Never Tell Anyone How Much Money You Make

Golfing-ducksPeter and I were golfing buddies for years until one day he started asking me about my compensation.  I refused to tell him for weeks until he mentioned he was in a tough situation, negotiating a package with a potential new employer and sought my advice as someone several years his senior.

As I stood over my ball, ready to attempt a 30 foot birdie putt, Peter chimes up, “Sam, you’d really be doing me a favor by letting me know, so I can go back and counter them in case they are low balling me.”  Peter then proceeded to tell me what he was making at which point I felt forced to reveal my income because he was so upfront.  When I did, he quieted down, walked to the next hole and smacked his driver down the pipe.

280 yards with only a sand wedge in!” I applauded after I missed my putt.  “Hmprh“, was the only sound that came out of his mouth as walked further and further away.

As weeks turned into months, I realized he no longer pinged me to play golf.  It also turns out that he never took the new job offer and remains at his company ’til this day.  Peter turned cold and I later found out that the reason why he never took the new job was because he countered them so high based on what he heard from me that they pulled the offer.  Peter blames me for not getting the job and not making the money he feels he deserves to make.  I have no control over what the potential suitor was willing to pay so why is it my fault?

NEVER REVEAL YOUR INCOME

I’ve known Peter for years, and it saddens me that we no longer hang out.  He asked me to be his mentor when he first graduated from college, and his competitive drive drove him overboard.  He compares everything from cars to property with everybody.  As an example, he purchased a two year old Aston Martin Vanquish around his 30th birthday.  All he had to do was buy a two year old Honda Civic and it would blow away what I was driving and most of our circle since we take the bus!

It was an absolute mistake revealing my income to him.  I like to wear worn t-shirts and jeans, because I don’t like to draw attention.  In fact, perhaps this is why I so often wear baseball caps, so I can be left alone to do my own thing.  Blending in is why I drive Moose, my 11 year old SUV that’s worth $4,000.  He’s handsome and clean, but will never turn heads.  It’s the best feeling when people look at me and think I’m just a kid with very little.

I’m not going to apologize for making more than Peter when I was his age.  I was just trying to help him out in his negotiation process as he wouldn’t relent on asking.  We could have come up with a strategy for negotiation, and use my figure as a realistic anchoring point for further talks with his potential new employer.  Instead, he decided to huff and puff and curse the world for life’s inequities.

THE UPSIDE OF KEEPING YOUR INCOME HIDDEN

* You can always play down your wealth.

* You can play up your wealth if circumstances dictate.

* You don’t have to feel like you always have to pay because you make more.

* You can buy things and go on vacations in peace.

* You blend in with everybody else.

* If you make more than the average, nobody will envy you or try and take you down.

THE DOWNSIDE OF REVEALING YOUR INCOME

* You start associating your identity with your income.

* You might come across as arrogant and boastful.

* You lose ground in salary negotiations if you ever change jobs.

* People will start expecting things from you i.e. “Larry makes $10,000 a month, let him get the dinner tab!”

* You might get reported to the IRS agent who might think, “Oh really now?”

* You will be judged by everything you spend and don’t spend your money on i.e. “You only donate that little to charity?”  “How can you afford a $25,000 car when you only make $60,000 a year?”  “You’re 45 years old and still only make that little?” “You make that much and still drive a beater?” “You’re selling the dream, and your client’s dreams are failing.” etc.

IF YOU MUST REVEAL YOUR INCOME

If for whatever reason, you just have to reveal your income to others, use this guideline to decide whether you should or not:

Reveal income if your income is equal to the median income of your peer group (industry, level, experience) up to +15% over.  If you are making any more, then it’s probably best not to reveal and speak in generality.  Any income below 115% of the median income of your peer group is fine.

If your business model is making money by showing others how much money you can make by making money off others, really try and reach out to those who’ve bought your products and failed.  Reimburse the occasional failure and set up some type of safety net fund or charity fund to help.

CONCLUSION

The next time someone tries to dig compensation information out of you, stand strong and don’t reveal any details!  If you must share info given the other party has bared their soul, talk in percentages and temper them while you are at it.  The other strategy is to provide a wide range below and above his or her salary so as to appease some of his/her desire to know, without making them feel unsatisfactory.

Look around at the most financially successful people out there.  You’ll never see or read about them disclosing how much money they are pulling in.  They are secure with themselves and understand the upsides of keeping their finances private.

Readers, what are your thoughts about revealing your compensation info to people, even your closest friends and family?

Why do you feel people like to reveal their income?  Is it true that those who reveal their income are either insecure or have suddenly found wealth and like to get their egos stroked?  Do you believe in the common response of “trying to inspire others”?

