MONEY Careers

At the Office, “Sorry” Seems to Be the Hardest Word

how to apologize when you screw up at work
If you've made a major misstep, spelling out your apology in office supplies probably won't cut it. Peter Dazeley—Getty Images

The stakes are high when you screw up at work. Here's how to own up to your mistake without hurting your career.

Q: Help! I screwed up at work. How can I apologize without making the situation worse?

A: A blunder on the job can tarnish your professional reputation, damage your relationships around the office, even put your job in jeopardy. But if you handle your mistake the right way, you can emerge unscathed.

There are several guiding principles behind effective apologies, says Lauren Bloom, author of Art of the Apology: How, When, and Why to Give and Accept Apologies. First, take responsibility. That means starting by saying you’re sorry. “If you lead with an explanation, that will sound more like an excuse,” says Bloom. Admitting to your mistake emphasizes your integrity, she adds.

Then propose a solution. How you do that depends on the situation. If you didn’t make the deadline for an important assignment, you might tell the boss that you’ll ask for his or her help prioritizing your workload in the future.

Should your actions have sparked intense emotions in the other person—for example, you made a comment that embarrasses your manager in a meeting or she overhears you complaining about her—apologize, then pause. You want to leave room to allow the other person explain what it was like from their side. The response will be painful to listen to if the person is really angry or upset, but it’s important for you to hear him or her out. Then ask what you can do to make amends. The person may be more forgiving if you clarify what you said to the people who heard your offending comment or complaints. If you can do it sincerely, express appreciation for the other person, say a boss who has allowed you to work flexible hours or helped you land important assignments.

Office rank should influence your strategy. The further up the chain, the more deferential you should be. You should also be incredibly courteous to lower-ranking employees. “The people beneath you can sabotage you or make you look great,” says Bloom.

If you offend a peer, apologize but don’t be overly deferential. “It can create an imbalance in office politics,” says Bloom. Keep your apology casual and say it in a way that can’t be used against you, says Bloom.

The most important thing to take away from your misstep: Learn from it rather than repeating it. “If you find yourself apologizing for the same thing again and again, just saying you’re sorry won’t cut it,” says Bloom.

Have a workplace etiquette question? Send it to careers@moneymail.com.

TIME Careers & Workplace

You’re Probably Guilty of This Gross Work Habit

Putting a whole new meaning on “taking care of business,” recent research shows that corporate America increasingly views the bathroom — at work and at home — as an extension of their office.

About half of respondents in a recent survey (which was sponsored by Lysol) admit they bring their mobile devices with them to the restroom when they’re at work so they don’t miss a call when nature calls.

Maybe this is a sign we’re getting too busy and really just need a break. When we’re on the job, almost two-thirds of survey respondents between the ages of 25 and 44 said they multitask with their devices in the bathroom. A quarter of employees use that “quality time” to surf the web; about the same number admits to playing games, and 17% call friends.

More than a third — 36% — of employed Americans who responded to the survey admit to emailing their boss, co-workers or clients while on the toilet, and 26% said they “frequently” used bathroom breaks for catching up on work email. And for the 5% who said they text or call their boss from the lavatory, make sure you press mute before you flush.

Younger employees and parents are more likely to read, shop and communicate from the porcelain throne — or, at least, they’re more willing to admit it. According to a Huffington Post/YouGov poll conducted last fall, half of adults under the age of 30 said they use their cell phones while on the toilet paper.

The Lysol study asked another question asking what people do on their mobile devices in general when they’re in the bathroom and the results are, well, pretty much everything.

More than half browse Twitter, Facebook or Instagram, almost one in five post or like Facebook statuses and 5% post videos on Vine. Ecommerce also gets a boost when nature calls. One in five respondents to the Lysol survey said they buy stuff online. Of those, more than half said they buy clothes, and about a third order their groceries from the toilet.

Not only are we taking more work home with us, we’re taking it right into the bathroom. Ikea’s new Life at Home survey of people in eight major cities worldwide found that roughly one in six employed New Yorkers admitted to doing work when they’re in the bathroom or on the toilet in the morning — a percentage matched only by Stockholm out of the other cities in the survey.

