Are You an Underearner?

We survived 2012 and the New Year is upon us! There is something exciting about a new year...a fresh start! I did a little research and found that according to the University of Scranton, 45% of Americans make New Year's resolutions and the 3rd most popular resolution is to spend less and save more. (Number 1 and 2 are lose weight and get organized.) So simple right. Nope. Figuring out the right combination of spending less and saving can be nearly impossible for some people. And only 8% of people achieve their resolutions. Let us help you fall into that 8% so you are not making the same resolution next year.

First, ask yourself these questions

Do you have a high tolerance for low pay? Are you constantly finding yourself thinking about money? Do you earn less than your potential despite your need or desire to do otherwise? If so, you may be an underearner and all the budgeting in the world may not help you until you address the under-lying issues that are holding you back.

Many of my clients come to see me because of issues that have evolved due to overspending. Overspending can lead to major troubles such as overwhelming debt, strife in relationships, and ill-health due to stress. Several posts on this blog have discussed how to make changes to your spending so that you can live within your means. Sometimes it may even be recommended that you earn more through a second job or a new job with higher pay. These are budgeting issues and strategies, and are focused on getting your outer-financial life under control.  Very important, but what if the problem is not overspending, but underearning?

Underearning is different than having a budget that is out of balance, or not making enough money. Underearning is a pattern of behavior and thinking that holds you back from having the life you want: holds you back from achieving “financial independence” in which you have the resources you need to live a satisfying and comfortable life: the resources to accomplish your dreams and goals.

According to Barbara Stanny, who wrote the book “Overcoming Underearning”, the definition of an underearner is one who earns less than his/her potential despite his/her need or desire to do otherwise. It is different than “voluntary simplicity” which is a conscious choice to live on less in order to have a simpler life. It is different than being a “mindful low-earner”, someone who enjoys what he/she does because it feeds his/her soul and also provides adequate income. No, underearning is a condition of deprivation in which physical and emotional needs are not being met. It is rarely a conscious choice, but many people I meet with are trapped in this mindset.

Are you an underearner?  Below are the top 10 traits of underearning. How many apply to you?

Underearners feel trapped

Do you feel stuck? As if you have no control over your life? Underearners will justify, defend and rationalize their situation so that they don’t have to look at their options or make changes.

Underearners give their power away

Do you project your power “out there”? This can come in the form of “if only” statements like, “If only I’d win the lottery”, “If only Prince Charming would come”, “If only the system weren’t rigged”, “if only my job paid more.” These thoughts may be stopping you from making choices to change your situation: If the problem is out there, then so is the control to solve it.

Underearners underestimate their worth

Volunteering is great and can be a valuable experience as well as personally rewarding. But if you are wishing you made more money and are constantly giving away your time, knowledge, skills or experience there is a disconnection between your actions and behaviors.  This can come in the form of self-employed folks offering to do a job for less than it’s worth, new-hires being unwilling to negotiate salary in a new position, or an employee who works off the clock to get the job done.

Underearners crave comfort

Making change is uncomfortable and chronic underearners hate being uncomfortable, so much so that they will often unconsciously sabotage their success to avoid the discomfort. Being successful can make them feel like an imposter who will soon be discovered as “not good enough”. They’d rather stay in their comfort zone than feel that distress.

Underearners are self-saboteurs

Self sabotage can come in so many forms that underearners may not realize they are even doing it. Because they underestimate their worth, they are unable to recognize their successes. Other forms of self-sabotage include procrastinating, job hopping, take on too much or too little. It’s a little like training really hard for a marathon, coming close to the finish line in first place, and stopping to tie your shoe only to see others pass you by and take first place.

Underearners are co-dependent

In a nutshell, co-dependency is when you are preoccupied by someone else’s life. Their needs become your own and often eclipse your true needs. It’s the curse of always putting others first and not taking care of yourself. Co-dependency creates victims – and the victim is usually you.  Caring for others before yourself is a form of self-sabotage and it can destroy careers as well as lives.

Underearners live in financial chaos

Living paycheck to paycheck, struggling to make ends meet, racking up large amounts of debt, and going from one financial crisis to another: the feeling of never getting ahead. Does this sound like you? Many of the folks I work with come into my office exhausted and fed up with working hard and having nothing to show for it. If you are working two jobs, putting in long days and having few-and-far-between days off, and still not getting ahead it may be time to figure out what you can do to achieve financial independence.

Underearners are vague about money and success

Do you know how much money you earn? How much you owe? How much you need? What does success look like for you? Feeling like you have the tools to be “successful” but never being able to quite get “there”, without knowing where “there” is, is a good sign that you could be an underearner.

Underearners are “anti-wealth”

Underearners are ambivalent about wealth and sometimes straight out negative about it and those who have it. This can show up as disliking the wealthy, criticizing those who focus too much on their finances, taking pride in living on a “shoestring budget”, or believing in the “nobility” of poverty.  Sometimes we feel ashamed to admit that money matters to us – we don’t want to seem selfish or greedy. It’s pretty easy to see how this can get in the way of earning enough to achieve financial independence.

Underearners are controlled by fear

As suggested above, underearners may have a great fear of success, and of failure; of being judged; or of being liked or not liked because of their money. They may be afraid of the responsibility of having money so they spend whatever they make, or don’t pay attention to how much they are over spending and build-up debt. They may refuse to see the reality of their situation, choosing to avoid making the changes they desperately need to make – staying “comfortably miserable”.

Making change does mean stepping out of your comfort level for sure, and for some of us it is the hardest thing to do. The good news is, even though being an underearner is rarely a conscious choice, many of the conditions and beliefs are self-imposed and therefore each person has the power to change them.  There is both “inner-work” and “outer-work” to be done. If you think you may be an underearner, LSS Financial Counselors can help with the tools to take control of your finances, which is part of the “outer-work.” It’s up to you to make the changes within.

Author, Shannon Doyle is a Certified Financial Counselor at LSS. Call 888.577.2227 or visit our website to meet with a counselor.