Earning Money in College: Don’t Sleep on Potential Gains

I started college on the wrong foot financially.

One afternoon, I returned to my dorm and found my roommate tracking his sleep schedule on a spreadsheet. He had signed up for the university’s sleep study, he told me, and he was being paid to record his daily sleep and wake up times.

The sum was laughable: $1 a day, with a potential to earn more for streaks of compliance-—for example, an extra dollar after five consecutive days. He recommended that I, too, should sign up for the study, but I resisted. After all, was it really worth my time to track my sleep schedule for a mere dollar?


By the end of the semester, my roommate had earned well over $100—an opportunity that I passed up as ‘unworthy’ of my time. Of course, I surely would not have paid $100 to opt out of such a study; the recordings required minimal effort, and $100 is quite a sum. But if I would not have paid $100 to opt out, why was I so unwilling to participate in the study to earn the same amount?

The answer, it seems, is in the ‘difference’ between losses and foregone gains. When the money is theirs, people experience its loss more powerfully and are less willing to write off the cash. When the money is merely a sum to be gained, however, forgoing the amount triggers a less significant reaction: people view themselves as no worse off than they were before the opportunity presented itself, and thus do not feel bad about its loss.

Of course, $100 is $100, regardless of whether it was lost or merely not gained. Money is just money, and each situation results in a net worth that is $100 less than otherwise. Bank accounts do not differentiate between these methods, nor do credit card balances, so why should young adults?

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One step to correct this mental inconsistency is to consciously flip your perspective during decision-making.

For example, would considering the $100 of the sleep study as already being yours cause you to experience its loss more significantly and to thus participate in the study? If so, then to write it off as a foregone gain probably doesn’t make sense.

The above step works well if you want to motivate yourself to take the money, but what if you decide that you’re fine financially? Do you really want to be a slave to all potential gains—to experience them all as powerful losses? Such a perspective would likely commit you to caring about money and little else—a poor path to a fulfilling life.

More financially secure individuals can use a different strategy. If you decide that you can afford to spend a bit more freely, try conceiving of your losses as foregone gains. For example, if you’ve done a terrific job saving all year—scrimping on necessities; passing up fun opportunities—then to spend a lot on a birthday present for yourself might feel excruciatingly painful. In this case, try to think of the birthday spending as forgoing part of your next paycheck, rather than eating up your savings.

The tension between the two recommendations—conceiving of foregone gains as losses, and conceiving of some losses as foregone gains—illustrates the need for a caveat. There is not a one-size-fits-all solution to handling losses and foregone gains. Instead, you should consider what your real objective should be—either earning the money, because you need it, or perhaps spending some on a great experience, because you are secure. From there, you can manipulate your thinking to make your decision less psychologically painful.

The important component of this recommendation is to make the financial assessment objectively without allowing the label to influence your decision. I wish that I had considered the sleep study’s full reward before passing it up, but I have also been thankful since then to not be entirely wed to money. The appropriate decision depends on the situation; by learning about the mental effects of losses versus foregone gains, young adults are in a better position to discount the labels and consider their objective financial situations.

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