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Feeling overwhelmed about how to get your career and finances in order?
Job stuff, money stuff, and personal stuff — not only is it all linked, but it can seem impossible to disentangle. Work Your Money, Not Your Life cuts through the confusion by serving as your all-in-one guide to career and financial satisfaction.
In his debut book, Roger Ma, an award-winning financial planner and a publisher strategist at Google, offers secrets on how you can craft a meaningful career, gain financial comfort, and achieve peace of mind through:
• Exercises and easy-to-use templates to help you clarify where you curr ently stand financially and professionally, and where you want to go
• Step-by-step instructions for achieving career satisfaction by tweaking your role, adding a side hustle, or changing jobs entirely
• Simple ways to save, grow, and protect your money to make your ideal life financially feasible and sustainable
You’ll come away feeling empowered to pursue the life you want without having to sacrifice what’s important to you. And the best part? Anyone can optimize their lives for greater clarity, balance, and purpose, starting now.
ROGER MA, CFP® is an award-winning financial planner at lifelaidout, publisher strategist at Google, and contributor to Forbes. He was named one of InvestmentNews’ “40 Under 40” in financial planning in 2017, and one of the top 100 Most Influential Financial Advisors by Investopedia in 2018 and 2019. Roger’s personal finance advice has appeared in numerous publications, including Bloomberg, CBS News, CNBC, and the Washington Post. Roger previously worked in investment banking for seven years and holds a Bachelor of Science in Business and Economics from Carnegie Mellon University. He lives in New York City with his wife, Jennifer; son, Owen; and two cats, Josie and Junebug. You can learn more about Roger at lifelaidout.com
JENNIFER MA is a New York City-based writer, editor, and communications professional. Her experience has spanned various communications roles in diverse industries. Jennifer has also served as a contributing writer at a number of finance, travel, and lifestyle publications. She holds a Bachelor of Arts in English from the University of Virginia. Jennifer is the proud wife of Roger Ma, and the doting mother of their son, Owen (as well as their fur babies, Josie and Junebug, of course).
MA
AdvancedPraise “Ifyou’veeverwonderedhowyoucanmakeworkandmoneydecisionswithoutsecondthoughtsorblindlygoingwith‘whatseemsgood,’buythisbook immediately.IwishIhadknownaboutthetips,strategies,andadviceRoger laysoutyearsagowhenIwasfeelinglostasacorporateoverachiever. Work YourMoney,NotYourLife isanengagingreadthatremindsusthatprofessional andfinancialsuccessareinourcontrol.”
—LaurenMcGoodwin,founderandCEOofCareerContessa
“WorkYourMoney,NotYourLife istheperfectbookforanyonewhowants theircareertoworkfortheminsteadoftheotherwayaround.It’sahighly actionablereadthatdoesn’tjustmotivateyou,butalsohelpsyoufigureout exactlywhattodoinordertoalignyourcareerandmoneywithyourvalues. It’samust-readforanyonewhofeelsstuckinajoborunsatisfiedwiththeir career.”
—KristinWong,authorof GetMoney:LivetheLifeYouWant,Not JusttheLifeYouCanAfford
“Candid,relatable,andfunny,Rogerdrawsonhisuniquebackgroundasa banker-turned-Googlerandfinancialplannertohelpreaderstackletheir biggeststressors.Thispowerfulreadshowsushowtakingsimplestepsto masterourmoneycanenableustobuildameaningfulcareerandachievea fulfillinglife.”
—NicoleLapin,authorof RichBitch and BossBitch
“What’syourmostvaluableasset?Mostlikely,it’syou—andthepaychecks you’llcollectinthedecadesahead.That’sthestartingpointforRogerMa’s uniqueandenlighteningbook,whichtakesthathugelyvaluableassetand showsyouhowtoturnitintothecareerandfinanciallifeyouwant.Yourjourneyhasthepotentialtobewonderfulandenriching,especiallywithRogeras yourguide.”
—JonathanClements,editorof HumbleDollar.com andformer personalfinancecolumnistfor TheWallStreetJournal
“WorkYourMoney,NotYourLife putsafreshandinspiringspinontwoof life’smostchallengingtopics:jobsatisfactionandfinancialwellness.Roger isanimportantnewvoiceinthecareerdevelopmentandpersonalfinance worldswhomakesthecomplexunderstandable,thedifficultattainable,and theseriousalittlelighter.Hisguidetoimprovingyourcareerandfinances shouldberequiredreadingforallyoungprofessionals.”
