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WHEN I WAS A CHILD growing up in Ohio in the 1950s, my two best friends were Tommy and Terry. They were brothers who taught me a lot about life. When I was nine years old, they showed me how to smoke a cigarette. They also taught me what the middle finger was all about. Okay, some of this stuff wasn’t what you’d want your child to know. But they also helped me learn an important lesson about money.
One day, we were playing baseball in my parents’ backyard and we broke the next door neighbor’s basement window. Our parents decided we kids should forfeit our allowances to pay for a new window.
I was okay with that—until I found out that Tommy and Terry were getting 50 cents a week and I was only getting 25. I was livid. All of a sudden, my life was turned upside down. Since I just broke the neighbor’s window, I didn’t feel I could ask my parents for a bigger allowance. I probably also knew trying to get a 100% raise was a nonstarter.
As a child, I never fully understood why my friends received more money. I just wished I’d never found out about it. One result: I made a concerted effort over the years to avoid knowing my coworkers’ salaries.
Many years later, however, a gentleman named Bob was hired into my department. Bob was not shy about discussing his salary with his coworkers. When people found out how much he was making, many became dismayed and angry. It got so bad that our boss had to request that our yearly performance and salary reviews take place early—ahead of the company’s scheduled date. I found out that day at work that I wasn’t the only one who is better off not knowing what his or her coworker is making.
We tend to judge how well we’re doing by using human benchmarks: the success of our coworkers, friends and family. These are people who we feel we have something in common with. We’re disappointed when our salary or net worth doesn’t match or exceed theirs. The problem: If we think this way, we’ll always be dissatisfied with our financial life, because there will always be someone who’s doing better.
Instead, the true benchmark against which you should gauge your financial fitness is yourself. It’s how you feel about your finances that counts. If you’re living a comfortable life with no major financial issues and you’re satisfied with your salary, that should be enough—and you shouldn’t worry what your friends or coworkers have or earn.
After 40 years, I had an opportunity to talk to Tommy and Terry. Tommy went on to have a successful career. He’s now retired and spending a lot of time on the golf course. Terry, who served in Vietnam, is also enjoying retirement. We reminisced about the good and bad times we had together. But not once during our conversations did the allowance debacle enter my mind. What seemed such a big deal back then seems so insignificant today.
Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor’s degree in history and an MBA. A self-described “humble investor,” he likes reading historical novels and about personal finance. His previous articles include Are We There Yet, Healthy and Wealthy and After You. Follow Dennis on Twitter @DMFrie.
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When I was climbing the corporate ladder in public accounting, both firms I worked for “discouraged” discussing their salaries with other employees. I currently work for a county governmental entity and salaries are made public so employees are well aware of who makes what. I know some are dismayed and angry by knowing everybody else’s salary as compared to their own. I could counter I make half of what I made in private industry but I don’t think that would make any of them happier. My bills get paid, my wife and I do what we want for the most part and I don’t really care what somebody else makes or has anymore.
I’m a federal employee (engineer) and interestingly, there is NO hiding our salaries/bonuses/whatever. All federal wages can be found in databases, by specific employee name. One thing that it actually does is kill the mystery around what others earn. I can look them up, and they can look me up, and when all is said and done, pay becomes a significantly smaller issue.
Here…https://www.fedsdatacenter.com/federal-pay-rates/
I agree with much of what you have to say. However, pay secrecy is used by many companies to keep wages down. Even though labor laws allow employees to openly discuss their salaries, a recent survey of employees in the major tech companies found that 60% answered true to the statement–“At my current workplace, I have been discouraged by HR/management from discussing my compensation with other employees.”
https://www.forbes.com/sites/laurencebradford/2018/09/11/are-tech-companies-breaking-the-law-with-pay-secrecy-policies/#8841985397d2
My first bicycle was the most beautiful thing in the universe. A 60’s gold Schwinn Stingray with a banana seat. I was so happy until the boy across the street got one that had gears! I was ruined! Later I found out my Dad kept an eye out for what the other kids were getting in our neighborhood and purposefully gave his children something approximating the median. For the record, I had a mean Mom too. 🙂