Is there a difference in revealing income off-line and on-line?

Is there a certain level of income one makes, which is the cutoff point where it starts becoming poor taste?

Related Post: The Rise Of Stealth Wealth To Stay Invisible From Society’s Rage

Regards,

Sam

Photo: Small duck following a big duck on the golf course. Sam.

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Updated: 8/20/2014

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. says

    I reveal my exact income every month since I do make it online, my readers got me there and seem inspired by knowing, and it keeps me going – like a kick in the pants to do even better. Would keeping my mouth shut be simpler? Yeah, but as long as my audience sees it as a positive rather than a negative, I’m blowing off the naysayers. ;-)

  2. says

    I also reveal my exact income from my day job and my online business on my blog. And I’ll do it in real life too… if someone ask for it. I would never come to my friends and family and tell them upfront how much I make… This would be seen as arrogance.

    However, I share my income with one of my friend as a source of motivation and because we always feel happy for him when he gets a raise, and vice-versa. So it’s not viewed as competition but more as encouragement when we talk about our income.

    There are plenty of people like Peter and I don’t think I want any of them to be my friend. If this guy was really your friend, he would not reconsider his friendship over a dollar sign. This has showed you how he values friendship.

    I like to know other’s people income as I am curious to know how people make their living. What great ideas they had. How they have built a successful company.

    Being jealous of someone because he is making more than you is just stupid. You just have to do what he does (e.g. all his sacrifices!) and you will be making the same income. It is as simple :-)

  3. says

    I don’t mind telling people how much I earn, probably because it is very average. I might be a little bit above average for my blue-collar profession, but less than average as compared to my white-collar counterparts.
    One of the early posts on my money blog talked talked precisely about my specific income. I figured folks out there might be curious about the income level of an average trucker.
    When my income increases though, due to investments and other ventures, I can definitely see the benefits to keeping it secret. Great post here and great advice!

  4. G$ says

    So did your buddy buy a Maserati or an Aston Martin? In either case you guys must be making a lot of money because both cars are well over $100K!

    I generally agree with your thoughts, but that is probably because I have the sort of income that would mark me for death at an OWS encampment. Conspicuous consumption is frowned upon and it is nice to be able to fly under the radar as much as possible.

    In the overall discussion of personal finance there are one or two close friends that I do share income figures with when discussing goals and planning, if they are really your friends it should not be an issue.

  5. says

    In the finance world everyone’s bonus (which represents >>50% of compensation in most cases) is usually public knowledge about 20 minutes after they find out what it is. Some people tell/brag/complain. Some people ask. Management leaks. A couple weeks before bonuses are decided is “campaign season” anyways so everyone’s been talking about it.

    It can definitely cause problems even though the industry is mostly thick skinned people and radical differences in compensation are the norm.

  6. says

    Sorry to put down your friend (I’m not, really), but this guy is an idiot. And worrying about what kind of information you share based on the actions of an idiot is also foolish.

    I’m not saying it’s a good idea to broadcast your earnings but worrying about alienating your so-called “friends” is not a reason to withhold that information. If you have people in your circle who would treat you any differently based on knowing your income then TELL THEM IMMEDIATELY SO YOU CAN IDENTIFY WHO THEY ARE AND GET RID OF THEM. There is no benefit to having people like that in your life. Iron sharpens iron and people that are worth having around will only be strengthened by your success. All others can quickly hit the curb.

  7. says

    I think it’s very rude to ask someone their income and a poor decision to reveal it. In my various circles of friends I have some people who make much less and some who make much more. If we are to see each other as equals, it’s best not to talk about such personal things.

    Besides, how much some is making is very different to their hourly rate or even their net worth. A better question may be to find out how much one should be making based on their experience, qualifications and geography – to make sure their are being compensated appropriately.

  8. PRE says

    From time to time, I share my compensation, I am an IT consultant, with three of my close friends. One of them owns IT business and the other is physician and third one is colleague (strange right). First two of them acknowledged that I make more money than most people. Strangely, physician who is in internal medicine told me that I make more than him too. Luckily, all of them are ‘true’ friends. Other than occasional remarks, both of them treat me well and none of the past relationship changed. The third one who happens to be my colleague happened to have lesser compensation than I did. So, we sort of planned in a way that he could get more compensation so it is almost on par with mine. To me friendship or relationship is give and take. I am always of the belief that the information you have should help so others (in particular close ones) and hopefully they leverage it constructively.

    My belief is that you should be share such sensitive information with close friends though my wife disagrees to the point that I am a fool. So far my openness with my friends and relatives worked for me. I get the same respect/warmth as before.