It’s kind of a bummer that the toilet has become the only place we can have a few minutes to ourselves where we can catch up on our digital activities, but look at the bright side: If the TP runs out, at least you can send a text asking for a spare roll.

MONEY First-Time Dad

Why I’ll Send My Infant Son to College Before I Buy a House

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Luke Tepper Taylor Tepper

With housing so expensive, I figure my young family will be renting for foreseeable future. The latest on being a new dad, a Millennial, and (pretty) broke.

Mrs. Tepper and I are 28 years old, and our son is four months. Over the past year, Luke has acquired an $800 stroller, a $250 crib, and a $50 humidifier. (Before you make fun, understand that he constantly bore a stuffy morning nose, and what kind of monster wouldn’t spend a measly $50 to help his only son sleep soundly?!)

We’ve begun funding Luke’s New York 529 college savings account in order to spot his entire higher education bill (provided he goes to a state school), and we, of course, will pay his medical expenses for the next 26 years.

But there is one thing that we will not buy him—a house. In all likelihood (which means unless we win the lottery, or someone gives us a hundred thousand dollars), we will put our son through college before we buy our family a home.

Which, when you think about it, is strange. Last year we earned almost $110,000 and that will (hopefully) increase rapidly as we enter our career primes. We hardly travel (much to our chagrin) and have a reasonable $300 monthly car payment. Mrs. Tepper really only shops for (baby) clothes on sale, online, or both, and my main indulgence is a bimonthly $45 bottle of Templeton rye whiskey.

Why then will we be renters, at least until we’re in our fifties?

Reason #1: It’s (Really) Hard to Save

We live in a two-bedroom apartment in Brooklyn with cheap wood cabinets and a kind of white plaster countertop that stains as easily as a peach bruises. In the afternoon it often takes five minutes for the water to go from warm to hot. We don’t have a washing machine—neither does our building, which was built during the Hoover administration—and I do our dishes by hand because we don’t have a dishwasher.

Next year our rent will be $2,020 (and that doesn’t include gas, electricity, cable, Internet, or whiskey).

Eventually we’ll decamp for the ‘burbs for the sake of space and sanity, but with that move comes higher mass transit costs (an $1,800 yearly increase) and more house to heat and furnish and maintain.

The Dave Ramsey in me says I should find more ways to cut spending: no more occasional brunches or flights to Florida. (Luke can meet his grandparents on Skype!) But those hypothetical savings are peanuts in the grand scheme of things, and the me that wants to stay married shuts Dave Ramsey up.

Read: Half of Millennials Will Ask Mom and Dad to Help Them Buy a Home

Reason #2: Student Loans

In order to gain our cushy, 50-hour-a-week jobs, both Mrs. Tepper and I attended (public) graduate school. That came on top of studying at New York University for four years and (seemingly) $550,000,000.

So we have loans. Lots of them. (I alone owe almost $60,000.) Obviously we are not the only ones tied up in the web of student loan bills. People like me now owe almost $1.1 trillion, according to the Federal Reserve Bank of New York, or about twice as much as in 2008, when my wife and I graduated college.

I’m now paying $350 a month—and that’s mostly interest.

Reason #3: Houses Are Expensive

In New York City, the median home price is $369,000, and that comes with a median down payment of $74,000, per a recent Redfin report. In Nassau County, which is out on Long Island, you need to put $88,000 down.

Needless to say, we don’t have that kind of money, nor will we anytime soon.

And that–expensive rent, student loans, and homes—doesn’t even take into account the $1,500 a month gorilla in the room (child care) or, you know, Christmas presents.

Look, there are worse things than not buying a house (like not having a job or being a Dallas Cowboys fan.) We have a happy, healthy family, with sunny days ahead, and maybe we’ll find a way to save a buck or two over the years.

But not that long ago, it took only one middle class job in the family to afford a home. Now, according to the Redfin report and my life, two doesn’t cut it. When the prospect of owning the roof over your family’s head is so far gone, is it really that crazy to buy a $50 humidifier for your son?

MORE: Why Does My One Baby Need Two of Everything?

MORE: How Can Child Care Cost as Much as Rent?