—FranHauser,authorof TheMythoftheNiceGirl andformer presidentofDigitalatTime,Inc.
“RogerMa’ssuperbintroductiontofinancialfreedomexpertlyhelpsreaders turntheirdesiredpathintoareality.Withitsactionableandinsightfuladvice, thisbookmayjustbethecatalystyouneedtodesignthelifeyou’reseeking.”
—ScottTrench,authorof SetforLife:DominateLife,Money,and theAmericanDream,andCEOofBiggerPockets
“Optimizingyourlife,yourjob,andyourmoneywillalmostcertainlyputyou onthepathtofulfillmentandhappiness.Rogeroffersatremendouscollection ofpracticaladvicethatyoucanandshouldimplementstartingtoday.”
—AllanRoth,authorof HowaSecondGraderBeatsWallStreet andfinancialplanneratWealthLogic
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Copyright©2020byRogerMa
PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey.
PublishedsimultaneouslyinCanada.
Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,or transmittedinanyformorbyanymeans,electronic,mechanical,photocopying, recording,scanning,orotherwise,exceptaspermittedunderSection107or108ofthe 1976UnitedStatesCopyrightAct,withouteitherthepriorwrittenpermissionofthe Publisherorauthorizationthroughpaymentoftheappropriateper-copyfeetothe CopyrightClearanceCenter,Inc.,222RosewoodDrive,Danvers,MA01923,(978) 750–8400,fax(978)646–8600,orontheWebat www.copyright.com.Requeststo thePublisherforpermissionshouldbeaddressedtothePermissionsDepartment, JohnWiley&Sons,Inc.,111RiverStreet,Hoboken,NJ07030,(201)748–6011,fax (201)748–6008,oronlineat www.wiley.com/go/permissions.
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LibraryofCongressCataloging-in-PublicationData
Names:Ma,Roger(Financialplanner),author.
Title:Workyourmoney,notyourlife:howtobalanceyourcareerand personalfinancestogetwhatyouwant/RogerMa;withJenniferRoberts Ma.
Description:Hoboken,NJ:JohnWiley&Sons,Inc.,[2020]|Includes index.
Identifiers:LCCN2019050437(print)|LCCN2019050438(ebook)|ISBN 9781119600367(paperback)|ISBN9781119600381(ePDF)|ISBN 9781119600374(ePub)
Subjects:LCSH:Finance,Personal.|Savingandinvestment. Classification:LCCHG179.M16552020(print)|LCCHG179(ebook)|DDC 332.024—dc23
LCrecordavailableathttps://lccn.loc.gov/2019050437
LCebookrecordavailableathttps://lccn.loc.gov/2019050438
COVERART&DESIGN:PAULMcCARTHY
PrintedintheUnitedStatesofAmerica
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PARTI: HERE’STHEDEAL1
Chapter1: You’reWorthMoreThanYouThink3
Chapter2: EverythingYou’veBeenTaughtAboutJobsIs Wrong15
PARTII: FIGUREOUTYOURSTARTINGPOINT25
Chapter3: How’sYourJob?27
Chapter4: CompilingYourFinancialReportCard39
Chapter5: HowtoIncreaseYourFinancialRunway59
viii CONTENTS
PARTIII: OPTIMIZEYOURJOB79
Chapter6: WhatDoesa“Good”JobLookLikeforYou?81
Chapter7: HowtoTweakYourJob97
Chapter8: SupplementYourJobtoExploreNew Opportunities107
Chapter9: PreparetoChangeYourJob121
Chapter10: TakeActiontoChangeYourJob137
PARTIV: OPTIMIZEYOURFINANCES151
Chapter11: ChartYourGoalsandHowMuchTheyWillCost153
Chapter12: WhatYouNeedtoKnowAboutInvesting165
Chapter13: HowtoConstructYourPortfolio187
Chapter14: ProtectingYourWealth205
PARTV: HOWTOSTAYTHECOURSEANDENJOYTHE JOURNEY225
Chapter15: FocusonWhatYouCanControlandTuneoutthe Noise227
Chapter16: YouDon’tHavetoDoItAlone241 Conclusion251 Acknowledgments255 Endnotes257 Index265 AbouttheAuthors275
Introduction Onpaper,everythingseemedtobefallingintoplacefor me.Iwasinmylate20s,livinginthecenterofManhattan,thrivingatatopinvestmentbank,diningat Michelin-starredrestaurants,andtravelingtostunninginternationaldestinations.ThisiswhyIhadworkedsohardthroughhigh schoolandcollege–tobeabletolivethis“dreamlife.”Butonthe inside,somethingdidn’tfeelright.