    I am open about everything not just financial stuff. They all appreciate my openness and it has served me well.

    I guess, it all depends on how you put it across so you do not come across as intimidating or arrogant. Sure, the relationship while strengthening, there could be some transition period where it could be little unsettling. In the end, it should work out fine as long as you choose right people as your friends. You will amazed

    It is lot of stress if you keep sensitive information to just to yourself. It is a great stress reliever too if you are open about things to your close friends and relatives. If at all, my relationships strengthened not that they were weak before.

    You can make out who your true friends are much before you share financial information.

  9. says

    I agree with what you said. I feel frustrated whenever my mum or my relatives ask about my salary. Sometime, I don’t know how my salary concerns them. I scared if I were to tell my mum about my salary, she will ask for more despite I have other obligations like car loan and study loan. It gives me nerve-wrecking moments and total anxiety! I don’t know how to brush her off whenever she asks me about my salary. Hope you can advise! Thanks.

  10. justsomeguy says

    it’s always a mistake, but people, especially friends get huffy and persistent about demanding to know

  11. ap999 says

    I think you did right by telling him. I think it was his fault for not evaluating the information correctly. If he was really low balled and his counter was almost 50% more then of course the company was probably not expecting to pay him that much more. If he was reasonable with the counter he could of got a foot in the door with that company, and then worked his way up to what he is worth down the road. Just my IMO.

  12. David S. says

    Great advice, but my fiance, after 8 years, still won’t tell me how much money she makes…do I really need to know? Maybe not, but she surely knows how much I make due to all my colleagues makes the same amount. I think it is just as well. But, what if she doesn’t make that much and 20 years down the line, I have a great portfolio and am able to invest properly and she has nothing to show due to her not making good decisions on her money, yet she makes the same amount. Shouldn’t I be able to direct her to invest properly? I’m going to feel useless when we are both 65 and I’ve done it right and she hasn’t done a damn thing.

  13. Jillian says

    I do not like revealing my compensation at all, but I recently have for my last job and current one.

    I taught in Japan last year, and fellow English graduates wanted to know how much it paid. I did disclose this information to people I fully trusted or who were considering pursuing that role.

    I currently work as a technical writer, and in this area, not many English graduates are fortunate enough to land such a role. So, a fellow English major was curious about my pay. I hesitated and said that I did not wish to cause tension or comparisons. He has a steady job (recently received a promotion), and he wanted to know what a writer here could make. I reluctantly revealed my salary to him, and he congratulated me and said he was very happy that a fellow English major was doing well (even better than most we know, in regards to compensation with our degree).

    Others have asked me, and I told them (politely) that if they are curious, they can research the average salary for technical writers.

  14. A.T. says

    When I made less than everyone else I knew, they treated me like I was a little inferior. When I started making more than everyone else I knew, they either became angry or expected me to pay for everything. There is no upside to revealing how much you make and frankly it’s no one else’s business.

  15. says

    Hey Sam,

    I gotta say man…another posting with plenty of room for discussion.

    Why withhold information from people? If someone asks, why not tell them? Plus it lets you know who your real friends are. Plus open discussions about money allow you to find out what you are doing wrong and what you are doing right with your cash.

    Excellent thrives in an environment of honest and transparency.

    Thanks,

    James

  16. JR says

    This blog is a nice find.

    I just started my career and have expectations of going to senior exec. in 10 years or less. I’m very explicit about what I want my next salary to be and don’t mind telling people what my current (essentially “starting”) salary is. My little trick is that I always add the disclaimer “Yeah, but I have crazy student loan debt and am aggressively fighting it while saving for a house and retirement.” I admit that I foolishly accepted a large financial burden; people get the impression that I’m fiscally responsible for tackling it AND that I don’t actually have that much money to spare.

    • says

      How’d you find my site? I’m always curious to know.

      Starting off is easier because income is less and we all know how much folks make for the first 3-5 years more or less. But after the initial training phase, things get much more touchy as some people are superstars and achieve rocket income levels.

  17. says

    I don’t talk about what I make in specifics. I may be vague and say, “6-figures.” My peers should be within the same ballpark as me so it wouldn’t seem like I’m doing better or worse. If I ever get married, I don’t think I’ll tell her a specific number. All she has to know is that it’s enough.

    It’s pretty cool that you dress down. It shows self-confidence and don’t need to show off.

    I do that too, just so less people hassle me when I’m out and about. People will think: Oh, he’s just a poor college kid.

  18. says

    This is good stuff, though I don’t think I’ve ever seen this recommendation played out anywhere: “If your business model is making money by showing others how much money you can make by making money off others, really try and reach out to those who’ve bought your products and failed.”

