Overcoming Underearning

Just the title of this book puts a jolt through me every time I look at it. Overcoming Underearning! Barbara Stanny teaches financial literacy, and she defines underearning as not reaching one’s earning potential. This probably applies to most people, because how do we know what our true earning potential might be? How do we know whether we have more in us or what heights we can reach? Of course, it definitely applies to the half of American men and women who feel underpaid. What if our underearning has its roots not just in external economic conditions, but in internal beliefs and assumptions?

Case in point: An acquaintance patches her income together from a variety of sources, including cleaning houses, pet-sitting, and other odd jobs. She doesn’t count her income by the month or the week, but literally by the day. Yet she related how she had cut her rates for her most demanding client, and then drove her an hour to the airport for free. For someone who needs to make every dollar count, why would she give discounts and free labor to someone who is difficult to work with? Especially when it takes up time she could be using to earn more money doing easier work? Overcoming Underearning points out that giving away our work for free is a common behavior.

According to the underearning quiz in the book, my acquaintance scores at least a 13/15 as an underearner. That’s based on things she has said directly to me, and it’s entirely possible she would agree with the other two if I asked. Yet she also has many of the traits of a high earner. That’s a paradox that, again, probably applies to most people. Why is it that working hard isn’t enough?

One of the most interesting insights in Overcoming Underearning was, for me, that high earners simply don’t identify with the way that underearners think about money. The rules and beliefs and structures that we put up around our careers, our finances, and our business decisions don’t make sense to them. This strongly implies that as long as we hold these beliefs, it doesn’t really matter what we do, because what we’re doing will not lead to promotions, wealth, being debt-free, or other goals.

Another great feature of the book was the list of Twelve Signs You’re in Resistance. This should be available on a poster, t-shirt, coffee mug, tote bag, and giant billboard directly across the street from my front door.

Barbara Stanny gets it. She’s clearly talked to so many hundreds of people, all of whom have their own special, inaccurate reasons why they should stay broke forever. She’s also seen the way that this information can transform someone almost overnight. This book deserves to be a classic.

Favorite quotes:

I knew that staying stupid was not an option.

“If I admitted that I was an underearner... then I would need to do something about it.”

For every excuse you give me, I’ll show you someone in the same boat who is prospering.