I want to talk more about this enigmatic quote from personal finance and I-will-teach-you-to-be-rich guy Ramit Sethi:
There’s a limit to how much you can cut. But no limit to how much you can earn.Ramit Sethi
I talked about the first part of this quote in a previous post. In short, yes, there is technically a limit, so that statement is correct, but I’m not sure how helpful or relevant it is. You likely haven’t hit that limit, and living that statement out can potentially let yourself off the hook for your behavior.
So what about that second point. Is it true that there is no limit to how much you can earn?
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We are part of the 100%
Here’s an interesting chart, showing income percentiles for the United States.
This means that if you make the income specified by the 50% figure, then you make more than 50% of the populace.
Statistically speaking, you are not likely part of the mythical 1%. (That is because, by definition, only 1 out of 100 people are on that list.)
But could you get there? Could you earn that much money?
Or, setting your sights lower, could you become part of the 10% What about the 25%?
If not, why not? If yes, why hasn’t it happened yet?
A scarcity mindset?
Ramit Sethi believes that you can.
In an interview with CNBC, he says that what holds people back is a scarcity mindset:
“A scarcity mindset is all about ‘I’ve got this much money, I’m not going to let anybody touch it,’” Sethi explains.
“On the other hand, you have growth oriented people, who say, ‘You know what, I’m happy with what I earn, but I think I can do more. I can grow more, I can challenge myself.’”
Instead of scrimping and saving, successful people devote their efforts to income generating pursuits […]
The key is always focusing on ways to earn more.
Does this ring true for you?
I don’t talk about careers and income very much on this site, and never have. Mainly, this is because I believe that it’s more important, and more actionable, to work with what you know you are in control of. And you are not in control of other people’s actions.
On the other hand, you are very much in control of what comes to you. And what you do with it.
I wonder if Ramit Sethi would call this a scarcity mindset?
Is it your fault?
The problem I see here is one that comes up when you look at the converse. To say and believe that there is no limit to how much you can earn, that means that if you’re not earning your unlimited income, then what? Is it your fault? Should you be ashamed of yourself? Are you not worthy of assistance?
That is the slippery slope that I feel like affects a lot of rhetoric like this: if you’re not wealthy, then that’s your problem, and I don’t see why I should be expected to help you.
And that seems like a much bigger issue.
We need to accept that some people have more privilege and advantages than other people, and everyone is worthy of our compassion, no matter what.
The difficulty here in the nuance: if you believe that everything is in your control, then no one deserves empathy. But if you believe that you are subject solely to forces beyond your control, then there is no point in striving.
Neither are true.
The curiosity mindset
So I’m going to say that the second part of Ramit Sethi’s famous quote that “there is no limit to how much you can earn” is technically true, just like “there is a limit to what you can cut“, but I’m not sure it’s particularly helpful.
Could you earn more than you do currently? Yes, I would say that it’s almost certainly possible.
I know that I’ve been incredibly fortunate in my life to earn higher incomes over time than I even thought possible. When I earned $30,000 a year, would I have believed that a few years later than I’d be earning double that? Of course not. But I did. And this was years ago.
The point being, our beliefs about how much we can potentially earn are most likely bogus. Maybe you can earn more. Maybe you have no idea how much you can earn.
Maybe not. But here’s the thing, why not try? Why not take a risk, why not ask your boss for a raise, why not try to find a side income?
At the end, I’m advocating less for an abundance mindset (which is nice, but not always possible) or a scarcity mindset (which protects you well but doesn’t let you thrive) but instead a curiosity mindset. To say, “I don’t know what is possible, but I would like to find out.“
But enough about me. Do you think there is any limit to what you can earn? I’d love to hear your thoughts in the comments below.