 

MONEY Small Business

How To Get Buzz for Your New Biz

Miguel Montaner

Three simple ways to make your startup part of the conversation.

Breaking into a crowded market? “Not only can press put you on the map, it can put you at the head of the class,” says Paul Krupin of Direct Contact PR in Kennewick, Wash.  The scoop on how to get media attention

1. Establish Relationships

Reach out to reporters and bloggers who cover your type of product or service. Start a dia­logue by commenting on an article the person wrote or by tweeting him a question. (If you’re an app creator: “Guesses on the iPhone 6 release date @reporter]?”)

2. Beef Up the Press Release

“Words are boring,” says Krupin. He suggests making a 30-second video on the inspiration for your business or an infographic on an industry trend to send to your new contacts along with the release.

3. Riff off Headlines

When relevant news breaks, tweet about it in real time or write a quick blog post including trending search terms (use Google Analytics to find them). That way you’ll pop up on Google News and in searches, says David Meerman Scott, author of The New Rules of Marketing & PR. You may even be contacted by a reporter to comment.

 

MONEY Careers

Work for the Man? That’s So Over, New College Grads Say

With banks dissing them and peers largely underemployed, Millennials are finding an alternative financial future.

Big companies still have many high-paying positions, and with the job market perking up those opportunities will expand. But young adults are still having trouble establishing basic financial security—or landing a decently paying entry-level job. Instead, they are forging different paths to financial success.

This search for alternatives starts with checking and saving. Banks haven’t figured out how to serve this new generation. Millennials have big debts from college, and instead of a single, steady full-time job, a recent grad may have four or five paying gigs. Banks can’t fit them into an existing box. But this new generation still needs credit and banking services.

Faced with this inflexibility, one third of Millennials seek to cut ties with traditional banks and financial companies, according to market researchers. Half say they are counting on start-up firms to overhaul how banks work, and 75% say they would prefer financial services from the likes of Google, Amazon, and PayPal. They are also turning to alternative financial firms like Square, Betterment, Robinhood, and Wealthfront to manage their payments and manage their money.

In their search for financial options, young adults are also finding new ways to launch their careers. Millennials have seen under-saved Boomers delay retirement, while corporations have shed workers and their peers are settling for jobs below their ability. As a solution, more twentysomethings are turning to entrepreneurship. Six in 10 recent college graduates are interested in starting a company, according to a new survey by CT Corp., a small business services firm. Those results mirror similar findings by other polls.

Entrepreneurial pursuits offer the potential to put individuals squarely in charge of their future. This is the mindset that the Thiel Foundation capitalizes on with its 20-under-20 fellowship, which seeks to develop entrepreneurs right out of high school and convince them they don’t need college or the student debt that comes with it.

The problem is that while many recent college graduates say they want to be their own boss, a large portion doesn’t really understand what that entails. So while 61% say they’d like to start a company, only 45% believe it’s feasible, CT found. Meanwhile, 67% display a knowledge gap around practical aspects like incorporating, registering a business name, securing a domain, and marketing their products or services.

Still, the entrepreneurial spirit runs deep in this crowd. One in five recent grads started a business while in college, and even among those who don’t believe they’ll ever start a company a third dream about doing so. More than half believe that being their own boss offers greater rewards and more financial security over the long run. Let’s hope they are right because in the new normal this is the path often taken.

MONEY Careers

Your Career Is Your Biggest Asset. Here are 5 Ways to Protect It

Career coach and former HR exec Caroline Ceniza-Levine offers strategies for ensuring that your human capital keeps appreciating.

Your earning potential is a million-dollar asset.

The first quarter 2014 Bureau of Labor Statistics report puts median earnings in the US at $796 per week, which adds up to $41,392 per year, which amounts to a hair over seven figures over a 25-year career—even without any raises. Get a reasonable 3% bump every year and your career will be worth $1.6 million.

If you owned a million-dollar home, you wouldn’t let the grass get overgrown or park your cars in the lawn, since this would erode the property’s value. Similarly, you do not want to be complacent with the asset that is your career. Instead, reserve a few minutes a day or a few hours each week to focus on protecting it.

Use these five strategies to ensure your most valuable asset just keeps getting more valuable:

1. Nurture your network

Job leads are shared mainly by word-of-mouth.

