PART 1 Make Money The money that goes out--whether you spend it, save it, invest it, or give it away--has to come from somewhere. That generally means earning it. And that's a good thing. Getting paid is an indication that others value what you do, how you think, and who you are. All of those things are a boost to your self-esteem. The rules in this section will help you understand how to earn what you're worth, how to extract the most happiness possible from those earnings, and when, in fact, you shouldn't do that particular work but instead delegate it to someone else. 1. Your job is your most important investment. For years, you were told your home and retirement accounts were your greatest assets. Wrong. If the Great Recession has proven anything, it's that your job--more specifically, your earning power--is by far your greatest asset. Protect your financial security by treating this asset like any other investment. If your work profile is risky, you're paid on commission or bonuses rather than straight salary, or your job security is largely tied to the economy, it's like a stock. If it's more stable, you work for the government, you're one of the lucky few who still has a traditional pension plan, or you're a tenured teacher or college professor-- you're essentially holding a bond. Consider this when you fashion your asset allocation: Those in "stock-like" jobs need to account for that by being a little less aggressive in their other investments. Those with job security can take a little more risk. 2. Your education is your second-most important investment. The rising cost of college has led to a populist cry that college degrees aren't worth the money. That's completely backward. A study from Georgetown University shows the value of a college degree is going up. The typical worker with less than a high school diploma will earn $973,000 over the course of a career. The typical professional (think doctor or lawyer) will earn $3.6 million. College grads fall halfway between. The pay gap between those who go to college and don't has gotten wider--and is expected to continue to grow. This isn't just an income gap--it's also a "social" one. College grads are more likely to get and stay married, to have strong networks of friends, to be active in their communities, and are less likely to be obese and smoke (both are wealth reducers--see rules #82 and #83). It's also important to note that graduating from college is more important than where you graduate from college (although a 4-year degree does pay off better than a 2-year one does). Bottom line: The more you learn, the more you expand your horizons and rack up cold, practical experience, the more you're worth to someone who needs your talents. Your stock can rise in any economy. 3. Know your worth on the open market. Are you worth more than you're earning today? Or less? If you don't know, that is a huge problem. If you're under-earning, you're losing money every day you're not asking for more. If you're overpaid, you're ripe for the chopping block, and you'd better update your skills or improve your productivity. You can find salary information online. Better yet, ask a friend or colleague at a competing firm, "What would someone with my skills be paid at your company?" 4. If you don't ask for more money, the answer will always be "no." Here's a shocker: In 2011, newly-trained female doctors earned salaries that averaged $17,000 less than newly-trained male doctors. It's not that women were picking less-lucrative specialties or that they were asking for more flexible work schedules. That used to be the case, but not this time. The difference this time was a problem that's existed for years. Women don't ask. Whether you're a woman or a man, you have to ask for the money you want. The answer may not be the one you're looking for. But if you don't ask, the answer will always be "no." 5. You're never more valuable than when someone else wants you. If you've been at your job more than a few years, chances are you're underpaid. The last few years have been some of the leanest for salary increases in three decades. Who did receive a decent raise? The guy or gal who jumped ship, that's who. Someone else recognized that person's value. You can do the same, but note: This gambit works best if your last performance evaluation was stellar and if taking the new job is something you're actually willing to do. That's the best way on the planet to earn a raise. 6. The four most powerful words in any negotiation: "Can you do better"? You're sitting in the office of the person who's dying to be your new boss. He's just offered you a job that you really want with the title you've been craving. The only hitch: The salary isn't where you'd hoped it would be. Don't commit--at least not until you ask, "Can you do better"? It's the perfect haggle. You sound as if you know there's wiggle room, and you're willing to let him work his magic. And note: This works just as well when you're on the phone with the cable company, at the mechanic for an oil change, talking to a mortgage rep about locking in a "refi" rate. It even-- I know from experience--works with teenage kids. 7. "More money" won't always make you "more happy." The next time you're considering taking a job "just for the money" remember this: Money only buys happiness to a point. Beyond that, more money makes no difference in how happy you feel. According to some Nobel laureates, $75,000 buys happiness. That's an average that varies regionally--happiness is more expensive in Manhattan, NY, than in Manhattan, Kansas. But the message is this: As long as you earn enough to pay your mortgage or rent, put gas in a car that's not a clunker, eat what you want when you want to, and take the occasional vacation and, oh yes, save a decent chunk of whatever you're bringing in, more money will not make you more happy. Coming up short on any of those basic wants and needs, however, will make you miserable. 8. The more time you spend looking, the less happy you'll be with what you find. When an opportunity seems good enough, take it. Researchers surveyed job- hunting college seniors and found that those who searched for perfection generally did land jobs paying 20 percent more. Unfortunately, those former students liked those jobs much less. That makes sense. If you're looking for the ultimate opportunity, the one you eventually choose is destined to fall short. The not-so-picky students were happier with their jobs. The same applies to any big purchase. Spend days searching for the best flat- screen TV and you'll always doubt your choice. Find one in a few hours that fits all your needs at a decent price? You're gonna love it. 9. An hour is worth of your time _______. Here's a quick and dirty way to compute your hourly rate. Remove the last three zeros from your annual salary and divide the remaining number in half. For example, if you earn $30,000 a year, that gives you a rate of $15 an hour. If you make $100,000, it's $50 an hour. Use this handy formula--in combination with your enjoyment/hatred of the task at hand--to decide when it's okay to hire others and which tasks aren't worth doing at all. The weeding of the garden you could hire someone to do for $15 an hour? If you hate it and earn more, hire help. If you love it and earn more, don't. And if you earn less yourself, plug in your iPod, pour yourself a cold one, and start digging. Excerpted from Money Rules: The Simple Path to Lifelong Security by Jean Chatzky All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.
