It’s OK To Be A Little Underemployed
If you’ve watched the news recently, you’ve probably seen economists wringing their hands over the growing ranks of the underemployed in the world. Underemployment is generally viewed as a negative thing because the underemployed spend less money and don’t product to their maximum economic potential. Less money spent by the unemployed means a lower GDP and a poorer economy.
For an economist, this all sounds like bad news.
Being a stay-at-home Dad and part-time blogger, you could consider me as part of the legion of the underemployed. I’m “employed” less than 40 hours a week, at a “job” that pays me far less than what my skills are worth. Blogging and taking care of my kids pays hardly anything.
Technically I don’t need my master’s degree to type stuff into WordPress, and the tiny amount of income I do derive from people clicking on Google Ads, mostly pays my website hosting fees.
What I actually take home these days is incredibly small… We’re talking pennies per hour of effort.
To me, none of that matters. I’m still doing stuff, it’s just not about maximize income.
It’s Not A Sin
Back in the early days of my career (before I had a family), my vision of freedom was buying a sailboat to sail solo around the world. That seemed like a life with total freedom. It was about as far from the corporate world as I could imagine. I worked as hard as I could to secure raises and promotions to reach that goal.
Today, that dream seems unrealistic — I have a wife that doesn’t like boats, and two young boys that need a ton of space to run around and play. Sadly, I think my dream of living on a sailboat probably isn’t going to happen.
Instead, I found a different kind of freedom by saving and investing for over a decade — ultimately reaching Financial Independence.
To most outside observers I simply look underemployed. I hear people say things like:
“Your wasting your life.”
“Why don’t you get a job? You could be earning a lot more money!”
“You’re throwing away tons of money by choosing not to work.”
These quotes are from friends and family members — many of whom still send me job listings. While I’m sure they mean well, I wish someone would tell them underemployment is not a sin.
In fact, choosing underemployment might be a smart step on the road to financial independence.
One More Year
“One more year syndrome” is an issue that plagues many people who are almost financially independent.
Rather than quitting a safe corporate job, many people choose to hang-on for “one more year” of savings. The idea is to play it safe and hang-on to that big income just a little longer. Meanwhile, you’re stuck working 40+ hours a week with only two weeks of vacation per year.
One year turns into two years. Two years turns into three, and so on.
Cutting that financial umbilical cord from the corporate mothership is actually a pretty hard thing to do. It takes a huge leap of faith in your finances and your ability to live a fulfilled life without the corporate mothership.
Which is actually why I suggest trying a little underemployment before taking that final leap into financial independence.
Simply put, find a way to work less without completely leaving the safety of the corporate bosom. Keep that steady corporate income, but cut back your hours and responsibilities!
Join The Underemployed
If you want to try joining the underemployed at your current job, you’ll probably first need to talk with management. If they’ll allow you to transition into a part-time role, I say “Go for it”!
I’ve known a several people over the years that managed this in their own careers — without question they’ve all said it was a fantastic career move. Yes, they did take a paycut, but what they gained back in personal happiness was worth far more than the loss in pay.
If you’re in a management role, try transitioning to a lower stress individual contributor position. The idea is to take baby steps toward becoming significantly *less* employed. Give up trying to climb the corporate ladder. Set your employment goals lower in life.
There is no rule in financial independence that requires you to quit working entirely.
Nobody said that… ever.
Work is actually a good way to maintain purpose in life, but that’s no reason to work yourself into an early grave either.
Powerup Your Side Hustle
These days, having a side hustle is a fairly common occurrence. It seems like everyone has some kind of side gig — selling stuff on ebay, driving for Uber, blogging, or even making things to sell on Etsy. All the cool kids are doing it!
The vast majority of these side hustles don’t bring in a huge income. Perhaps a few thousand dollars a year.
But what if you could “power-up” your side hustle by putting in just a bit more effort? Could you turn that dog-walking job on the weekends into a real business? Could the incremental effort lead to returns good enough to quit your corporate job? It’s worth asking yourself these questions.
The idea of improving your side hustle is NOT to create a new job for yourself, but rather to engage in a side-business that you enjoy. If it’s possible to earn a significant chunk of your annual living expenses, it might just be worth it to finally leave that corporate job.
The security that side income provides will make a huge difference when it comes to finally escaping the safe confines of a giant corporation.
Financial independence doesn’t have to be a black and white state of ‘on’ or ‘off’. Working or not working. There can be many “shades of grey” between the two extremes. As I’ve said in the past, happiness is often found in the middle ground.
Next time you see your favorite barista at Starbucks, don’t automatically assume they took that low paying job for lack of anything better. It’s very possible your favorite barista is simply choosing to be underemployed while they transition to a life of financial independence.
As a member of the underemployed myself, I can honestly say it’s not all that bad.
36 thoughts on “It’s OK To Be A Little Underemployed”
This would be a great way of transitioning into FIRE. I’m seriously contemplating becoming underemployed next year to focus on more side hustles and learn a few more skills. Thanks for the reminder.
I’ve had a lot of contact with the sailing community recently. The best quote about boat life I heard is this: “a boat is a hole in the ocean you throw money into.”