But even if you’re not actively job seeking, a strong network enables you to hear about company changes, upcoming projects that you might want to be a part of (or avoid), the inside scoop on a new client, or helpful tips on how promotions, raises, and bonuses are decided.

Maintaining your network can be done in a few minutes per day.

Your action plan: Read your LinkedIn activity feed and reach out when people post news. E-mail former colleagues you don’t regularly see to catch up on summer vacation plans. Attend the occasional professional association event or conference. Or, block out specific days and times to reconnect with people —for example, scheduling at least one lunch a week with a different contact.

2. Make friends in HR

A former colleague called me in a panic one day: Layoff rumors were swirling at her company and she wanted to know how severance works without making a formal inquiry into HR. Having worked as a recruiter, I was able to tell her what she needed to know (severance information is actually openly shared with employees–check your employee handbook).

Your action plan: Get to know your HR colleagues well before you have an urgent concern. A friend in human resources can help you navigate the ever-changing benefits landscape, can explain sensitive issues like severance that you’d rather not discuss with your boss, or give you helpful insights, such as deadlines for performance reviews (these often precede when raise and bonus decisions are made so you want to know the timeline). Even HR relationships outside of your own company are helpful, as recruiters elsewhere can inform you about market trends—including what is a fair compensation for your position. Return recruiter phone calls, even if you’re not looking.

3. Manage your references

If you’re not actively looking for a job, you might think that you don’t need references. While you don’t need them in the traditional sense that a job seeker does—no one will be calling your list to vouch for you—informal references are given all the time. Recruiters may ask around to find an expert in a certain area: Will your network mention you, and therefore give you a chance to grow that recruiter relationship (see point 2)? Senior management may ask around about who would be good for an upcoming, high-profile project: Will your colleagues think of you and regard you highly enough to put your name forward? Managing your references means that you have supporters who know your value and promote you as opportunities arise.

Your action plan: Keep people informed of what you’re doing–don’t assume that even your boss knows everything you’re working on—and what is of interest to you. This way, the right opportunities will come your way.

4. Build your online profile

Social media is a great way to keep in touch with your network, your recruiters and your references.

Your action plan: Update your LinkedIn profile regularly to mention a new project or to add a new skill, since this activity is broadcast to your contacts. It’s a way of keeping people updated and staying in touch more broadly. At the same time, you will hear about others’ activities, and you can reach out individually with a congratulatory note or a helpful idea. Finally, you want your profile to be updated so that, if someone does refer you for a job or a project, the prospective employer can easily research you and see comprehensive details about you. Building your profile takes dedicated time if you’re starting from scratch, but updating it and maintaining correspondence with your contacts takes just a few minutes at a time.

5. Maintain your go-to status

Your online profile showcases you, your references think of you, recruiters flock to you, and your network promotes you… all because you are the go-to person for something. You have a set of skills, industry knowledge, specific expertise, or some combination of qualities that make you the perfect solution to a problem at hand.

Do you know what you are the go-to person for? Do you take the time to sharpen this advantage?

Your action plan: Define your unique qualities that make you marketable. And work on emphasizing your competitive advantage even more.This could mean taking advanced classes relating to your skill set, reading trade publications to stay ahead of trends in your area of expertise, or adding new skills with volunteer work or cross-departmental projects at your company.

_____________________________________________________

Caroline Ceniza-Levine is co-founder of SixFigureStart® career coaching. She has worked with professionals from American Express, Condé Nast, Gilt, Goldman Sachs, Google, McKinsey, and other leading firms. She’s also a stand-up comic. This column will appear weekly.

 

TIME Careers & Workplace

17 Daily Habits My Dad Insists Will Make You Happier and More Successful

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Image Source—Getty Images/Image Source

Want to improve your life, one daily habit at a time? My dad offers some pretty good advice.


This post is in partnership with Inc., which offers useful advice, resources, and insights to entrepreneurs and business owners. The article below was originally published at Inc.com.

The other day my dad sent me an email with the subject line, “YOUR COLUMN.” (My dad is sometimes big on all-caps.) It began:

Bill:
In the tradition of 12 step programs and your excellent columns, I offer the following for your use, adaptation, or rejection.

