Why some people earn more than others
High-income earners often display some particular traits.
In June, a user at Ask MetaFilter wondered: What are the differences between someone who makes $100,000/year and someone who makes $30,000? As you might expect, this question generated a lot of discussion -- all of it interesting.
Many commenters noted that, from their experience, high-income earners generally exhibit several of the following traits:
- They maintain a strong work ethic.
- They don't watch the clock.
- They seek to improve their skills.
- They do quality work.
- They're flexible and adaptable.
- They maintain a good social network.
- They possess self-confidence.
A few commenters noted that there are two other factors that absolutely play a role in how much a person earns. Chief among these is choice of profession. Even if you're the best damn high school physics teacher in the world, you'll still probably earn just $50,000 or so. (But if that gives you a fulfilling life, that's probably worth more than a high salary.)
Hard work, etc., do not guarantee a higher salary -- but they do improve the odds. A second oft-overlooked factor is luck. Chance. Happenstance. There's no question that luck plays a role in how much a person is paid. But as I've argued in the past, in most cases luck is no accident. It's possible to make your own luck -- to a degree.
Lots of people make six figures, including plumbers, business managers, attorneys, high school principals, military officers, technicians, landlords, psychologists, and people in thousands of other professions. The common denominator is that they've figured out what they're good at that other people are willing to pay them to do.
From my own experience, I know that while I was stagnant and
uninterested in my career, my income was also stagnant. It wasn't until
I decided to take charge of my own life that my financial situation
improved -- including the amount I was earning.
I've seen the same in the lives of my friends. It's easy to coast, to become complacent. But it's important to remember that with incomes especially, nobody cares more about your money than you do. If you want to earn more, you must play an active role in obtaining the money.
Finally, I want to note that a high salary is not the panacea many people believe it to be.
Sometimes the costs of a high income make the payoff less than you
might expect. For example, I have a friend who is an attorney. He makes
a fair amount of money. But he's also burdened by outrageous student
loans and business expenses. Though his income is high on paper, it's
actually rather modest after he's paid for his necessities.
High-income earners face another problem that prevents them from getting ahead: lifestyle inflation. Sure, that's a nice problem to have, I suppose, but if you don't learn to control your spending as your income increases, you're not really much better off in the long run than somebody with half your salary.
Ultimately, I don't know if it's possible to say that there's any one magic thing that leads one person to make more than another. Yes, hard work probably makes a difference. But so does luck. Have you noted a difference between the high-income earners in your life and the low-income earners? Is there a pattern? Or does it all seem rather arbitrary?
Addendum: I seem to have done a poor job of conveying my message today. I'm not trying to imply that "poor people are lazy" or anything of that nature. However, I do think there must be differences between high-income earners and low-income earners, that it's not purely a matter of luck. So, what are these differences? It must be possible to have an intelligent conversation on this subject without being rude and without becoming defensive.
Related reading at Get Rich Slowly:
- How to negotiate your salary
- Who earns minimum wage? A statistical profile
- How to escape from minimum wage
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
An annual cap on flexible spending accounts is increasing medical costs.