Workandmoneywereattheheartofmystruggles,despitethe factthatIhadwhatwasconsidereda“good”jobandamplesavings.Mostmornings,I’dhearmyalarmanddreadhavingtogointo theoffice.Myhourswerelongandunpredictable,oftenstretching intothelateevenings,someearlymornings,andmostweekends. Thegruelingschedulemeantmissingfriends’birthdayparties,cancellingdates,andhavinglittletimetorelaxorrecharge.
Theactualnutsandboltsofmyjobwerefarfrombeingglamorous.Evenworse,theworkIdidonaday-to-daybasisdidn’talign withmyinterests.ThiswasdefinitelynothowIhadimaginedmy careerunfolding.Butironically,atthesametimethatIwastrying
x INTRODUCTION tofigureouthowtorighttheshipandchangemysituation,others werereachingouttomeforadviceonhowtogetonthesamepath Iwason—leavingmeconfusedaboutwhat,ifanything,Ishould dotoimprovemyjob.
Whenitcametopersonalfinance,Iwasnobetteroff.Asthe childofimmigrantparents,Ihadalwaysbeengoodatsaving (sometimestoanextreme),andIcertainlywasn’tlivingpaycheck topaycheck.Yetmoneystressedtheheckoutofme.Infact,any timeIwasn’tdoingwork,Iwasprobablyfreakingoutaboutsome aspectofmyfinances.Alongtheway,Imadeallofthetextbook moneymistakes.
Forstarters,Iwasoverwhelmedeasily.Irememberlooking blanklyatthe25differentinvestmentoptionsavailableinmy 401(k)plan,withoutthefaintestideaofhowtoevenbeginfiguring outmyinvestmentstrategy.Afteragonizingoverthedecisionfor months,Idecidedtothrowinthetowelandsimplyputmymoney equallyintofourmutualfundsthat“soundedgood.”
Ialsosoughtfinancialguidancefromthewrongpeople,like whenIwouldlistentotalkingheadsonTVtogetcluesonthe directionofthestockmarket.Evenworse,I’dusetheiroften inaccuratepredictionstotimewhenIshouldmovemymoney around.Inshort,ratherthanbeingincontrolofmyfinances,Ilet myfinancescontrolme.
Overthelastdecade,I’vegraduallymadethenecessarychanges topaveapaththatfitsmyinterests,skills,andpriorities.Today, IbalancearewardingcareeratGooglewithrunningafinancial planningfirmthathelpsothersaddressthesameconcernsabout moneythatIoncefaced.Ifinallyfeelatpeacewithbothmycareer andfinances.
ButtheprocesstogettowhereIamnowcertainlywasn’teasy. Initially,Iwasscaredtotakeactionandexperiment;andonceIgot going,Ifailedoften.Inretrospect,Irealizethatalotofmystruggles stemmedfromviewingmyprofessionalandfinancialneedsasisolatedpartsofmylife,ratherthantwointertwinedpieces.Through myworkasafinancialplanner,Iseethatmanyofmyclientsalso
struggletoreconcilethesetwoissues.I’mguessingthatsinceyou’re readingthisbook,youmightbeinthesamesituation.
ThisbookistheresourceIwishIhadinmy20sasIfumbled throughtryingtooptimizemycareerandfinances.Overthecourse ofmywriting,Iconsultedwithavarietyofexpertsonworkand moneywhogenerouslysharedtheirinsights,includingcareer strategists,financialplanners,entrepreneurs,Fortune500executives,motivationalspeakers,recruiters,lifecoaches,journalists, andbestsellingauthors.Ialsodelveddeepintotheresearchon careerandfinancialissuestolookforcommonthreads.Allthe while,Itriedtoconnectmyownjourneyandthoseofmyfinancial planningclientswithwhatIhadlearnedfromothers.
