FINANCE

Under-Earning: The shameful side of the financial stress puzzle

When it comes to the subject of ‘financial stress’ a lot of energy and attention is paid to our spending: where does all our money go, we are urged to ask of ourselves and our partners.

The insinuation is that we share a horrible flaw: reckless and clueless impulse spending. That we are over-spenders, who at best use money to still difficult emotions and at worst cannot control our greedy desires.

For some people, sadly, those are uncomfortable truths. But just as many people try with all their willpower and attention to detail to live within their means but cannot seem to make ends meet. For many of them the opposite problem to over-spending applies: under-earning.

Earning less than your skills suggest you should wouldn’t be a problem if it wasn’t so damn expensive to live; so huge numbers of people are driven into debt.

US households on average carry US$132,529 (A$172,326) in debt, according to American financial advice website nerdwallet.com. In Australia the figure is even higher, skyrocketing to A$245,000, according to the National Centre for Social and Economic Modelling (NATSEM). Much of those debts are mortgage repayments, an essential cost and also an investment in our futures. So unavoidable.

But what about credit card debt? In the US, the average credit card debt per household is US$16,061 in (nearly A$21,000), according to nerdwallet’s 2016 American household credit card debt study. Card debt is lower in Australia, but still over A$4362 per cardholder.

“Many people assume that credit card debt is the result of reckless spending and think that to get out of debt, people need to stop buying designer clothes and eating at five-star restaurants,” says Erin El Issa, author of the report.

That is often untrue. “Many people use credit cards to cover necessities when their income just doesn’t cut it,” El Issa wrote.

Nerdwallet found US household debt had increased 11 per cent in the past decade – mainly because growth in the cost of living had outpaced growth in wages: “Median household income has grown 28% since 2003, but expenses have outpaced it significantly. Medical costs increased by 57% and food and beverage prices by 36% in that same span.”

One answer to how we cope with going backwards even when we have the best of intentions is to confront the issue raised near the start of this article: under-earning.

But beyond a state most of us find difficult, even shameful to talk about, what is under-earning, exactly?

First it’s useful to identify what under-earning is not. Barbara Stanny, author of Overcoming Underearning: A Five Step Plan for a Richer Life wrote in Forbes in 2011 that an under-earner is not someone who chooses a low income, or a simpler life without much work. “It is always a CONDITION OF DEPRIVATION [sic] not just of money, but of time, joy, freedom, choices and self-esteem,” Stanny wrote.

Under-earners are often drowning in debt and vague about money, she wrote. They might even have an “anti-money attitude”, unwittingly sabotage their own career prospects and underestimate their value at work.

Often they are also co-dependent (meaning they put others’ needs ahead of their own).

Under-earning is a chronic condition that’s not going to be fixed in a day, let alone by reading an article, but awareness of it can start to break decades-long negative cycles. People work through deep-seated issues like these using anything from various forms of therapy to 12 step recovery to mindfulness practice.

The latter approach can help alleviate financial stresses and strains at two levels. “Mindfulness practice won’t necessarily change your earnings,” says Tomas Jajesnica, Chief Mindfulness Officer at Financial Mindfulness and a corporate-based mindfulness trainer and meditation teacher.

“But it will give you a new awareness of what you are doing and help change your approach to what and how you spend and what you earn.”

Jajesnica says regular mindfulness practice will help people clearly see the reality of their situation, “instead of being stuck … with your mind racing 100 miles an hour” – and will give you the calm to deal with it. And you’ll need that calmness because negative, even painful, feelings are likely to come out of seeing the realities behind your financial stress.

“Frustration can be sign of a breakthrough,” Jajesnica says.

“It might help you get into action, perhaps seeking a pay rise, having an authentic conversation with your boss or it might put you into gear to pursue a better-paid vocation, either within the same company, the same industry or by doing something totally new.

“Either way, if you change your relationship towards money by first accepting the reality as it is, is a great start to this process.”

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