Financial Lifesaver Barbara Stanny’s Five Steps to Overcoming Underearning

April is Financial Literacy month! In honor of this month, we have arranged a couple of Q&A’s with our financial speakers in order to get a better understanding of how to improve money management skills.

For the past 40 years, Barbara Stanny has been successfully coaching clients to make better personal and financial goals. In this Q&A, Barbara provides 5 tips on how to overcome underearning!

Q: The typical U.S. household makes $51,000 per year. What advise would you give them about how to overcome under earning?

A: Underearning—the inability to make more money despite your efforts or desire to do otherwise— is a widespread condition affecting millions of Americans. But one thing I’ve discovered—after interviewing hundreds of high earners, overcoming my own chronic underearning and teaching Overcoming Underearning classes for over 20 years— each and every one of you can make more than you’re making now. Underearning is not a life sentence. And no matter your gender, age, or occupation, Overcoming Underearning is a lot more in your control than you realize. The secret is not working longer hours. It’s by following these five steps.

STEP #1. TELL THE TRUTH

Begin by admitting what’s not working in your life and analyzing why. There’s tremendous power in telling the truth. Clarity alone often generates change. Until you stop denying, or diminishing, your difficulties, you can’t possibly do anything differently. Your first peek at the truth may evoke temporary panic. But, rest assured. Situations can rapidly improve once you take off the blindfold.

STEP #2. MAKE A DECISION

Nothing will happen until you make a conscious and committed decision that financial success is a pressing priority. A decision is not the same as a want or even a goal. While a goal denotes the desired destination, a decision implies the determination to reach it. Here’s the beauty of this step. You don’t need a plan all figured out. All you have to do is decide what you want and do what comes next. Decisions are like magnets. They attract opportunities.

STEP #3. STRETCH

Those opportunities, however, always lie just outside your comfort zone. Success can only be achieved by stretching beyond what feels comfortable to what may seem impossible. The stretch looks like this: feel the fear, endure the discomfort, observe the resistance, and go for it anyway. Keep in mind: the discomfort is short-lived, but the rewards are life changing.

STEP #4. CREATE COMMUNITY

The people you hang out with radically affect your ability to succeed, or not. Underearners tend to operate in isolation or gravitate to pessimists, worrywarts, negative folks who want to hold them back. High-earners, however, surround themselves with people who cheer them on and inspire them to aim higher. How do you find a supportive community? One way: join organizations where you’ll meet the kind of people you want to be, not who you’ve been.

STEP #5. RESPECT AND APPRECIATE MONEY

Overcoming underearning isn’t limited to pocketing a fatter paycheck, but to achieving Financial Independence. Financial Independence does not come from what you earn. It comes from what you do with what you make. There are four rules for respecting money:

1. Spend Less (Only buy what you can easily afford)

2. Save More (Pay yourself first)

3. Invest Wisely (Put money in assets that grow in value over time.)

4. Give Generously (Use your money to make a difference.)

No matter how sizable your salary, unless you adhere to the first three rules, you’ll find that money will exacerbate your stress rather than enhance your well-being. After all, the whole point of overcoming underearning is not just to earn a good living, but ultimately to live a good life and help others do the same.