Whilecareerandmoneyissuesareintrinsicallylinked,Irecognizethatabookcombiningthesesubjectsisnotexactlyabeach read.Inordertocoverbothtopicswithoutmakingyouwanttojump infrontofacar,I’veonlyprovidedtheinformationyouneedto knowtoseethebigpictureandtakeaction,ratherthanbogging youdownwithalloftheminutedetails.Inadditiontointroducingconceptstoyou,thisbookwilloccasionallyusestoriesfrommy ownorotherpeople’sexperiences.Althoughthestoriesarebasedon actualevents,certaindetails,suchasthenamesofpeople,groups, andcompanies,mayhavebeenchangedtomaintaintheprivacyof theindividualand/ornotdiscloseconfidentialinformation.
Consideryourselfwarned,however,thatthisbookisan active read.Inparticular,I’llbeaskingyoutoanswersomequestionsabout yourneedsandvaluesthatyoumightneedtothinklongandhard about.I’llalsoprovideyouwithaseriesofexercisesfocusedonyour careerandfinancialsituations.Iencourageyoutoputinthetimeto dothislegworksothatyoucancreateatrulycustomizedroadmap forachievingyourgoals.
Ihopeyoufindthisbookhelpsyoubalanceyourprofessional andfinancialdecisionsforgreaterstability,satisfaction,andpeace. Whiletheroadaheadmaynotalwaysbeeasy,Icanassureyou thatthepayoffisworthit.Becauseyou can workyourmoney,not yourlife.
Nowletmeshowyouhow.
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PartI Here’stheDeal “Noteverythingthatcountscanbecounted,andnoteverythingthat canbecountedcounts.”
–AlbertEinstein
I’msureyou’reeagertojumpintotheactualnutsandboltsofoptimizingyourcareerandfinances.Butbeforeconcerningourselves withanypracticaldetailsorfancyarithmetic,let’stakeastepback andidentify why theworkwe’llbedoingtogetherinthisbookis important.
Althoughworkandmoneyareinterconnected,theextentto whichthesetwoareasofourlivesimpactandinformeachother maynotbesoobvious.Itcertainlywasn’ttome.However,I’ve foundthatcreatinganintegratedworkandmoneystrategycan empowerpeopletogainmorecontrolovertheirlivesthanthey mighthaveimagined,leadingtogreaterhappinessandaclearer
senseofpurpose.Thishascertainlybeenthecaseformanyofmy financialplanningclients,aswellasformepersonally.
We’llcoverseveralkeyconceptsinthissectionthatwillhelp motivateyouonyourjourneytowardprofessionalandfinancial well-being.Inparticular,we’llexaminehowyourlivingexpenses caneitherhelporhurtyourjobandlifeflexibility.We’llalsoclear upsomecommonmisconceptionsabouthowtopursueasatisfying careerbydispellingseveralofthemythsthatmayhaveledusinto unrewardingjobs.Theinsightsyougainwilllaythefoundationfor yourworkandmoneyplan.
Chapter1 You’reWorthMoreThan YouThink Sinceyou’rereadingthisbook,chancesarethatyoucanrelatetomy storyinsomeway.Maybeyouhavewhatisconsidereda“good”job bymoststandards,yetyoufeellikeyoudon’thavemuchtoshowfor it.Yournetworthseemstobegrowingslowly,ornotatall,andmay evenbenegative … andtomakemattersworse,it’snotlikeyouhop outofbedinthemorningskippingtowork.Ormaybeyouloveyour career,butyoucan’tfigureouthowtomeetyourfinancialgoals.At timesyoumaywonder,“WhatamIdoingallthisfor?Iimagined lifetoturnoutalittledifferentlythanthis.”
You’renotalone.Nearly70%ofAmericansdon’tliketheirjobs, accordingtoaGallupstudy,1 and65%ofAmericanslosesleepover theirfinancialworries,basedona CreditCards.com poll.2 Career andmoneywoesappeartobeespeciallyprevalentamongyoung professionals.Infact,aLinkedInsurveyfoundthat75%ofpeople intheir20sand30shadexperienced“insecurityanddoubt”around workandmoney(noduh,right?)—orwhattheymightcalla “quarter-lifecrisis.”3
Whilemanyofushavetriedtoimproveourcareersandour finances,wemayhavedonesobyapproachingthemastwototally separateproblems.Butinreality,decisionsyoumakeinoneofthese
WORKYOURMONEY,NOTYOURLIFE areascanhaveahugeimpactonallotherareasofyourlife.WhenI cametothisrealizationformyself,ittotallychangedhowIthought aboutworkandmoney,andhowIchosetolivemylife.
