I actually was supposed to write this...over a year ago. Some of my more loyal readers may remember.
You may be wondering why Money Maverick is writing a soft personal finance topic such as this. It's not something distinctive and specialized about investing or insurance.
As it turns out, even if you write something like saving $100k by 25, you can still get lambasted by childish people. I've always wanted my articles to have open discussion but in the last few years it seems like people just agree with me while not even bothering to like my posts. (angst)
Naturally, there will be haters but as you guys can tell from a few weeks back, I think there's only so much worse it could go.
Plus, if Miss FitFI can endure so much crap, I'd feel embarrassed if Money Maverick shied away from non-endearing topics.
Without Further Ado
1) Set Goals [Goalsetting]
PLEASE bear with me - no one likes this pointer, but it's such a must and it always comes first.
I think the problem I had with this growing up is that anyone feels like they can plan (much like anyone feels they can do Financial Planning, huhuh). What is usually lacking is quantification.
For example, if my goal is to make $10,000/mth and I'm currently making 1/4 of that - there are several pertinent questions you want to ask yourself:
a) How long will I give myself to reach this particular goal?
b) What are the steps needed for me to reach this goal?
c) What are the things that I need to accomplish this year to get me closer to this goal?
And other such pertinent questions. Often, you can use a benchmark (e.g. an ideal or someone in a senior position) to help you kickstart this assessment.
For example, if I'm a contract-on-probation trying to make $10k a month like my manager, I'd have to assess how old he was before he reached his position, and whether or not there is even a position available at that company, what he had to accomplish to get there, etc.
2) Prepare Your Boss [Aligning Expectations]
Your boss and boss' boss are much more responsible for the control of your income, so you have to prepare them. Let them know what you intend for and ask them what it would take for them to pay you what you want.
As someone who has hired contract workers, part timers and recently my first full timer - I have a pretty reasonable idea of how much better the business would have to do in order for me to pay each person more.
[In fact, most good business owners - not necessarily good employers - but good business owners would know how much more they already can afford to pay you]
Having the expectation set early and having regular reviews to see how you help your boss or your boss' boss reach their goals will obligate them to help you meet your goals as well.
3) Double Down or Side Hustle [Specialization or Other Things]
This is an interesting conundrum for me.
Side Hustle: The overwhelming number of side hustles typically don't have scaling. It's usually something flexible that you do on your free time - e.g. Tuition, Grab Delivery - but it tends to make you a reasonably predictable amount of money.
In fact, some side hustles make more relative income than the person's regular job: for example - someone getting paid $3000/mth on a 45 hour work week would be making about $17/hr.
If you'd focused solely on your career and the corporate ladder, several things might happen
a) You might not be as recognized as someone who is flashier, or you risk getting credit stolen from you regularly
b) You may not be able to advance as quickly due to specific limitations like having a degree, regardless of your work
c) etc.
Double Down:
If you go from an executive making $3000/mth to a senior manager making $9000/mth - it's unlikely that your side hustle would be able to keep up with that kind of money per hour.
And it's less likely that someone who had a side hustle prior to that would be able to transition from Executive to Manager easily, since doubling down would give you more presence at the company.
Many side hustles can make more than that per hour - but they rarely allow you to scale beyond that.
My advice? Unless your side hustle allows you to scale or even becomes a business, I'd double down quite exponentially after my short term needs (e.g. house) were settled.
Plenty of research indicates that older/married people tend to have better long term careers anyway.
4) Assess Your Worth Continually [Revenue you Bring to the Company, Networking Opportunities]
Like in Point 1, what I think is lacking for career planning is the ability to quantify goals.
(Much like how people will refuse to do investment planning with me but have no idea on how their investments are doing, nor how they should be doing.)
One of my favorite clients, who's a software designer - assesses his value quarterly and does a final tally at the end of the year.
a) Prior to his arrival, what was the company bringing in? b) How much has the company grown since he arrived?
c) What areas could he attribute their growth to, directly and indirectly - can he track which of his ideas were implemented, or even carried out by him that led to said growth?
This actually complements the KPIs typically set by a company so that they can see you have long term prospects growing your career with the company. But even without that, such a record will allow you to demonstrate your value better to headhunters.
5) Watch Out For BIG Pitfalls
Two that I've seen or experienced more that can really slow down your income doubling are:
Black and White: Plenty of companies love to promise a lot, where the reality is less kind. Never take a job on a promise that isn't written in black and white, and make sure that you read through the entire contract - even if it takes an hour.
Priorities and Opportunities: Nobody does a job fully and completely because they are so supportive of someone else's dream and thinks so little of their own time.
We typically prioritize in this order: our well-being (able to feed ourselves), family/people we care about long term, followed by everybody else.
The ones who've doubled their income repeatedly are inflexible on their priorities and flexible on their opportunities - they will go overseas, leave for an objectively better opportunity in a heartbeat or negotiate a better opportunity to not leave. If you have attachments to things outside of your initial priorities - whether its something as superficial as poor spending habits or something more personal like colleagues - prioritize.
Never set yourself back for the opportunity to do more for your first priorities. Never get done in 10 years what you can get done in 5.
Conclusion: Will Any Of This Work?
With that, I'd like to give some thanks to my clients, S and E - for sharing with me how they did it, as well as my sister Rachel for first suggesting the possibility of the concept.
These are actually very basic ideas to a very basic introduction. So yes, they will work - up to a certain point anyway.
I first was introduced to the concept of doubling your money every 5 years by a video on gender inequality in the workplace.
The debater was a clinical psychologist who was unwilling to concede the 'gender pay gap', which is the average difference in pay between men and women who are working, due to a string of multi-variate factors that not only showed that women get paid as much as men for equal hours, but some demographics of women actually get paid higher.
The majority of the differences in later life were attributed to some of the things that I've mentioned, such as:
a) Making very specific career goals and quantifying them
b) Tracking performances and then asking for raises, promotions or seeking out opportunities to get headhunted (often at the risk of being sent overseas too)
In local terms: like how many people - particularly men, spoke negatively of Miss FitFI - Singaporean men have a much more distinct reason for why they have significantly lower pay than women in the same age band due to National Service.
But overseas, particularly emerging countries - and even in efficient areas like the US - the psychologist was able to tie down a distinct number of factors (often related to more prominent personality traits in men) that could help women double their income every 5 years.
Hopefully you can do it too.
Money Maverick