My dad (Bill Murphy Sr., if you’re doing the genealogical math) has enjoyed business successas a lawyer who built his own firm, and who has worked for himself since the early 1970s. He and my mom raised five kids together, and they’re still going strong. They’re devoted to their grandchildren, and moreover my dad is a man who enjoys both his work and the rest of his life.

In fact, as I read his email, it occurred to me that he’s achieved many of the things that younger people tell me are among their goals in life. (Of course, I’ve been too close to realize it.)

My dad went on to offer four daily habits, each of which made great sense to me, and which I know he’s backed up with experience. However, I also know my dad well enough to realize that offering onlyfour pieces of advice isn’t exactly his nature, so I racked his brain. Here’s what we came up with.

1. Carpe diem.

You know that this is Latin for “seize the day,” right? This is the first daily habit on my dad’s list. No matter how yesterday went–whether you had great triumphs or whether you wish you’d spent the whole day in bed, remember that every new day is a new opportunity. You can’t rest on yesterday’s accomplishments, and you never have to repeat yesterday’s mistakes.

2. Spend as much time as you can with the people you love.

Your spouse, your kids, your parents, your close friends–whoever they are–make sure that you find lots of time to spend time with the people you truly care about. If you want to feel really guilty about this, check out the calculator at seeyourfolks.com, which will calculate how many more times you’re likely to see your parents based on past experience and life expectancy. (We’ll wait here while you go give them a call afterward.)

3. At the same time, love the ones you’re with.

There are many different kinds of love, and here my dad is talking about showing respect and concern for the people you spend your days with. “That is simply, love everyone,” is how my dad put it, and he added a quote from Thomas Merton: “Love is our true destiny. We do not find the meaning of life by ourselves alone–we find it with another.

4. Work hard.

You can’t always determine what you get out of something, but you can often control what you put into it. When I was growing up and I’d be anxious over some school assignment or other project, my dad would usually ask me the same question afterward: “Did you give it your best shot? Then forget about it.”

5. At the end of the day, go home.

This one seems simple, until you start to realize how most of us are almost 100% on and accessible all the time now. Now, I’m not going to pretend that either my dad or I truly live up to this advice, but it’s a good goal to have.

6. Later, go to bed.

“Get the rest you need. Your body needs sleep–not just ‘rest and relaxation’–for it to work well,” my dad insists. He’s right of course–and it’s even become fashionable to admit thatpeople need sleep.

7. Get some exercise.

My dad’s sport is swimming, and while he came to it late, my dad has the zeal of a convert. A few years ago he did a half-mile open water swim off the beach in Narragansett, R.I. Regardless of what sport or activity works for you, my dad advises, your day will be improved if you do something athletic. Science backs him up.

8. Have a little faith.

As a lawyer–the kind of lawyer who takes on real clients and tries real cases in court–dad has pretty much seen it all. He also has stronger religious (Catholic) faith than most people I know, perhaps in part because he’s had his faith tested in many ways. It helps immensely if you believe in something bigger than yourself.

9. Learn another language.

My dad studied ancient Greek and Latin in high school. More recently, in his 60s, he decided to try to learn Farsi, I guess to better understand what some of our nation’s enemies were saying about us. Whether you’re literally learning another language or simply learning how to do new things and to challenge your preconceptions, the lesson is clear: Keep learning.

10. Read every day.

In a few weeks, guess what I’ll get my dad for Father’s Day: a book, most likely something on the top of the New York Times nonfiction bestseller lists. It’s what I’ve been doing for decades, so why stop now? I can’t think of many people I’ve known who read more than my dad. Importantly, he usually reads about things that have nothing to do with his work.

11. Keep your wardrobe simple.

My dad gave me this advice years ago when I first started working–so of course I completely ignored it at the time. However, had I gone ahead as he’d suggested and bought a handful of white and blue shirts, for example, and worn them every day, it would have been one fewer decision to have to make in the morning. It looks like that kind of simplification worked for Steve Jobs and Mark Zuckerberg, anyway.

