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Monday, February 14, 2011

Insecure about money

Money is a sensitive topic for many people. I tend to be an open book in most areas of my life, including money and how I spend it. It's good to bounce things off of others who are in a similar (or even not-so-similar) place to help establish good spending, budgeting, saving, and giving habits.

But there's one question most people steer clear of: "How much do you make?"

I can think of two times I've been asked that question since I've been in salaried positions after college. Both people asking were related to me and both questions came out of a much extensive conversations. I didn't mind telling them if they cared. I don't care, so it's not something I asked them or have asked anyone else, but I don't mind if someone else wants to know.

What I find interesting about the question though isn't the fact that it's asked, but how I respond. I've found myself going to great lengths to try to give my salary context. In both cases, I suspected I earned more than the people who were asking me what I earned. It's as if I felt I had to then defend my salary for some reason.

I found myself explaining how high the cost of living is where I am. Sure, it's cheaper here than in San Francisco or Washington, DC, or New York. Compared with other large cities, we aren't in the upper tier of expense. But both people who've asked me have been from more rural areas where housing is half the cost of the Twin Cities.

I found myself explaining that our home cost quite a bit less than the average home in our city, that my income is somewhere around the median household income for our area (statistics vary by source). Of course, the fact that Jamie doesn't work got thrown in there as well. After all, we're living in this pricey climate on just one income!

I found myself throwing in vague information about payments that we had and how quickly we're trying to pay them down or how aggressive we are about trying to pay our house off in closer to 15 years instead of 30.

And afterwards, I found myself wondering why I bothered to stumble over the details. Why did it really matter? I was asked a simple question, I gave an answer, but I gave much more than just a simple answer. Why did I feel the need to add all of the context? Why not let the person asking the question figure out the cost of living factors? Or why not just let them think I make more relative to my cost of living than I actually do?

I'm not really sure exactly why I cared to elaborate. I think some of it is just trying to put myself on a level playing field with the people asking. If I think or know they make less than me, I don't want them to be intimidated by my higher earnings or wish they had that or think differently of me because of it. So I downplay it.

Four years ago, I made far less than I do now. At that point, any time I got in a discussion about what I did for a career, I was always quick to give my position context. I made sure people knew it was a stepping stone, that I wasn't planning to be "stuck" there. I think I really exhibited some of the same insecurity, just the other way around. I wanted to feel validated, like I was actually going somewhere, like I wasn't just some liberal arts major who was stuck in a dead end job that had nothing to do with his degree.

I wish I didn't think of money in this way. I wish I didn't subconsciously associate the success of friendships with relative economic power. (In other words, I think I have a subconscious thought that if someone else makes what I do, we'll probably have the ability to do - or not do - the same or similar things. Our budget for eating out and our ability to take a weekend getaway together or do anything else recreational is obviously tied to our ability to pay for it, so I find that I think in those terms without even realizing it.)

I think my response shows to some extent how important a factor money is to me, or at least how much I think about it without even thinking about the fact that I think about it. Maybe it shows how insecure I am about how I spend it. Our spending is exposed in so many areas. Cars, vacations, and televisions are very visible. Sure, the number of miles or the actual expense of the vacation or television may not be known exactly. But they're must more visible than the check you wrote to your church or the Salvation Army.

I hope if I'm ever asked how much I make again, I respond better. I hope I can be more matter of fact about it. I don't expect my friends who make more than me to explain to me what they do with all of it. And ultimately, if someone wants to know all of those details, they can ask me. I'll be happy to divulge them and be held accountable for it.



Anonymous Bill Roehl declared,

When doing this for a job I relay to them my salary + benefits and round up + 7,000(when searching for a job and it's absolutely required that I provide that information something I am generally not comfortable in doing).

Anyone else asks and I really don't see a need to tell them, I just make up random numbers. It's more fun that way. (And no, you aren't someone I just make up random numbers for :-))

2/14/2011 10:51 AM  
Anonymous Kandi declared,

So-o-o-o-o, Joey, how much money do you make? ;)

2/15/2011 7:34 AM  
Blogger Jamie declared,

Lol Kandi, I was just waiting for that comment to come. :)

2/15/2011 9:14 AM  
Blogger Joey declared,

I make more than some of my friends and less than others, more than I deserve and less than I want, more than I need and less than I could spend.

I was thinking about this last night. I think money is less about how much we make and more about what we do with it. I may have to write another blog post on that...

2/15/2011 10:27 AM  
Blogger Tim declared,

You're very right about what how much money someone makes means depends on a lot of factors. For example, I have single friends who don't really make much money, but because they have little or no debt, a modest lifestyle (paid off cars, basic apartments, etc.) and no dependents, they have money to spend on things like random trips to Vegas whenever they feel like it. Conversely, I know two-income households where both people actually make very good livings, but because they have expenses like massive student loan debt (advanced degrees don't come cheap) and children to provide for as well, they have to watch what they spend and save money as best they can. And then you add in things like different costs of living in different geographic areas, like you noted, and it gets still more complicated. So it's not always easy to look at someone who makes X amount of money and know how well off they truly are.

But of course, another factor is that as people make more money, they spend more money too. Here, I'm not just talking about things like the expense of raising children, but things like thinking they need to have a 2500 square foot house in a nice neighborhood, a couple of new or newish cars that they are paying off at the same time, vacations, maybe a cabin, gym memberships, et cetera. That's why I think households who make, say, $150K/year don't feel as well-off as they actually are. If they spent like their income was half that, then yeah, they would probably feel richer. But to a certain extent, I don't think it's just that people want these things, but that they need to have them as well to keep up appearances and fit in with their socioeconomic peers.

That's what makes money so tricky -- it's not just about the numbers, but a huge amount of psychology as well.

2/15/2011 10:15 PM  
Blogger Joey declared,

Tim, I know I'm late on this but I still had your comment sitting in my inbox. I especially liked one comment you made: "another factor is that as people make more money, they spend more money too." That's the fundamental problem. It's true, they're budget-strapped, but it's because they chose to be. To a certain degree though, I suppose we all choose to be as budget-strapped as we are (or aren't).

2/19/2011 11:53 AM  

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