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A few years ago, when it came time to renegotiate our union contract with the company, I decided to join the bargaining team. I didn’t join because I was pro union. I joined because I was a numbers guy and wanted to make sure we got the best deal possible.

One of the main sticking points at the time was the company stock plan. Non union members were allowed to use up to 10% of their income to purchase company stock which was immediately matched at 25% by our employer. After one year in the plan, the match jumped to 33%, and after two years, it was a 50%.

My quick calculations showed that if you maxed out the plan, after two years, employees would be getting a “guaranteed” raise of 5% (plus dividends), however, not everyone saw it that way.

A higher income won't change anything

Making more money won’t change anything

As one of the negotiators, I was obligated to answer any questions or concerns the union members had. There were a number of people who expressed great displeasure that we were focusing on the stock plan instead of getting a higher annual raise.

To get the stock plan, the company offered small raises on a 5-year term. None of the raises exceeded 2% which I admitted would unlikely beat the cost of inflation. However, the long-term gains from the stock plan would make it worthwhile.

I certainly understand why some people would want a raise off the top Making more money means increased spending power, or for some, it meant they could pay down their debts.

Here’s the thing. Making more money doesn’t tend to change anything. We’re hard-wired to spend more as soon as we make more. I could have negotiated a 10% raise and it wouldn’t have been enough for these people.

Spend less or make more?

Rarely do we have control over how much money we make. These employees who were concerned about their raises were relying on me to get them something. I don’t like telling people how to spend their money, but I pointed out that saving for the stock plan would lead to more money.

It’s really a simple concept if you think about it. Spending less means more money. Everyone (including me) can cut back on certain expenses. I’m not suggesting you be super cheap, but there are plenty of ways to be frugal without affecting your lifestyle too much.

Some argue that trying to be frugal is a waste of time. They say it’s much easier to make more money. I suppose that’s true to a certain extent, but not everyone can just make more money. Even if you’re able to make more money, quite often you end spending more money so nothing’s really changed.

Why do we keep spending more?

It’s simple, lifestyle inflation can affect many of us. For many of us, when we earn more money, we spend more. When we’re first starting our careers, we’re forced to live on our limited budgets, but as we make more we spend more.

You might go from a shared apartment to your own condo or maybe you go from instant noodles to the newest restaurants in the city. Lifestyle inflation happens to all of us, but if we don’t know when to stop, we’ll just keep spending more.

It doesn’t help that we’re wired to compare ourselves to others. It used to be called keeping up with the Joneses, but now the cool term is you only live once, YOLO!

Final word

Don’t get me wrong, if you get a raise or earn extra money, you definitely deserve to treat yourself. But at the same time, you can use some of that money to increase your net worth or to pay down some debts. How much you save is equally important. Keep your spending grounded and a higher income won’t change anything (in a good way).


About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi


  1. Avatar Steve Bridge on April 3, 2017 at 11:57 AM

    Great stuff, thanks Barry!

  2. Avatar Ms. Frugal Asian Finance on April 9, 2017 at 10:02 PM

    I think the thought of rewarding yourself with a move up in housing or lifestyle is prevalent. There’s nothing wrong with it. The problem usually occurs when people over-reward themselves or feel entitled to spending their increased income without a plan.

    • Avatar Barry Choi on April 9, 2017 at 11:23 PM

      Ms. Frugal Asian Finance,

      Heh, yeah when people get a 10% raise but then increase their spending 15%, there’s a problem.

  3. Avatar Vito on May 2, 2017 at 8:44 PM

    Hey Barry, great article!

    I would only add that the forward thinking you made with the stock plan being the better choice for the long term, can also be risky because the value of the company can always go down rendering the shares value to decrease. That said, I’m enrolled into my company’s ESPP and get 15% return on my investment immediately, but your matching program for the stock plan sound amazing! I have that but only for our employer RRSP contributions. One particular year the value went down and I was down about $14-15K but now has gone back up passed that, but thats always due to speculation, especially the company and industry I work in.

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