12. Shine your shoes.

Shined shoes make you stand out these days, because most people are so casual. You can probably substitute something else for this habit. Just pick things that advertise to the world that you take care of small things. So maybe you also take care of bigger things.

(Here’s a text from my dad a few hours before this column ran: “Just read it again. On point 11, change ‘one less decision’ to ‘one fewer decision.’ Your grammar is wrong. Then, point out this message as an example of point 12.”)

13. Tell the people you love that you love them.

Hey, we’re back to love. Don’t just spend time with the people you love, as advised back in No. 2. Make sure you actually tell them that you love them. For example, when I talk to my dad, he’ll tell me to tell my wife that he loves her. Unnecessarily but amusingly, he’ll add that I should be sure to mention that he means he loves her “appropriately.”

14. Don’t worry.

This is one of those do-as-I-say-not-as-I-do pieces of advice, as my dad is in fact pretty good at worrying about things. That said, worrying rarely improves the odds of good things happening, and can actually diminish those odds.

15. Be kind to animals.

My dad has had dogs since he was little. He treats animals well. His advice? If you want to treat a dog well, treat it like a dog. Don’t try to make it into something it isn’t, and doesn’t want to be (for example, a little human being). Help it become the best possible version of itself.

16. Find good assistants.

For many years, my father had the same, excellent secretary. He taught me long ago that even during the times when you’re working by yourself, you have to be willing to depend on others for help. The most productive people in the world often succeed because they refuse to do some things.

17. Repeat as needed.

This is perhaps the most important bit of advice on my dad’s list, so it’s fitting to have saved it for last. None of these items are actions so much as they are behaviors. The first time you commit to them, you won’t see results. Over a lifetime, however, they can greatly improve your life. Aristotle put it best: “We are what we repeatedly do. Excellence is not an act, but a habit.”

Read more from Inc.com:

The Psychological Price of Entrepreneurship

14 Tactics for Reading People’s Body Language

The One Trait That Guarantees a Good Hire

7 Things You Can Do on Friday to Make Monday Awesome

Sheryl Sandberg and the Hypocrisy of Lean In

MONEY Small Business

How This Former Techie Gave Her Career a Jolt

Vicky Lewis in her Dripping Springs, Texas coffee shop
Jay B. Sauceda; Wardrobe Styling by Lauren Smith Ford; Hair and Makeup by Lisa Gleeson

Weary of her job, Vicky Lewis decided to take a shot at a completely different venture: opening a coffeehouse.

Vicky Lewis, 49, didn’t just wake up and smell the café one day. Her desire to open a coffeehouse grew over a few years, following her family’s move from Seattle to the far suburbs of Austin in 2005. Tired of “being wet all the time,” she and husband Bruce had given up their jobs to relocate their two kids to an area with affordable housing and abundant sunshine. The only oversight: “We were coffee addicts living in a place without a coffee shop,” says Lewis.

Within a year of arriving, Lewis found a job similar to the one she’d had, as a program manager at a semiconductor firm. But after surviving several rounds of layoffs, she became unhappy: “The more disgruntled I got, the more I thought about the fact that somebody was going to make a killing opening a coffee shop. I began to think maybe I should do it.” While she didn’t have hospitality experience, Lewis knew she’d be able to draw on skills developed over 20 years in the chip industry to perform functions like tracking inventory and schedules: “My strengths are around organizing systems,” she says, “and successful businesses are system-based.”

By the time she told her boss she was quitting in August 2012, she’d taken a three-day class at Texas Coffee School in Dallas and leased a storefront in down­town Dripping Springs. To write a business plan, she pored over data on population growth and traffic patterns. Plus, she often drove the 50 miles roundtrip to Austin to sit in coffeehouses and analyze custo­mer behavior. Meanwhile, her husband, a real estate broker, helped with the build-out of the space.

Named after a town in the Cascade Mountains where her family used to vacation, Mazama Coffee Company opened its doors in November 2012. With strong ties to the community—the café sells drink local T-shirts and uses a nearby roaster—the shop stirred up sales of $200,000 in its first year. “It’s a little weird being known around town as the ‘coffee lady,’ ” says Lewis. “But I’m thankful; it’s a sign that we are beginning to flourish.”