    I see both sides of this. Maybe an updated post with “the upside of revealing your income,” since so many people see the value in doing so. If anything, it is nice to have a hard figure to attach to blog income because it might help motivate people to stick at it for years at a time, especially when it is far from lucrative for most!

  19. NG says

    I have a girlfriend whom I’ve known for years and is very competitive. I get annoyed every time she tells everyone how much money they spend on everything. I just went to her son’s three year birthday party where she was making a circle telling everyone how much she paid for the venue, food and favors. She is the type of person who judges others by what they have to show. She has tried a few different tactics to try to get me to tell her how much I make. I always just say “we could always make more but we are comfortable with what we make”. I think she is insecure and has to know if she’s doing okay by comparing herself with others. Because I choose to downplay what we make by not showing her what we have, she thinks we make less than her and leaves us alone.

  20. Nicholas says

    Great article. I have a family related predicament!

    On my side of the family, we don’t tell each other what we make. Frankly, it’s nobody’s business and can only complicate things. I’m close to 30 and my parents still have no idea what I make, which has worked well!

    My wife’s family is very open about discussing incomes and financial stuff and always has been. So we’re at the point where they (my parents in law) expect to know (play by play, rise by rise, promotion by promotion) what I make. I’ve explained to my wife that I’m uncomfortable both discussing and revealing what I make. So she’s covering as best she can. But the questions are still coming!

    Apart from me not liking this in general, I feel like there’s information asymmetry between my own parents and my wife’s parents which makes it worse.

    Anyway – WTF should I do! Frank conversation? Or is this blowing it out of proportion?

  21. Scott says

    I just came a cross the article and can relate.

    I have been in my field for many years and through continued education and hard work I have found myself in a very blessed position. So, you may be asking, what’s the issue? Well, one is that I come from a working class family and have greatly outpaced my surroundings. For example, my wife and I still live in the same starter house as we did years ago. We actually love the area and have raised our kids here and don’t want to leave. The tricky part is that as my career has grown, we are starting to exude success even though we speak little of finances.

    Personally, I have only disclosed my income range with close relatives. Though we have a tight and loving family, I do get a couple who joke about me paying for food, drinks, etc… I feel joking between family it’s tolerable, but this is occasionally done around outsiders which is not cool. I correct these comments and they accommodate, but not without jibes. They rationalize this by saying they are proud of me, and that I should be proud of my accomplishments and so on. I guess? But it’s hard when I’ve overheard money related comments from friends and family members spouses, such as “why cant we vacation here” or “why can’t we do this or that?”… From what I gather it seems I’m getting used as a gage of success which is to me terrible and totally unintended…

    I guess my point is that one’s finances may not need to be verbally disclosed to be estimated by people around you. I feel that with certain careers sometimes success is estimated by outsiders based one’s behavior, career discussions, professional friendships etc. As a note, I am not arrogant or extravagant in the least, but my career life and obligations do put some pressure on my personal life.

    Just wondering if anyone has experienced this?

    • says

      You are right. There is likely an embedded assumption how well off someone is by their age, experience, and occupation. But with all these stories about people spending more than they make, it’s not a certainty.

      I often wonder why a 55+ year old is quoted in the paper as being devastated by a job loss when they had 30+ years to save and invest. The answer is that I guess many people don’t spend within their means. Life just happens and will only be rectified if the pain is bad enough.

      • Scott says

        I agree with everything you wrote. Sometimes we can all succumb to external pressures of what we should be doing versus what is prudent given one’s individual circumstance.

        This is where “keeping up with the joneses, or in todays terms, Kardashians” come in to play. For example, one colleague of mine (56yo) feels compelled to pay for his kids education in full. Two are already in Ivies, one a senior, the other a freshman both seeking advanced degrees. The youngest – a junior in HS – is also bright and wants to attend a top school as well. Yikes, talk about financially burdensome!

        Don’t get me wrong, paying for his kid’s education is admirable. However, it still comes with the cost of restricting retirement savings at an age when this is wildly important. Point is, if he subsidized payments or passed this full obligation on to his kids, they would be able to rebound with time on their side, and hopefully great future jobs. My coworker on the other hand will be in his sixties by the time this is said and done, and will have missed out on potentially hundreds of thousands in savings. Heaven forbid he loses his job or has a major life event. He would then become one of the people you describe seeing in the paper.

        • ben says

          Maybe it would be admirable if they were helping other peoples kids, but their own kids are their own personal responsibilities. I wouldn’t call it “admirable” to raise them well, rather “not despicable”.

