By Rachel Zupek,
    
        
Amanda* was unhappy with the amount of money she was making 
at her job, so she went after a position with a competitor and 
negotiated a higher salary. When she told her current employer about the
 higher salary offer, it countered with a considerable increase in her 
current salary to keep her on board. Hoping this is what would happen 
all along, Amanda accepted the new salary and stayed with her employer. 
One
 year later, the company made a round of layoffs because of changing 
market conditions and Amanda was one of the first to go. Not because she
 was a bad employee -- because she was overpaid compared to her 
contributions.
In today's society, workers associate earning a 
high salary as one of the most important aspects of their jobs. They 
assume making a lot of money equals happiness, satisfaction, less stress
 and job security. Unfortunately, this is not always the case; Amanda's 
story is just one of many examples of how having a higher paycheck can 
backfire
"Our sense of value and self-worth is often tied to how 
much money we make," says Michael Zwell, human capital expert and author
 of "Six-Figure Salary Negotiation." "There is an illusion that we live 
with and believe that a bigger paycheck makes us happier and more 
valuable."
In fact, research shows otherwise. Studies have shown 
most people feel happier in a five-figure job where they are earning 
more than the majority of other people in the company than they do in a 
six-figure job where they are making significantly less than others, 
says Stan Smith, founder and CEO of Smith Economics Group Ltd., in 
Zwell's book. Ultimately, he says, people can't rely on short-lived 
salaries, promotions and raises to keep them happy but rather the 
contributions they make in the long run.
Smaller paychecks reap large rewards
In
 some situations, having a smaller paycheck than you'd like can actually
 be a bonus. If you are in a job where there's a steep learning curve, 
for example, getting a smaller paycheck will buy you time to develop the
 skills and experience to earn more in long run, Zwell says.
 Additionally, less money can buy you more flexibility on the job, Zwell says.
"Compensation
 is based on an exchange of value for value. Depending on your life 
circumstances, you may want to contribute less and put in more time on 
another key area of your life," he says.
If you've always thought a
 bigger salary was your dream, take a look at how making more money can 
actually work against you. You might start to appreciate what you 
currently earn. 
Potential backfire No. 1: You're one of the first ones to be laid off
When
 the economy is weak and companies need to cut back on costs, one of the
 first places they look is the highest-salaried employees, as 
exemplified in Amanda's story.  This is not to say that just because you
 earn more than others you're a target for layoffs. Nevertheless, if 
you're earning more than you should be for your market or contributions,
 chances are that your job could be under scrutiny.
Potential backfire No. 2: The more money you make, the more money you lose
Let's
 say you earn $85,000 annually and you received a raise that brought you
 up to $90,000. Sounds exciting at first -- until you the do the math 
and realize your new check is only a couple hundred dollars more than 
your old one. 
One of the negatives to earning a high salary is 
that your marginal tax rate is higher than other people's. While you 
might be earning more than your co-worker, he or she might be taking 
home a similar -- or higher -- amount per check because they aren't 
taxed as much.
Potential backfire No. 3: You might be priced out of the market
Zwell uses the example of, Joseph, an accountant
 for one of today's biggest accounting firms. After three years, he got a
 huge promotion and was making $10,000 more than any of his peers. He 
was in a dead-end job however, doing accounting work that became 
routine. 
When he looked for another job, he found that all the 
jobs he was qualified for paid much less than he was making. He didn't 
want to take a pay cut and even if he was willing to, companies would 
rather hire someone for whom the move was an increase in pay, not a 
decrease. In other words, nobody would hire him because he was currently
 making too much money for his experience -- thus, his high salary 
backfired. 
Potential backfire No. 4: You could inadvertently trap yourself under a glass ceiling
Knowing where you are in a salary range reveals a lot about your career path, Zwell says. A young man is recently hired by a bank,
 for example, at the highest salary grade for a non-manager. He is 
already at the top of a salary range for his title, therefore less 
likely to earn any more money without changing positions or companies. 
Potential backfire No.5: Earning more money does not mean more happiness. 
Sure,
 you might earn $200,000 annually -- but what does it matter if you're 
not doing something you enjoy? Many workers find themselves saying, "If 
only I earned $XX, then I would be happy." Then the day comes 
when you are earning that amount and -- surprise, surprise -- it's still
 not enough. Ultimately, the only time you'll really be happy is when you don't care about salary at all.