NetWorthIsNottheBe-AllandEnd-All “Youarenotyourjob,you’renothowmuchmoneyyouhaveinthe bank.Youarenotthecaryoudrive.You’renotthecontentsofyour wallet.”4
Yeah,that’salinefromthemovie FightClub, butit’strue:your networthdoesn’tdefinewhoyouareasapersonorequatetoyour self-worth.Yet,earlyinmycareer,that’sexactlywhatIthought.It wasaprettydemoralizingmindset,especiallywhenIstackedmyself upagainstthebillionairecorporatetitanswhogracedthecoversof Forbes and Fortune.
Iwassofocusedonthedollarsandcents(orlackthereof)thatI neglectedtoaccountforeverythingelseIhadgoingforme.Iwasa young,college-educatedprofessionalwithplentyoftimetobuildmy skillsandearningspotential—myhumancapital.Andaccording totheCollegeBoard,thevalueofyourhumancapitalcanbesignificant,withaveragelifetimeearningsforacollegegraduateestimatedatnearly$1.2million.5 Unfortunately,humancapitalisn’tan assetthatistypicallyaccountedforinthecalculationsofasimple net-worthstatement—butmaybeitshouldbe.
Ifyouthinkaboutyourtotalwealthasbeingmadeupofboth yourhumanandfinancialcapital(Figure1.1),itbecomesclearhow yourworkandmoneyareconnected,andwhyit’ssoimportantto findajobyoulike.Inthebeginningofourcareers,ourabilitytowork andearnincomeactuallycomprisesthemajorityofourwealth.As wework,webegintoconvertpartofourearningspotentialintoreal dollars,whichallowsustofundourlivingexpenses,saveforour financialgoals,andgrowourfinancialnetworth.Duringourprime workingyears,andespeciallyearlyon,smallimprovementstoour humancapital,likebuildingnewskillsorstartingasidehustle, couldhaveamuchlargerimpactonourfuturenetworththantrying toearnanextra1%onourtinyinvestmentportfolio.
SavingMoneyIsAboutMoreThanJustRetirement Doyoueverthinkabouthowbizarretheconceptofsavingfor retirementis?Afterfinallygettingoutofschool,youenterthe workforceraringtostartarealjob(orifnothingelse,tobegetting apaycheck),onlytoimmediatelybetoldthatyoushouldstart sockingawaymoneyforretirement—apointthatfeelslikeeons intothefuturewhenyou’resupposedtojustplaygolf,volunteer, andsitonthebeach.Whattheheck?
Thereasonthissequenceofeventsmaysoundoddisbecause there’snothinglogicalaboutretiring.Infact,retirementaswe knowitdidn’tevenexistuntilthelatenineteenthcentury,whena politicallysavvyGermanchancellorinventedtheconcept.Forallof recordedhistoryupuntilthatpoint,youworkeduntilyoudied— usuallyinlabor-intensivejobs.6 Evenwhenretirementprograms didbegintogainpopularity,workerscouldn’tbegincollecting pensionsuntiltheywere65or70yearsold.Atthetime,alotof peoplediedbeforetheycouldevenmakeittoretirement—andif theydidmakeit,theyoftendidn’tgettoenjoyitforlong.
Figure1.1 Theevolutionofyourhumanandfinancialcapital.
6
WORKYOURMONEY,NOTYOURLIFE Fastforwardtothepresentday,anditbecomesclearthatour attitudesaboutretirementhaven’tcaughtupwiththetimes.The medianretirementageintheUnitedStatestodayis62,7 despitethe factthatlifeexpectancieshaveleapttothe80s.8 Meanwhile,work hasbecomemuchlessphysicallytaxing(gottalovetheinformation superhighway!).Whileitwouldbetoughformost75-year-olds totoilatthesteelmillsallday,theymightnotfinditsohardto consultforcompanies,writememos,ordriveforUber.Andsure, playinggolfandsittingonthebeachsoundsfunwhenyou’re working60-hourweeks,butthatcouldgetoldreallyquick(nopun intended).