Docking fees, mooring fees, fuel, food, and registration…the world is still out to siphon what you have. Oh! And Pirates! Never forget the pirates.
Just because they are cool doesn’t mean they shower or won’t take all of your toys.
Solid points there about boats and pirates! I never really considered the pirates angle, but the lack of paying property taxes has to help pay for some of the extra fees.
This is a great reminder!
I don’t know that I am at the point financially and mentally to voluntarily underemploy myself yet, but it really is something I should keep considering, for all of the reasons you suggest.
Retiring On My Terms recently posted…ROMT’s FIRE Prowess Score
I am definitely aiming for underemployment. In a few years (likely at age 40) I am hoping to go part time (90%) and ride it out for a while. Maybe a few years after that I will go to 80%, etc….I can go all the way down to 60% work and still be considered a full time employee with a pension and free health care. It seems like a nice spot to hit. In the mean time I will keep this side hustle growing too.
Awesome D3! I only wish 60% work options existed back when I was working!
I’m not at the point in my life (yet) where I will choose for underemployment, or working less. I’m not aiming for that high paying management job either. It’s an interesting concept, and I’ve been reading it more often on several blogs now.
Having a purpose, and add meaning is something that works empowering. If it’s possible to find that in a job.. Well, that would be ideal. In the Netherlands (where I live), fulltime ‘retirement’ is harder to achieve, and the option of part time financial independence could work wonders. Not only will you reach it far sooner, it could also bring you more happiness overall.
Why is full time retirement harder to achieve? taxes?
I’m with you, I’m in early retirement with four side gigs that consume at most two days a week, often less, and that are enjoyable and mentally stimulating and in my case are providing all my family expenses. But I’m making less than one fourth of what my former highly paid self made during my full time career. Because my side gigs are related to my old career tangentially my name is still in play in business circles so I get job offers I don’t ask for since everyone “knows” I’m too young to be retired. So far I’ve turned down two this week, one actually for seven figures, which was well more than I made in my best year. I think that means I’ve passed a test of sorts when even obscene amounts of money don’t make me think twice about staying retired. My wife did get a kind of lustful look in her eye when I told her about the size of the offer. I may have to keep an eye on her!
Your wife’s not alone — For seven figures, I might even contemplate going back to work! Astounding!
I really like your “shades of gray” idea because it jives with my experience.
I FIREd 5 years ago and I view retirement as all of the following:
1) Goofing off and having fun
2) Working at something you love that makes some money
3) Working at something you love that makes no money
4) Learning new and interesting stuff
FI is more about the freedom to do whatever you want than it is about some particular state of employment. I’ve done plenty of underemployment stuff since I retired – write a blog, release and sell an android app, and earned money with bank bonuses and focus groups. It’s nice to earn a little money but I do most of the things for the challenge and fun.
Mr. Freaky Frugal recently posted…To budget or not to budget?
Totally agree Mr. Freaky Frugal! The power to do what you want isn’t something you can see in dollars, but instead it’s felt every morning when you wake up!
I totally agree with you. It is essentially a lifestyle choice. There’s nothing wrong taking a break, choose something that may pay a little less with way less hassle. I often hear the term “real job” when people are comparing i.e. a retail job to a white collar job. In my opinion, all jobs are respectable real jobs, and you shouldn’t judge someone based on that.
Mao recently posted…Housing Affordability for Millennials Between the US and Asia
Great post, Mr. Tako! I can see why people are concerned. They believe in your ability and are convinced that if they were you, they would be making so much more money. But you are different from them. They might like making more money like you or they might not be financially independent like you. Either way, people tend to project their personality and insecurity onto those that they are close to.
I personally don’t want to be unemployed because I’m not financially independent yet. But once I am, it’d be cool to work on some projects that don’t pay well but will give me great satisfaction in life.
At some point, you might just decide “I have enough, and I’m happier working a little less”. At that point, underemployment might seem like a good choice!
Good article, I goes against the “flow” in America, but then again I was never with the flow to begin with. I have been living “underemployed” for at least 5 years now. I was in high paying corporate IT jobs in NYC and Toronto, Canada for a good 8 years before I decided to throw in the towel and leave the stressful corporate world 5 years back. I am not financially independent as I have a young daughter and son to raise, but I also have a 500K USD all blue chip equities dividend growth portfolio that has already doubled since 2012. Right now I teach comp science at a college in Asia and get 5 months off a year (3 in summer , 2 in winter) and believe it or not the pay is enough to raise 2 kids and support my wife on and take vacations to Thailand. My portfolio keeps growing with dividends reinvested. For me this is a low stress option to build wealth and enjoy raising my kids at the same time.
I actually wouldn’t mind being a bit underemployed if my portfolio was higher. I think I will always work, but there is an appeal to just going and doing something and coming home. Not having to deal with all of the bs that comes with certain jobs, including teaching, which I love to do, but I don’t enjoy some aspects of the job.
Yep, sometimes simple jobs are better than those high-paying complex corporate jobs!
