5 Annoying Ways Your Job Costs You Lots of Money

Over the last 35 years I was an employee for 24 years, and full-time self-employed for 11.

Those first 24 years were critical in enabling me to do the work I do now through my businesses, but as far as direct compensation, they left a lot to be desired, and in some cases actually cost me money.

A lot of money.

Excess Value Created

Your employer is in business to make a profit, and there’s nothing wrong with that. However, what this means is that by definition you must be creating a lot more value than what you’re getting paid.

Indeed, since you probably cost your employer about 25-40% more than your pre-tax, pre-deductions salary, you probably create at least 100% more value than you’re paid.

If you could do the same work as your own boss, you’d keep full compensation for all that value. As an employee, the excess value you create goes into your employer’s pocket.

Unpaid Overtime

If you’re a professional, you’re probably considered an “exempt employee.”

This means your salary doesn’t increase if you work more than the standard 40-hour work week, even if those extra hours are involuntary.

In one employee position, my supervisor would say things like, “Weekends and holidays are for secretaries and students,” or “Working evenings and weekends is for your convenience, so you can get more done.”

Of course, my (rather anemic) salary didn’t increase by a penny when I had to work 50, 60, 70, or more hours a week for weeks on end.

Say your employer has you working 50 weekly hours on average with no overtime pay. In this situation, you’re losing the extra 25% you should be getting paid (let alone the time-and-a-half or double-time payment often required for non-exempt employees’ overtime work).

Supervisory Abuse

When I was a grad student, I did research work overseas for a year.

For 6 months my then wife had no work permit, making our finances super-tight.

After she got a work permit and found a great job, I remember her calling me at work to let me know she had just been given her first paycheck.

“That’s great,” I replied. “I’m going to the bank then, to withdraw our last 10 (Swiss) Francs so I can buy lunch.”

Over that year, my relationship with my supervisor became increasingly strained, because I wasn’t willing to work 100 hours a week, setting my personal limit at 70. Since in his opinion grad students were a (vanishingly small) step up from indentured slaves, my refusal to jump each time he said “Frog!” was inexcusable to him.

By the time the year was up, my wife was 8 months pregnant with our son.

I asked my supervisor to extend our stay there for a month or two, so she could continue working until giving birth. This would have given us desperately needed income, and would have had all her hospital bills paid by the extremely expensive private health insurance I was required to buy that year.

My supervisor declined.

Not being one to just give up, I told him I’d take my leave before moving back home.

“If you want to take leave, that your right,” he replied, “but first you have to move back home.”

By my estimate, his abusive reaction cost me the equivalent of 10 months’ worth of my salary at the time.

While this is an extreme example, as an employee you will likely experience cases where your supervisor or employer limit your ability to take advantage of opportunities to make extra money.

Niels Buksik, CFP^®, CEO, Founder, and Financial Planner at ANCHORY, adds another example that hit close to home. He says, “Some employers started requiring their employees to commute to the office again, only to get on a Zoom call with folks that are not co-located in the same office. This just recently happened to my wife. Not only is this waste of time and energy, but with gas prices at all time high it’s an unnecessary expense carried by the employee.”

Buksik adds another example that hit many of his clients, “Being a loyal employee to the company actually costs you money. I’ve seen this with multiple clients. Say an employee has been with a company for five years. Each year he or she might have received a 3-5% raise. However, the market changes and in certain sectors (e.g., technology) salaries increase exponentially. A new hire often gets paid more right out of the gate. The long-time employee will never be able to make up this difference between their salary through annual raises. Rather, they’d have to go to another company to get the salary they should have received at their current organization based on the market changes.”

You may not think of this as supervisory abuse, but how else would you label getting paid less as a loyal employee of many years than a brand-new hire doing the same work?

If nothing else, many employers have language in their employment contracts that prohibit you from doing paid work in your field outside of your employment.

Taxation Differences

Tax laws favor employers and business owners far more than employees. As a result, there are few work-related expenses you can deduct from your taxes as an employee.

How much this affects you depends on many factors, but it almost definitely costs you more of your hard-earned money than it should.

The Myth of Job Security

There are some exceptions to this one, for example if you’re a government employee.

However, for the rest of us, job security is mostly a thing of the past.

My final employer let me go because they weren’t able to market my skills well enough to make money from my work. This made perfect sense, and I left the company on good terms without any hard feelings.

However, this resulted in my having no income for several months, and having to pay the full cost of my health insurance through COBRA. Just that last was over $1500 each month!

The Bottom Line

Being your own boss comes with many perks, but also with lots of risks. Not everyone is cut out for this path, and not everyone who tries succeeds. However, if you stay an employee for your entire career, be aware that you’re very likely losing a lot of money as a result.

Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.