Don’tgetmewrong—Idothinksavingforapotentialretirementisimportant,butwhatifwecouldreframeourthinkingabout jobs,retirement,andthislargefinancialgoal?Whatifyoucouldfind ajobthatyouloveddoing,andthatyoudidn’twanttoretirefrom? Inthatparadigm,youmightstillsavemoneyasearlyaspossiblein yourcareer—butitwouldn’tbesolelytohelpfundyourretirement. Instead,youcouldbenefitfromyourgoodsavingshabits immediately bygaininggreaterflexibilitytofindacareeryouenjoynow, andeventakesomebreaksalongtheway.
Andgetthis:youdon’tneedtoamassabajilliondollarsbefore youcanstartdoingthis.
So,howmuchmoneydoyouneedtogainmorefreedomand controloveryourlife?That’syourfinancialrunway:theamountof savingsneededtoachieveyourgoalsbasedonyourspecificsituation,underlyingexpenses,andvalues.
HowLongIsYourRunway? Ashortfinancialrunwayissimplyhavinganemergencyfund— typicallythreetosixmonthsoflivingexpensessavedinacheckingorsavingsaccount.Forexample,ifyouspend$5,000amonth, youshouldbuildatargetemergencyfundof$15,000to$30,000. Financialplanners(myselfincluded)usuallyrecommendestablishinganemergencyfundasoneofthefirstprioritiesforclients.This
You’reWorthMoreThanYouThink7
givespeopleastashofmoneytotapincasesomethingunexpected happenstothem,whetherthat’slosingyourjob,unforeseenhealthcareexpenses,orsomeothercostlyemergency.
Areallylongfinancialrunwayissometimesreferredtoas financialindependence—aconceptthathasbecomeparticularly popularamongmillennialsthroughtheFinancialIndependence, RetireEarlymovement(someusetheacronymFIREforshort). Financialindependenceistypicallydefinedasnolongerneeding toworkformoneybecauseyoursavingsandtheincomefromyour investmentportfolioaresufficienttocoveryourlivingexpenses. Manyinthepersonalfinancecommunityusethe4%ruleasastartingpointtomeasurefinancialindependence—aruleofthumb thatsayspeopleneed25timestheirannualexpensessavedacross cashandinvestmentstoreachfinancialindependence.Building onourexampleabove,ifyouspend$5,000amonth(or$60,000a year),tobeconsideredfinanciallyindependent,youwouldneedto have$1.5millionincashandinvestments($60,000 × 25).
HowMuchIsEnoughforFinancialIndependence? Understandingthe4%Rule Theclassiccalculationfordetermininghowmuchyou needtoachievefinancialindependenceisbasedonaseries ofstudies.In1994,financialplannerBillBengenlaidthe foundationforthe4%rulebypublishingresearchonhow muchpeoplecouldsafelywithdrawfromtheirretirement portfolioseachyearwithoutrunningoutofmoney.9 Because theresultsvariedbasedontheyearpeopleretiredandthe sequenceofmarketreturnstheyexperienced,Bengen’s studylookedathowvariousinvestmentportfolioswould havefaredfora30-yearretirementforstartyearsof1926 through1975.Hisanalysisfoundthatpeoplecouldsafely withdraw4%oftheirinvestmentportfoliointhefirstyearof (continued)
(continued) retirement,and4%plusacost-of-livingadjustmentinsubsequentyears.Ona$1.5millionportfolio,thatwouldmean beingabletosafelywithdraw$60,000inthefirstyearof retirement.Subsequentresearch,includingthewell-known TrinityStudy10 conductedbyagroupofprofessorsfrom TrinityUniversity,confirmedBengen’sfindings.
Thus,the4%rulewasborn.Fromamathematical perspective,youcancalculatetheamountofmoneyyou wouldneedtoreachfinancialindependencebysimply dividingyourannualexpensesby4%.Becausedoingmental mathwithpercentagesissometimestricky,peopletypically simplifytheformulabymultiplyingtheirannualexpenses by25.(4%isthemathematicalequivalentof4/100and 1/25—i.e.,100/4% = 100 × 25.)
