What Few People Tell You About Earning Money

Old ‘financial wisdom’ is outdated.

Money: the unit of wealth which affects every one of us. It’s a sensitive topic often spoke in hushed murmurs. Given its importance and equally polarizing opinions, you’ll hear a million pieces of advice from different people, most doing something completely different from what they preach.

Like me, you’ll undoubtedly come across generic pieces of financial advice recycled over and over again. Every so often, I’ve also heard unorthodox advice that I disagreed with at first.

Over time, my perceptions about money have changed.

All-out saving takes more than it gives

Saving alone will not make you rich. Many of us still think we can become rich by spending as little as possible. For more than we like to admit, our financial attitudes have been massively influenced by our parents.

Their logic isn’t wrong –it just doesn’t apply to our generation.

Your parents/grandparents and you live in two separate generations. In your grandparents’ generation, they survived two world wars and the Great Depression. In your parents’ generation (the 1950s), the stock market was capitalized by heavyweights like General Motors, Exxon Mobil and U.S. Steel. Not a single tech stock.

Fast forward to your generation, the S&P is heavily comprised of big tech like Amazon, Facebook and Google. We can’t imagine a day now without their services yet none of these companies even existed before 1990.

Different generations, different rules. The same applies to finance.

There are two flaws with relentlessly saving to amass wealth.

First, inflation and a higher consumer price index. With record levels of inflation in the U.S at 7.9%, $50,000 in your bank this time next year will be worth around $46,050 in spending power. Without doing a single thing, you’ve ‘lost’ almost $5000. The trouble with inflation is you don’t physically see the money draining out of your account so it seems a smaller impact than it actually is. The $50,000 in your bank will still be there next year but its worth is considerably less.

Secondly, mindset. Saving is spurred on by a negative money management mentality: the goal is to restrict as much money output as possible. You’ll scrutinize every dollar used and control yourself with extremely short-sighted thinking: ‘If I buy this, I’ll lose $50… if I buy that I’ll lose $100’.

In a desperate attempt to save money, you’ll lose opportunities to earn money through spending money. If that concept sounds absurd, you’ve just criticized the model of every business: spend money to make money.

Let’s be clear: have some savings. Emergency savings are always wise because you never know exactly what the future holds. However, above a certain savings threshold (and only you will know what your own personal savings threshold is), it’s worth investing your savings to better use.

Jack of all trades, master of many

In the early stages of your career before you settle down, you should rotate jobs every 2–3 years.

For three reasons: money, skillset and self-worth.

Money:

Employees who stay in the same job for longer than 2 years get paid up to 50% less than those who change jobs.

The reason why your progression at one company can be agonizingly slow is because your employers know your ability well. Even if you’re outperforming the set standard, existing employers are slow to respond with a salary increase. It’s a very passive process.

Most employees are offered a pay rise only when they leave because it’s their employer's last-ditch attempt at making them stay.

It’s not entirely our employer’s fault. The sensitivity of discussing salary means we’re shy to approach our managers for a pay rise. The passive approach of employers is that if you don’t ask for a pay rise, your employers assume you’re satisfied and make little attempt to reward you for your efforts.

In these cases, the unfamiliarity with a potential new employer works to your advantage. If you ask for a higher salary at the interview and they reject, at least you don’t have to come to work the following day.

Skillset:

“Staying too long at a job can hinder your employment prospects, and a lengthy tenure with one company can give the impression that you aren’t interested in growing your career.”

An ideal employee is one with a varied skillset and experience across multiple sectors.

‘Previous experience is essential’. The go-to line for every recruiter for just about every job. If you’ve spent 5–10 years at the same role, you’ll have less varied experience than someone who’s spent shorter amounts of time in one role but offers a considerably more mixed skillset.

Being able to leverage your skillset massively benefits you in the long run because you end up with a breath range of skills and experience to fit multiple roles. It also shows future employers you are flexible and willing to learn (2 favourite buzzwords for any job spec). On a personal level, it builds your confidence to apply for ambitious, unfamiliar jobs and take greater risks such as starting your own business.

Self-worth:

Too many of us stick to a job we hate simply because the thought of moving to another job seems stressful and challenging. Or you may be ‘comfortable’ where you are. Few things in life reap high rewards without considerable effort and jobs are no exception. The mental roadblocks imposed by yourself make changing jobs more daunting than it actually is.

Before you talk yourself out of switching jobs, think about this:

You will change jobs at some point in your career.

Do you want to spend 8 hours a day, 5 days a week, watching the clock run down?

Know your self-worth.

Spend big to earn big

When I say spend big, it means allocating your finances wisely. Blowing your bank balance on lavish goods solely for the ‘feel-good’ factor will leave you bankrupt. What do I mean ‘wisely’?

For me, it means saving time and acquiring skills.

Time:

Saving your own time and earning more money in the long run requires outsourcing. You might not realize, but outsourcing is very common.

The company you work for; it was founded by an individual or group which have now outsourced the bulk of the work for hired employees i.e. you. Entrepreneurs often start solo and then establish a group over time. Content creators who started doing everything from scratch (writing, production, filming) have hired professionals for these roles once they can afford them (e.g. ghostwriters, video editors, photographers).

The biggest block to outsourcing initially is paying for someone or a service without seeing an instant return. It’s the opposite of saving.

It seems expensive initially and you’re worried it won’t work out. However, outsourcing saves you time to work on areas you’re most interested or knowledgeable in whilst getting help for areas less interesting to you (e.g. admin tasks) but equally important to your work.

Yes, you can do it all yourself like you originally did but being able to hire a PA/professional will get the job done twice as good in half the time.

In the long-term, this leads to more income compared to if you did everything alone — simply because you don’t have the time to do the jobs of 5 people. As your work or business scales up, so must your economies of scale.

If outsourcing is a bad idea, why is it used by every company? Besides, if you’ve tried it not liked the results, you can always go back.

Skills:

Another wise investment is investing in yourself, in the form of skills.

For anyone just beginning their career ladder or entering the world of work: chase skills initially, not money.

Many of us assume our skillset is linear to our earnings: a smooth diagonal line. The reality is probably more like an exponential growth curve i.e. expanding our skillset in the short-term brings little changes to our earnings but once your skillset increases past a certain point — boom! Your earnings start to explode.

No one knows when this will happen. You can only increase the odds by continuously acquiring new skills/improving existing ones until the moment comes.

In our information age, you can self-teach new skills with free resources. It’s portrayed as a simple process to jump from beginner to expert. In reality, self-teaching skills to a professional standard is extremely challenging. Not only do you have to master technical elements, but you also need self-discipline and structure.

Think about the chances you’ll go gym alone compared to if you had invested in a personal trainer. Yes, that personal training session may have cost you $50 dollars, but in the long run, it gives you something much greater — health.

A select few can succeed purely through self-taught skills but the majority of us would produce infinitely better results with a little structure and direction. You shouldn’t be afraid to spend on good-quality resources even if they seem expensive — books, courses, classes etc. You might see little improvement for the initial few months or first year, but once you master a new skill, the benefits are far more than just monetary.

Nothing in life is truly free; even your education costs you tuition fees. You get what you pay for.