I’m running an informal book club here on the blog, working through the chapters of All the Money in the World one week at a time. You can join us at any time; there are links to previous weeks at the bottom of this post.
This week it’s time for Chapter 2: Don’t Scrimp More, Make More. This was probably one of my favorite chapters to write. When I was researching this book, I read a lot of tomes on various frugal practices, and I felt many left a lot to be desired. Sure, many of us have fluff in our budgets we could cut. But the first things we think to cut — those recurring, discretionary expenses like lattes, dinners out, lunches with the gang at work, gym memberships, cable, fun items in the grocery store — are often things we really enjoy. Cutting them extracts a pretty high price in happiness for the amount of people’s budgets they actually save. If it truly pains you to give these things up, and you can’t (in the short term at least) change big expenses like housing, then you’ll need to find a way to make more.
As I was writing this chapter, I realized there are two kinds of people in this world: people who think you can change your income, and people who think you can’t. I am very much in the first camp. This mindset is intuitive to me because I’ve been freelancing my entire professional life. My income has been all over the map. The years it’s up, it’s usually because I’ve sought out more clients and pitched more pieces and taken on bigger money-making projects. The years it’s down, it’s either because I’m focusing on something that hopefully will boost my career in the long-term (like books) or because I’m not working as many hours (perhaps because I have a newborn around). There is a direct connection between what I do, and what I make.
If you get paid by the hour, there’s a connection between how much you work and how much you get paid, but all dollars are bought at the cost of hours, as opposed to efficiency gains or scaling projects up. And in salaried jobs, you tend to lose even that connection. You may get a raise with your annual review; you might get a bigger raise if you score a promotion. And, of course, if you get a job offer with a higher salary, you can take that, or ask your employer to match it. But these are obviously rare events. And in some professions there are salary scales that preclude much negotiation.
But I still think it’s helpful to think about how one might increase one’s family income. Perhaps not all adult family members are maximizing their labor force participation. If the kids are older, it might be possible to increase hours worked without shelling out much for childcare. The are many jobs in this world; if you don’t like your current one, it’s always possible you’d like a better paying one better. You can take additional classes and certifications in your field, you can move around between companies in your field, you can aim strategically for the next promotion, or you can figure out a sideline. Maybe it will be something creative that taps parts of your brain your main gig isn’t. Maybe it will be something you’d like to try full-time later in life. One way to get your brain going on this front is to ask how you might increase your family’s income by 10-25% next year, if you decided that was a family priority.
If you look at what it would take, and decide you don’t want to do it, or it would involve too many trade-offs, that’s fine. But at least then you know why you’re cutting your restaurant budget, and you’ll be more motivated to stick with such austerity than if you never thought of the income option.
Anyway, here’s this week’s discussion question: have you or your family ever experienced a major change in income? Up or down? What precipitated it? What changes did you make as a result? Is there anything you decided to start doing with your money that you hadn’t before? And if the change was a cut in income — either intentional or otherwise — what did you start doing differently to weather those changed circumstances?
My answer: in 2001, I started a year-long internship at USA Today. My take-home pay was roughly $1200 a month (which I later augmented with freelancing, but not at the beginning). I’d figured out how to live on that amount, but it wasn’t a lush life. No car, three roommates, lots of generic groceries, dinners out usually only on dates — sometimes it’s good to be a girl. During this time, I saw a gorgeous photo-realistic water color painting of a strawberry in a studio at the Torpedo Factory near Old Town Alexandria (VA). I was not really in the position to be purchasing original art at that point in my life, but I wrote down the name of the painting and the artist. Fast forward three years. I was earning much better money after the freelancing thing had taken off. I tracked down the artist and learned that the painting hadn’t sold. Given how quickly most of her other ones do, this was kind of extraordinary. I took it as a sign it was meant to be. I later purchased two other strawberry paintings from her, and love seeing them on my hallway wall — a constant reminder to me that circumstances can change. How about you?