Almost everyone these days has done some belt-tightening to make ends meet. But for some in the workforce, financial crisis is an ongoing issue regardless of the national economy. Personal finance experts such as Jerrold Mundis and Barbara Stanny call these individuals “underearners” and say that their rank is strong.
“Underearners repeatedly gain less income than what they need regardless of the overall economy,” explains New York City-based Mundis. The problem cuts across all social and occupational strata and leaves an emotional and physical toll. Even when the economy is on the rise, they continue to struggle.
Mundis, who identified the group in his bestseller, “Earn What You Deserve” (Bantam, 1996), says that an underearner will repeatedly gain less income than he or she needs even in the best of times.
The goods news is that underearners can turn their lives around. Like any self-help group, the first obstacle is identifying the issue. Underearners share some common characteristics: they’re typically in debt, they do a lot of unpaid volunteer work, they’re unaware of their true expenses and they fear money or believe money can solve all their problems.
“Coming out of the dark means telling yourself the truth,” explains Stanny, author of “Overcoming Underearning: A Five-Step Plan to a Richer Life” (Harper Business 2007). “Unless you confess what’s not working and figure out why, you’ll never be able to make things work any better.”
Recognizing that you undervalue your work is a big step, says Mundis. One of his first suggestions is to ask for more. Request a raise or raise your rates, by even just 25 percent. “Sometimes, freeing yourself from underearning is not a matter of changing jobs, doing different work or doing similar actions, but simply being paid more for what you already do,” he says.
Stanny has been counseling underearners for years. She has a five-step method for overcoming underearning that starts with telling the truth. The other steps are as follows:
• Take action: Set the goal of making more money a priority. You don’t need a plan right away. But the commitment will draw opportunities to you. Once you make a firm decision, you’ll encounter coincidences, changes in other areas of your life and resistance.
• Stretch: This step means entering a zone of discomfort and facing your fears. To overcoming underearning, you must seek opportunities to stretch and do what you think you can’t do.
• Create a supportive community: Surround yourself with four types of supporters. True Believers will cheer for you. Confidantes will listen. Way Showers will exemplify what’s possible. Messengers will provide necessary information.
• Repect money: Learn how to manage your own money and abandon the fantasy that someone else will be responsible for your financial security. Spend less, save more, invest wisely and give generously. “Cutting back doesn’t mean cutting out completely,” says Stanny. “Instead, track your expenses, do a spending plan and educate yourself financially.”
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