Has Your Earning Capacity Saturated?

Published: May 1, 2015 at 3:00 pm

Last Updated on February 12, 2022 at 6:21 pm

Has my earning capacity saturated?. Is this all that I am going to earn for the rest of my life? Do I need to erase some of my dreams because I am never going to earn enough in order to achieve those?

These are some of the most unsavoury questions in personal finance. Most people confront them at some point in their lives. The answers are typically not pleasant. At least that was the case for me.

As a boy, I knew little about the importance of money. I demanded very little from my parents. What I wanted, I got. So mine was a happy childhood.  Money did not drive my choice of education. I did not choose a degree based on career prospects. I chose what I liked or what I thought I liked.

I never had any kind of notion about what a ‘good’ salary was.  I remember the reactions of my classmates when I told them my research fellowship. Some of them went ‘is that all? How do you manage?’ To be frank, I did not know what ‘manage’ meant. I would draw my salary, give it to my parents and did nothing more.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

I was 31 when I got a tenured appointment and for the first time got a ‘respectable salary’ (meaning my friends would not go, tsk, tsk!)

A year or so later, during a discussion about how scientists behaved in certain labs, one my colleagues made an observation which I would never forget. He said,

these guys found out pretty late in life that their salaries are not commensurate with their dreams. Beyond expenses and essential financial goals (child’s marriage, education etc.), these guys cannot buy anything else. They don’t have the cash flow. They salaries have saturated. So they are frustrated and it shows in their work.

Those words shook me up pretty bad. For the first time in my life, I  realized the importance of holistic money management. The need to take into account future financial goals and if we will have the necessary cash flow to fund them.

The following summer, I spent a lot of time staring at cash flow charts in Excel, answering:

If my salary did not grow beyond the typically expected 8-10% growth, will I be able to invest enough for my all my essential financial goals?

I have been doing this exercise (now fully automated with financial plan creator) each year since then.  You can also use the robo advisory template

When I did it for the first time, I had only retirement as the essential goal. Since then, I have become a parent and now have my son’s education and marriage as additional essential goals.

Thankfully, due to the 6th pay commission, my salary increased and I could accommodate the additional goals.

However, I have not be able to factor in my dreams, desires or non-essential goals (relatively speaking) for the last 9 years.

I think it is safe to say that my earning capacity has saturated.

I would not be surprised if many others are in the same boat. For most people, there is a limit to how much they can earn and therefore, a limit to how much they can realistically want.

Yes, yes, we must never give up on my dreams and wants, be optimistic, strive for it as long as we can, it is never too later and all that sort of thing, but who are we kidding?

Correct me if I am wrong, I think for most people, earning potential is determined in a narrow time window, typically after school.

How much we earn is decided more often that not decided by what we choose to read and where we choose to work.

An income over and above that is typically rare.

The moment when we holistically realize what our present and future purchasing capacity is going to be is a watershed momement.

If you have not though along these lines, I urge you to ask the questions that I did with the financial plan creator or the robo template this weekend.

It is important to not lose hope. Let us hold on to it with perspective.

pic credit: pix shark


Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.
🔥Now Watch Let's Get Rich With Pattu தமிழில் (in Tamil)! 🔥
  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter using the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl-version covers of "Chinchu Gets a superpower".
Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management, is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)