#88 Perception = Reality

Today time slowed down to a crawl. By 10 am it felt like lunchtime, by 12 pm it felt like time for an afternoon coffee break and by 2 pm it felt like I should go home, shower and curl up in my blanket. I'm sitting down to write this after a nice "evening shower" and looking at the clock and I'm thinking to myself, "How is it only 3:54 pm??!?!?!!!"

Yesterday I walked 16,000 steps and 9 km. I skipped dinner last night because we had a late lunch. And this morning I woke up before 7 am to see the doctor. With the dim overcast sky looking like a child on the verge of breaking out into a sky full of tears, you could say my perception of the world today was skewed by my tiredness, hunger, and the world looking like the night was coming.

It's all about perception.

Perception, Money, The World, and Reality 

When I was working in Vancouver, I was making what I thought was a decent wage. I started out in an administrative role at an insurance company making $28,000 a year. That quickly grew to about $35,000 a year by the time I quit and decided to do a Master Degree in finance.

After a year of study, I graduated with my Master degree and secured a very low paying internship. The initial offer, which I accepted, was a three-month contract for $1000 a month. This was determined to be an illegally low wage, so they ended up paying me $1665 a month. I stayed on for two more months at $2500 a month before I was offered a full-time position at $3000 a month or $36,000 a year. 

Was $36,000 a fair wage for my experience and knowledge? I thought so. Even though by this point, my girlfriend (now wife) had been given two offers (one in Vancouver and one in Toronto) for over $75,000 a year. She had her accounting designation already and a much stronger looking resume, so my perception was still not yet skewed. 

At this point, I still considered the $36,000 offer seriously, and I knew that the opportunity to learn in that environment was very good. If I had not committed myself to my girlfriend (now wife), I likely would have gladly accepted it. However, I decided to follow my girlfriend to Toronto.

This is where my perception really changed. Within 1 month of arriving in Toronto, I had been told by recruiters that I was competing with people with much more experience. But then a job came up that looked right up my alley. It was similar in nature to the job I was offered for $36,000, so I applied. Long story short, I got the job and was offered a base salary of $75,000. 

I was blown away by this amount of money. I went from being willing to accept a $36,000 offer only 1 month earlier to accepting a $75,000 offer. My perception of what I was capable of making changed completely. A year later when I got my bonus and found out that my total compensation was over $100,000, my wife's perception of what she was making was changed from making a lot to not making enough.

Two Lessons

1. The same job can have drastically different salaries depending on how the employer perceives your ability and contribution.

In my case, one employer saw me as a trainee that could be paid a lower wage at first and gradually more over time. While the other employer saw me as a fully developed professional ready to hit the ground running. The pay difference was over 3x greater.

2. Raise your expectations and your perception of what you believe is fair. This can serve you as motivation to make more money, save more money, and live a better life.

If you expect to be paid in the top 25% of people doing your job, then you know when to ask for more money and when not to settle for less. 

The same goes for spending money. If your perception of your wealth is that you are "rich" then you will end up spending like a person with money to spend (i.e. with no control, picking up clothes and groceries without looking at price tags). 

If you are more modest with your perception of your wealth (i.e. you think you are poor) then you will be more conservative with how and when you spend your money. Should you get an alcoholic beverage with your meal? (water please).

Combining a high perception for your income and a low perception for your spending will push the two most important factors of your savings success in one direction. You'll save more money faster and retire early.


Save Money Retire Early is written by Jon Lo, a barely 30 something Chartered Financial Analyst. I believe anyone can be rich or poor, it's what you save that makes the difference.

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