          People without the money to give their kids a good upbringing probably shouldn’t be having so many kids in the first place. It’s the parents’ decision to have children, and nobody elses. These are burdens the parents chose to take on. Very few people conceive unwillingly. (am i allowed to say rape on this blog?)

  22. ben says

    I found this article by searching for “Why can’t I seem to make what my friends and family can?”.

    While I don’t want this to come off sounding like a sob story, I felt like I had to say something here after reading so many of the comments about how “Peter is an idiot” and how “Peter wasn’t a real friend”.

    I have nothing against success, but it’s a hard fact of life that relating to those with more success is extremely difficult, especially when you met as peers. I’ve lost many friends growing up simply because our interests grew apart. For example, I had a friend long ago who dropped out of high-school and immediately started making 100k a year. After about a year, we just couldn’t talk to each other anymore. Our lives became drastically different as well as the people we associated with. I was a poor engineering student while he was a well off 17 year old entrepreneur.

    I agree that you didn’t do anything wrong and that Peter was indeed the one with the problems, but I really think your readers should give Peter a break. People here are describing Peter as some sort of terrible friend because he let “jealousy” overcome him. Well I’m sorry, but jealousy only begins to describe the feeling Peter probably felt. Peter probably felt INADEQUATE learning that his friend (the financial samurai) was making significantly more after the same experience. This feeling of inadequacy compounds on itself, and salary plays a huge role.

    Sure, you may see it as shallow, but I’m sure it was very emotionally taxing of Peter realizing that after all this time, his work wasn’t paying off the same as his peers. This train of thought quickly leads a person to feeling inadequate, which nobody likes to feel. It even causes some to give up completely if it goes on for too many years.

    Often times someone puts in way more effort/sacrifice to get where he is in life, I understand this, but sometimes it just doesn’t feel this way. For example, if you had a friend from high-school who started as your peer, but 10 years down the line, you realize that he gets paid over twice your salary, you’re going to start second guessing your entire existence. This can result in people giving up their career entirely as they see no correlation between the effort they put in and their salaries. It becomes more clear that some people just “have what it takes” while others don’t, and it sucks when your slowly realize your social circle has what it takes while you don’t.

    I just wanted to add my 2 cents as a lot of successful people do indeed some to lose touch with basic human emotion and empathy.

  23. d says

    Thanks for the article Sam. I feel like I made a mistake, I told my best friend that I make a six-figure salary. However I’m about to be laid off soon / my contract will ramp down. She used to work until she decided to go back to school, where her international student fees are pretty high. While trying to take a decision and explaining to her my situation, about wether to jump ship first and follow my dreams or wait it out, I blurted out that I make a six-figure salary. She sounded a little surprised but took it in stride and we discussed the dilemma. She knows I won’t be making this kind of money in the future with the dream job that I will be pursuing after this contract is over.

    Is it terribly wrong for me to have done that? Now that she’s back to being a student, I felt really bad about blurting that piece of information out (not that she thinks I was making less than 50K, but still). She keeps things in confidence and I trust her, I just feel bad about how I said it.

  24. Bob says

    I’m realizing that it gets really bad when your friends with more education find out that you make more money than them. They’ve all gone on to get graduates degrees and it really has not seemed to have paid off: now they’re over $50,000 in debt and still looking for a job. They make a lot of passive aggressive comments to me about it as they apparently think I should be making less than them. I’m not going to apologize for it though, I made the most with the opportunities that were given to me and it has paid off.

  25. drew says

    I grew poor, I had a baby when I was 18 in highschool. People told me I would fail. At 19 I got a job at a company making over 100,000 a year gross. That same year I bought rental property. I have continued to expand, and make money off different things. Because I never went to college, when people ask how much money I make at 25 I told them. We don’t flaunt. People think the opposite, I love to prove them wrong. I sure wish I would have seen this advice at some other point in life. DO NOT TELL. I have issues with family and friends over money, I am an Entreprenur spirt. I talk about money constantly. Big mistake.

    update Now I am in college. I filled a 13 to keep my estate because I lost my career. Still doing very well, but don’t know how to tell people it is not 100,000. Take this mans advice don’t tell…it should’nt matter. Its all ready said enough for however your living. You should’nt go out of your way to hide it, but don’t tell. Family should not know either.

  26. lux80 says

    You should never tell… I have friends always using different tactics to try to gather information about how much I make, how much rent I pay, etc.

    I always avoid the answer, sometimes in a very obvious way. Why do people need to know? There really is nothing useful they can do with that information.

  27. Nil says

    Its better not to reveal because you never know who will knock on your door in the middle of the night with knife in his hand..

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