Should you tell people how much you earn?

28 May 2009

http://img7.imageshack.us/img7/3820/digitalcoincountingmone.jpgThe basics of the world economy are so different now than they were 20 years ago. Corporate loyalty is a thing of the past. Many people make their bread and butter not in one way, but in several. There are those with full-time jobs and secondary gigs on the side. Others are start-ups and freelancers who work a part time job. And are gigalos on the side.

To whom should you reveal your salary and sources of income, and under what circumstances? Let's consider three situations:

1. Your banker. If you ask for a loan from the loan sharks, they're going to want proof of income. Sure, they didn't do that back when the housing bubble was rapidly filling up with hot air, but now they do. But should you reveal every last asset that you own to them?

2. Your significant, or soon to be significant other. You've been together for a good few years. But when should this conversation come up in the relationship? Chances are, it will come up organically at some point, like on vacation at a terrible tourist hotspot. But again, should you let them know of all your assets?  While you don't have to calculate your salary and net worth to the penny to tell your partner, you should both be able to trust each other with the ballpark figures... right?

3. Your children. How often should you talk to your children about money? What if they ask about it? Monevator says that with little kids you can be vague, "We don't have a car like the neighbours because we don't have as much money (or debt)." With older kids, you can be more specific. If you have a child on the cusp of adulthood that you hope will leave the nest soon, they need to know what it takes to run a household. You don't have to disclose the details of your compensation package, but they do need to understand that certain jobs pay the bills easier than others. And if they're still living at home as young adults, they should be contributing to paying those bills, even if it is only a token amount.

What are your feelings about telling people how much you earn? Which matters more, salary, or net worth? Have you ever disclosed your salary/ net worth and it has hurt a friendship or relationship? Do tell.

[Monevator]

TOPICS:   Banking   Privacy   Loans

17 comments

  • Colin
    In some countries (such as India) it's certainly commonplace to discuss salary with colleagues - that way, everyone can compare notes and query the company as to why they may be making less than a more junior or less productive member of the team. This seems healthy to me, so I've always made a point of being open discussing incomes with anybody, to the extent my full time employer knows about my extra-curricular activities and don't have a problem with it.
  • Matt B.
    I don't earn as much as many of my friends and that is clearly reflected in my lifestyle (though I do roughly know their salaries). My major regret is the amount of debt I racked up at University which I am completely unable to clear. It's a real shame as it effectively halves the amount of income available for food/going out/clothes etc.
  • tino
    My wife, the banks and hmrc know how much I earn & own. My kids are only 3 and 0 - so they dont care. But growing up my mum used to tell me about their finances. I had access to their cash stash, pin NO, save combination, checking, savings account, everything.... So, that alone taught me how to and how not to manage money. I think telling people how much I own/earn doesnt really help anyone. - well.. for me anyway. I'd like to think that people would actually learn something from what I am doing with my money (I maintain a blog). But the blog entries with money saving tips never get a high reading count! They care more about my gossip and if something bad happens:) - I guess that's why hello magazine's subscriptions is a lot higher than Financial Times.
  • Mike H.
    I think companies have fabricated this myth that we shouldn't discuss salaries so that they can keep them low, they don't even advertise a salary in recrutment. I think a lot of people lie about their salaries, especially with their mates. Some peeople seem to be on a good salary, but actually, their prospects and salary is pretty crap.
  • MinstrelMan
    £28 per hour.
  • Robin
    My parents refused to tell me what they earnt as I was growing up (altho I kinda knew the ballpark figure). It is in my experience to avoid as much as possible revealing what you earn or enquire of others what they earn, particuarly friends, as it really can put a rift in place if you or the other party feel something is unfair.
  • Giles
    I earn £19,040. I think people can only judge if they are paid farily by comparison. I should be paid less than people less qualified or with les experience and more than people with more - after a recent pay review honest and open discussion meant we're all better off than we would have been if we'd kept everything secret.
  • Slime
    Quote:Giles 'I should be paid less than people less qualified or with les experience and more than people with more - after a recent pay review honest and open discussion meant we’re all better off than we would have been if we’d kept everything secret.' Um, haven't you got that the wrong way round? ;) You should be paid more than people below you, and less than people above you!
  • tino
    OK now Vince... after we tell you our stories.... How much do you make? - blogging and travelling :) And how much hotukdeals make a year?
  • Deepz
    www.glassdoor.com - very useful for this kind of thing
  • The B.
    Frankly, if your bank didn't know how much you earned simply by looking at how much your employer paid in every month I'd be rather suprised.
  • Giles
    @ Slime... nice one. Reading that I should probably not be paid at all! :) Point stands - being honest and open can only act to equalise pay - if everyone keeps quiet then they just make assumptions...
  • Justin M.
    What I'm not keen on is possible future employers snooping into my salary level. That "how much are you currently paid?" question in a recent interview was met with me saying that I don't discuss my current salary since it's private financial information. What I did tell them was how much I'm worth and expect as a salary should they choose to hire me. There's no way I'm going to allow an interested employer to negotiate my salary downwards, which is what their goal is, by judging me on my current salary. Not every job I've ever taken has been on salary alone and sometimes the perks balance the apparently low pay.
  • Swf
    In the workplace we should have transparency. In your social life, its really not a good idea, friends get jealous sometimes and may expect subbing if they have less money. Its up to individuals what job/income they settle for and we should treat friendship as an independent thing, no need to reveal all. Bound to cause problems. Only the very wealthy can keep their income secret from their partners and frequently do
  • Nobby
    Being open and honest can also reduce productivity. If I know I am being paid less than someone that (in my view) does not work as hard, then I know I am working too hard for the money I am paid. If I am not given a higher salary, then I won't work as hard in future.
  • Nobby
    > Frankly, if your bank didn’t know how much you earned simply by looking at how much your employer paid in every month I’d be rather suprised. They don't know about how much you salary sacrifice. I pay pension and childcare costs to my employer before tax is calculated, and my final monthly statement shows my salary to be quite a bit lower than someone who pays into a private pension and pays childcare from their bank account.
  • CDN
    I have recently discovered that some colleagues are being paid more than I am, as much as £3000 per year more, some have not in the company as long as I have and I deal with a lot more, I have also been advised that we cannot discuss our wages as this will result in disciplinary action. Even though this is to be written in a staff handbook I am yet to see this nor is it in my contract! From what I have found or not as the case is I cannot find any legal guidlines on this. There is no clear salary brackets so some are on £500 to £3000 per year more and I fail to see any justification in any policy, any ideas?

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