As someone who spends a lot of time reading FI blogs and also a lot of time reading economists, the “underemployment” discussion is always interesting to me. I am overemployed now and saving and investing so that I can be underemployed later and do work that I enjoy without regard to pay. On the other hand, I get that we are a very rare breed and that the vast majority of underemployed people are not underemployed by choice.
I’ve never seen it quantified in the data as “by choice” or “not by choice”. Would love to see some numbers on that!
Right on. I’m leading a small band of rabble rousers in Houston to join me in early retirement. One former co-worker recently quit the corporate world to focus on leading spiritual retreats. Less money, more happiness. A former supervisor took a one year sabbatical to travel and has decided to work about 6 months a year as an audit contractor and travel the rest. Me, I’m full blown FIRE. Like you, I have a blog that earns about 200 bucks a year (if I’m lucky!) It’s a labor of love. And I’ve met my tribe.
People are funny. I know plenty who tell me they were so much happier in university days. They ten times as much money but are 1/10th as happy. If more money is not correlated with more happiness….why are you busting your ass so hard to earn as much as you can? Get off the damn hamster wheel.
Also, I am human or cephalopod and have checked the appropriate box.
Financial Velociraptor recently posted…Early Assignment Blackstone (BX)
So true FV! I think so many people wish they could go back to those university days…when they owned practically nothing, made practically nothing, but had *time* to enjoy life with good friends.
Hi Mr Tako,
Great post. Long time stalker, first time comment. I can identify a lot with your blog, Financial Samurai, ThinkSaveRetire, Retire By 40, MMM, LivingaFI.
I have 2-young kids myself. Worked in bluechips till 38 full-time. Took redundancy last year (had contemplated resigning multiple times in previous 6 years due workload/stress/lack of family time etc), which was an awesome outcome!!
Got rehired as a contractor for same company doing half the hours for a nice income. This is the best outcome – underemployment is awesome – I am soooo much happier.
Hi MartinM! Glad you took the time to comment!
Yes indeed, sometimes less is more!
I’m underemployed but for a different reason. We’re not FI yet, and I’m the kiddo caretaker, so I work part-time. I think there’s a lot of pushback for men, maybe less so for women (but I have gotten some, “wasting my potential” and what-not) if you’re underemployed, but I believe it was Amos Trotsky that said that it’s good to be a little underemployed, because it gives you time to think (he was specifically talking about in research). But he’s on to something… one of the things the advent of the smartphone has brought on is a dearth of thinking time. Porch time. Lemonade-sipping time, and underemployment can give you that.
My local library is a great example of this. The employees there seem pretty smart, nice and very helpful and knowledgeable. However, I don’t think they’re earning six figures working at the library. But again, that’s probably just what they like to do and are fine with it.
I know a librarian who has solid 6 figure student debt. Apparently you need a masters to be a librarian. And she only makes $50K a year max.
Staying and caring for kids deserve some sort of compensation, there should be a better word for stay at home parent than the umbrella term of underemployed. It’s more tiresome than it looks. I once babysat for just half an afternoon for my nieces and nephews (with my husband’s help) and we both wiped out before the kid’s nap time. The mother thought it was hilarious she found us napping instead. I couldn’t believe how tiring it is. Child rearing is not underemployment you buttheads.
Today was one of “those days” for me. I’m totally wiped out!
I find the One More Year syndrome a really interesting topic. My wife and I currently make WAY more than we have in the past. This creates two interesting dilemmas (1) even though we’ve saved a lot for a number of years, one more year of income makes a material difference to our net worth, and (2) we feel that we’re in a lucky phase earning much more than one can realistically expect to make, so voluntarily stepping back from that sweet spot is kind of tempting the fates. We’re probably not alone in this dynamic, particularly among those lucky enough to save enough to retire early.
It’s hard to cut the cord when you’re rolling in it.
Lifestyle inflation happens pretty easily when you make a lot of money. It’s easy to get addicted to all that money and the luxury life it buys. You never want to go back to “living with less”.
Underemployment is great for people with good finance. You and I are the perfect example of this. However, it’s really tough for people who haven’t saved much or didn’t make much when they were young. I’m very glad that I had a good job and invested consistently over 16 years. Most professionals can do what we did, but they just don’t know it.
Well said Joe. If someone’s drowning in debt, they really should be busting ass to get out of debt. ‘Underemployment by choice’ is best suited for individuals without a lot of debt.
The two quotes from family about earning more money if you kept working or throwing away money is pretty accurate but the “Your wasting your life.” is so wrong it’s laughable.
I used to get annoyed by people saying “oh you’re throwing away money by not working”, but now I just agree with them. Yup, they’re right, I am throwing money away, but I’m HAPPILY throwing money away because I’m gaining something WAY more valuable than money…TIME. And I will keep throwing away potential earnings in exchange for time because this life rocks and I have ZERO regrets.
I love it when people who are wasting their life tell you you’re wasting your life. Yes, I would love to take advice from stressed out, miserable people. They clearly have their shit together.
Here’s to being underemployed/unemployed!
Yay! I completely agree FireCracker! I wake up to Monday mornings looking *forward* to the day with excitement. How many people can say that!? 😀
It certainly doesn’t *feel* like a waste of my life!