE, money. Like Bianca Bass, I’m taking a stand and putting it out there. She sums it up wonderfully in these three sentences.
“Money is wonderful. It’s the difference between having choices and having none. It’s the difference between worrying about bills and having the mental space to think about more creative things.” – Bianca Bass
Being broke is a time suck, and an energy suck. Things like navigating public transport in many cities, bargain shopping and researching every single purchase to save every possible cent takes up a huge amount of your time.
They say wealth is the ability to fully experience life. Hell, even a modest existence requires money – and in New Zealand, quite a bit of money, actually.
It’s not very PC to say that you like money and want more of it. People like to argue that money doesn’t solve all problems, that having too much money is just as big of a problem, etc… Which I just find so hilariously out of touch with most people’s realities. More of us than not are worrying about how to make ends meet, how to support a family, how to afford a comfortable retirement. Your average person is never going to have #richpeopleproblems – myself included.
“I think about how much money I’m making and how I could find more of it, not out of greed but out of a pressing need to know that regardless of what happens, I will always be able to take care of myself. I love money for the security it represents. Worrying about money has been a defining characteristic of mine for as long as I can remember.” – Megan Reynolds
Preach it… To me, money means options. It means peace of mind. I spent a solid chunk of time feeling panicked about money on a day-to-day basis. Downgrading that to mild worry has been awesome. I want to accumulate money, not for the sake of it, but for the security and freedom (ha yes, two slightly contradictory words) it brings.
It’s safe to say I never really gave retirement very much thought at all until this year.
But now that I’m not deathly worried about bouncing from cold damp rental to cold damp rental for the rest of my life, I can focus on other things.
Also, some of the things work has sucked me into lately are all about retirement savings and planning for the future. Heavy shit, in other words.
All around the world countries are struggling with the affordability of supporting retirees.
In the future we probably won’t be able to rely on superannuation, and will probably have to pay more of our own living costs and health costs.
Currently NZ has low levels of elder poverty – our high levels of home ownership, and NZ Super being universal, non-means-tested, and pegged to 66% of the average wage play a role in that. But soaring house prices mean home ownership levels are falling, and I can’t imagine NZ Super will be immune to the kinds of pension reforms that are underway around the world.
Seeing and hearing some of the things people say on this subject makes me shake my head.
I can understand indifference and inertia. I know it feels hopeless. You need to save so much for retirement and it seems like your money isn’t going very far. Hell, I know *I* should really be saving more. But something is better than nothing.
What I don’t understand is all the ignorance and paranoia out there around KiwiSaver. Seriously. 1) Take the free money, the rest of us are! 2) Your KiwiSaver funds belong to you, not the government. Let go of those tinfoil hats, people.
Save for the futures, dudes. It’s one thing to pay for the less fortunate – the non-able, whose who don’t earn a living wage – those who aren’t able to take care of themselves. It’s another (and kinda immoral IMO) thing to be a drain on the system because you simply didn’t plan ahead.
As soon as you can, get started. Even if you start small, you can always ramp it up. Every little bit helps. Time, at least, is on our side. Just do it.