BY THE NUMBERS

$135,000: Cost to start up the café

The funds came from her 401(k), which contained $150,000. She rolled over the balance into a retirement plan she set up for Mazama, then spent $135,000 of it to buy all the stock of the new C corp., which turned the funds into tax-free startup capital.

5: Number of employees the café has

That doesn’t include Lewis’s three family members, who all pull shifts. Her kids, both in college, put their pay toward tuition. With reduced income and savings, the Lewises are unable to subsidize their children’s education as much as they’d hoped.

66%: Increase in pay Lewis expects this year

While she took home $30,000 last year, she figures she’ll make about $50,000 in 2014, as she now has a license to sell alcohol. With plans to add mobile espresso carts for weddings, Lewis thinks she’ll close in on her previous salary of $121,000 by 2019: “And I know for sure I’ll be happy with what I’m doing.”

MONEY psychology of money

The Money-Happiness Connection

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Justin Wolfers photographed in Washington, DC Joe Pugliese

We put the question to economist Justin Wolfers, who recently conducted one of the broadest studies on the relationship between money and happiness to date. His answer -- yes, sort of, but it ain't cheap -- breaks with the conventional wisdom on the subject.

Does money buy happiness?

Wealthier people are happier than poor people. Wealthier countries are happier than poor countries. As countries get ­richer, they get happier. The relationship between income and happiness is extremely strong.

What’s the nature of that connection? Does money actually make you happier?

I should give the usual “correlation isn’t causation” disclaimer here. When I say rich people are happier than poor people, I don’t know if it’s the money that’s making them happy. When I say rich countries are happier than poor countries, I don’t know whether it’s the greater money that makes the average American happy or whether it’s the greater opportunities. Maybe it’s democracy, rule of law, or having functioning markets and political and social institutions.

Saying richer countries are happier than poorer ones seems obvious. Has other research found otherwise?

There’s something called the Eas­terlin paradox [named after University of Southern California professor Richard Easterlin], which claimed that while rich people are happier than poor people, rich countries are not happier than poor countries, and as countries got richer, they did not get happier. Now, what we [Wolfers and fellow University of Michigan professor Betsey Stevenson] did was study more comprehensive data. We looked at ­surveys, including the Gallup World Poll, of 155 countries covering 95% of the world’s population. It turns out that rich countries are indeed happier than poorer ones, and as countries get richer, they get happier.

[Easterlin says that Wolfers has mischaracterized his findings, and that his paradox indeed asserted that rich countries are happier than poor ones. Easterlin also says that while happiness and income are correlated over short-term periods, the relationship disappears over the long run.]

Psychologist Daniel Kahneman and economist Angus Deaton, also drawing on Gallup data, famously concluded that happiness doesn’t really increase above incomes of $75,000 a year. How do you square that with your research?

Whenever people talk about happiness, they are imprecise in their language. I’m mostly analyzing questions that ask you how you think about your life overall, or how happy you are, taking all things together. These are questions that we think of as being “evaluative.”

The $75,000 number comes instead from measures of affect. Rather than being evaluative, they gauge what’s going on with you right now. They say, “How did you feel ­yesterday?” This is not asking you to judge your life as a whole. And Kahneman and Deaton found at very high incomes more money did not increase well-being. The increases above $75,000 were vanishingly small.

Back to your research: Is the relationship between money and happiness linear? Will I feel the same jump in happiness with each $1,000 raise?

No. If you think about how much extra well-being is associated with each dollar, it’s absolutely a situation with diminishing returns. But if you describe it in terms of the percent change in income, a 10% rise yields a roughly similar rise in well-being to everyone in the world. A 10% increase in a very poor country like Burundi is equivalent to a 10% increase in a very rich country like the U.S.  But to get a 10% increase in ­Burundi doesn’t take a lot of dollars, whereas in the U.S. it takes a lot.

Happier3

The U.S. economy has grown a lot since the 1970s, but you’ve found that happiness here hasn’t increased much. How can that be?

I never said that the only thing that changes happiness is income growth. Something else is going on in the U.S.

