When your finances are tight, you have two options before you. You either cut costs or increase your income. In most cases, people opt for the former because it is the fastest thing to do. You simply choose not to pay for something that you usually do when there is an immediate financial need. However, increasing your income is usually preferable because it keeps you and your family from feeling the burden of the financial difficulty. Of course, only the person who is trying to earn more will notice the change. The good thing about it also is that after the crisis has passed, you will benefit from the additional income that you have set up already.
But we all know that increasing your income is easier said than done. After all, the unemployment rate, although it has improved after the Great Recession, is still not enough to sustain what the middle and lower class really needs.
Lately, the issue about income inequality have come into the spotlight once more. Apparently, the gap between the rich and the poor is steadily increasing over the years. According to EPI.org, in 1979, 53.9% of the income increase in the US was taken home by the top 1% earners in the country. Over the period between 1979 and 2007, the income growth of the top 1% is 200.5%. For the remaining 99%, it was only a pitiful 18.9% growth.
Given these figures, you will know that even if you work hard on your job, statistics show that you will only get so much out of the overall income increase that the country is getting. But then again, maybe increasing your income is not really the solution.
What if you are told that obsessing about earning more will cost you more in the long run?
Why are Americans obsessed about earning more
First of all, let us identify why Americans are obsessed about increasing their monthly cash inflow. There are a couple of reasons why we are constantly after a higher take home pay.
It in our culture.
Americans love everything in excess. We are not really sure how all of this began. A lot of people say it was after the war when people started buying bigger homes and borrowing money to pay for that. Some believe it was after the credit industry loosened their approval restrictions. But regardless of how it started, you cannot erase the fact that if given a choice, we would prefer to live in bigger homes, drive expensive cars, own countless clothes and shoes, and have all the latest gadgets that we can get our hands on. Of course, all of these require money and that is one of the factors that influences our pursuit of a higher income. Not because we feel that our work deserves it. But more because we want to own more and better things as we age. Bob Sullivan, in his website BobSullivan.net actually calls us “the land of the Restless.” He explained how Americans are continually restless and that even though we earn more, we are never really satisfied. After an increase in income, we usually end up still falling short financially. That indicates a problem with the way we use our money, not the amount that is actually coming in.
We have accumulated a lot of debt.
Another reason why we are compelled to earn more is because of debt. Thanks to the consumerist society that we grew up in, we believed that owning more means we get to appear more affluent. Unfortunately, we were not taught to save up for it first. We used credit left and right just to satisfy the need to own more. That resulted in a lot of debt. Since we have to worry about debt payment on top of our monthly expenses, our income ended up being insufficient. It means increasing your income is now a must. Of course, you have the option to lower your monthly debt payments through debt relief. However, that will make the payment period stretch out longer – unless you have opted for debt reduction. But in most cases, the income increase is the solution to pay off your debts a lot faster.
Our future goals require money.
On a more positive note, people want to earn more because they have dreams for the future. You strive on increasing your income because you want to retire early and comfortably. You want a higher pay because you want to send your kids to a good school. You work two jobs because you want to save up for a new home. These are great motivations to increase your earnings but make sure that your target is realistic. Do not go over the top because you might end up exhausting yourself.
How working harder actually costs more money
Let’s be honest, we all want to earn more money. This is especially true for those who come from low income household. However, the issue here is this: what are you giving up to get that income increase?
Here are a couple of things that you are giving up when you choose to earn more.
- Time. In most cases, increasing your income means you have to allot more time working. That means you are sacrificing the personal time that you should be spending with your loved ones. Even those who are single are sacrificing the time that should have been spent on their personal well being. You may want to think about the quality time that you are losing with your spouse, kids and friends.
- Chores. This is connected with the time that you are losing out to work. Since you are working more, you have less time to cook, clean the house, etc. That means more money is spent on take out food, and probably hiring someone to help around the house. It could also mean doing the laundry twice because you are too tired to finish a week’s load of dirty clothes.
- Health. Another thing that you may want to look into is your health. According to an article published on PRB.org, after the Great Recession, people got back to work but it was usually to a job that pays lower wages. That means if you want to increase your income, you may have to work longer or get two jobs. Working longer hours because you are bent on increasing your income means your physical and mental condition is more stressed. That could take its toll on your body and increase the risk of you getting an illness. We all know how costly it is to get health care nowadays so make sure your need to increase your salary is worth it.
In the end, you have to weigh what working more will really cost you. Your health, relationships and personal well-being may not be measurable but they are all equally important in your life. Make sure that you are not abusing what your body can handle.
If increasing your income can be done without you having to work longer hours, that is the ideal situation. Setting up a passive income business is a great place to start. Think about your options before plunging into the task of earning more. You can even capitalize on a hobby so you can increase your income while enjoying what you are actually doing.