Average per capita income has grown, but that can be misleading. If you look instead at the median—the income of someone making less than what half the population makes and more than what the other half does—income has barely risen over the past 40 years, once you adjust for inflation. Income has actually fallen for those at the lower end of the scale. If income has barely grown for most people, we shouldn’t be surprised that happiness has barely grown for most people.

So how can we fix that?

We can do it through the minimum wage or the tax system. We can do it through the benefit system as well. Things like the earned income tax credit. Remember, an extra dollar doesn’t buy much extra happiness for a millionaire, but it buys quite a lot for a working-class person.

Raising the federal minimum wage is politically difficult. So is making the tax system more progressive.

Compulsory education up to an age older than 16 could also work. Research shows that education and skills not only increase income later in life but also increase happiness.

What about the personal implications of your research? Are you happier now that you make more money than you used to?

Unquestionably, yes. When I was in graduate school and I went into a store, I was always looking at the prices. I was constantly calculating. You ask yourself, “Can I afford to buy this box of cereal?” You think, “If I buy more of this, maybe I can afford less of that.” You’re making these tradeoffs and you’re constantly aware of these ­tradeoffs. And it’s tiring.

The first thing I did when I had a well-paying job is I stopped looking at those price tags. Now I never really feel stressed about money. Even if I lost my job tomorrow, I have my degree, and I can get another job. I get to live free from stress and worry and the constant calculating of tradeoffs that I had earlier in my career.

So would I be happier if I became a hedge fund manager?

Don’t let an economist bully you into believing money’s all that matters. And don’t let a psychologist bully you into believing that money is completely unimportant. How you manage that tradeoff is going to require a lot of experimenting and thinking and introspection. People choose occupations based not just on money, but also on meaning. There’s nothing in my research that says that’s a bad idea.

MONEY Careers

4 Ways to Find an Unlisted Job

Magnifying glass looking at classifieds
Mikey Burton

With a little digging, you can make sure you’re in the know when a sweet office opens up at your dream employer.

Your next job probably won’t be advertised. When it comes to filling positions at the director level and up, hiring managers prefer to target their ideal candidates rather than sift through applicant résumés. But don’t just count on a call from a recruiter to pluck you from the ranks. “The job seeker who waits to be tapped on the shoulder might be waiting awhile,” says Tonushree Mondal of HR consulting firm Mercer. Take these steps to find the job, since it may not find you.

Talk to the Top Recruiters

Higher-up HR reps tend to be gate- keepers for higher-level positions, so identify recruiters with sway at the businesses you admire. Can’t determine the right person via LinkedIn? Scour the employer’s career page for the most senior posting in your area and reach out to the person listed, says Kurt Kraeger, New York managing director at Robert Walters recruitment firm. Send a note saying, “I submitted my résumé via normal channels but wanted to get in touch directly about my interest.” Stay on the person’s radar with a periodic email. “They may not look at it, but they’ll remember your name,” says Fred Coon, CEO at executive search firm Stewart Cooper & Coon.

Make a Friend on the Inside

Since upper-level jobs are often revealed only internally, it can pay to establish relationships with peers at companies on your wish list, says Edina, Minn., executive career coach George Dow. Use Linked­In to find a second-degree connection, then request an introduction from your mutual pal. Explain that you’d like to learn about what the company looks for in candidates. Once trust is established, ask your confidant for the favor of letting you know of openings. (“Forget about saying, ‘Can you help me get a job?’ or the person will feel used,” warns Coon.) Offer something in return, like an intro to influencers in your network.

Impress the C-suite Crowd

For you to be identified as a candidate, “companies need to see that you’re a known commodity,” says Job Search Magic author Susan Whitcomb. That means going beyond attending industry events. To capture the attention of those with hire power, you must steal the spotlight. Whitcomb suggests getting on the speaking docket at a trade conference or forming a cross-industry group on a trend in your field.

Get the Boss’s Buy-in

Want to climb at your current ­company? Ask the boss for a boost: “Under your direction I’ve learned so much and feel ready to take on a higher role. Can you help me find new opportunities here?” If that’s uncomfortable, schedule a visit with the head of HR. “Say you’re interested in moving up, and why,” says Coon. Also, find a mole in finance, since filling jobs often requires budget sign off. Adds Coon: “It’s detective work, pure and simple.”

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