Whileresearchersdeterminedthat4%wasthesafewithdrawalratefora30-yearretirement,it’simportanttonote thatthisisjustaruleofthumb.InBengen’sstudy,therewere severalscenarioswherepeopleactuallyendedupwithalot ofextramoneyleftover.Ontheotherhand,Bengenused marketconditionsandreturnsforaspecificperiodoftime— andasweknowfrominvestmentcommercialsonTV,past performancedoesnotnecessarilyindicatefutureresults.
BreakingFree:ThePowerofFinancialRunway Whetheryou’relookingtomakesomebigchangeorjustasubtle mentalshift,havingfinancialrunwaycangiveyoutheconfidence andfundingneededtotakeaction,soyoucanimprovetheimmediateandlong-termqualityofyourlife.
Let’sstartwithjobsatisfaction.Increasingyourfinancialrunwaycanpositivelyimpactyourworksituationbyexpandingthe
You’reWorthMoreThanYouThink9
typesofjobsyoucanpursueandbyprovidingyoutheflexibilityto takemoreprofessionalrisks.Inpractice,thatcouldmeanbeingable toacceptalower-payingbutmorefulfillingrolethatbetteraligns withyourinterests.Oritcouldmeanfeelingconfidentinchanging industries,despiteneedingtoworkyourwayupalloveragain.Or maybeyou’reburnedoutfromworkandneedtotakeabreak—in whichcase,financialrunwaycouldallowyoutotakethatunpaid leaveandtraveltheworld.
KristinWong,authorof GetMoney andcontributortothe NewYorkTimes,realizedthepoweroffinancialrunwayearlyin hercareer.Aftergraduatingfromcollege,shelandedatechnical writerroleinwhichshecreatedcontentforproductmanuals— notexactlyherdreamjob.Afterdoinganumberofsidegigs,she realizedshewantedtotryherhandatscreenwriting.Tofacilitate herjobtransition,Wongspentayearstockpilingsixmonthsof financialrunway.
“IfIhadn’tsavedupthatmoney,Ineverwouldhavebeenable tomovetoLosAngeleswithoutajob,”Wongsays.“Itboughtme thetimeIneededtolandawritingjobandpursueacareerpaththat eventuallyledmetowhereIamnow.”
Onasubtlerlevel,financialrunwaycanhelpimproveyour day-to-daystateofmind—ofteninsmallbutmeaningfulways. MyclientMorgan,forexample,sufferedfrommajorburnout afterworkingforacoupleyearsasanassociateatalargelaw firmbecauseofherdemandingcolleagues,heavyworkload,and incessantreactiverequests.Althoughshewantedtodoagoodjob, shefelttrappedandbitter—thatis,untilshelearnedaboutthe conceptoffinancialrunway.
WhenMorganreached12monthsoffinancialrunway,somethinginterestinghappened—shebegantofeelasenseoffreedom. HavingthatmuchfinancialrunwaysetasideallowedMorganto walkintoworkeverydayknowingshewas choosing tobethere, ratherthanfeelinglikeshewastrappedandhadnosayinthe matter.Goingtoworkempoweredandwithamorepositivemindsethadotherbenefitsaswell;forexample,Morganfoundherself
morereceptivetofeedback,moretolerantofdifficultco-workers, andmorepatientabouthercareerprogression.
Thesubtlechangesthatresultfromhavingfinancialrunway canalsotranslateintomoreconcreteandlong-termbenefits.Ifyou approachyourjobfromapositivementalstate,youmayproduce higher-qualityworkandgetalongbetterwithyourco-workers. Ultimately,theseimprovementscanmakeyoumorevaluable toyouremployer,whichcouldleadtopromotionsandahigher salary—enablingyoutofurtherbuildyourfinancialrunwayso thatyoucancontinuemakingchoicesthatalignwithyourgoals andvalues.That’swhatI’mtalkingabout!
DreamingofWinningtheLottery Backinmyfinancedays,myco-workersandIhadatraditionofpoolingourmoneytogetherwheneverthelottery jackpotreachedatleast$300million.Withthemoney everyonechippedin,we’dbuyabunchofticketstoimprove ouroddsofwinning.Intheunlikelychancethatwedid winsomething,weknewwe’dtakethemoneyupfront— soona$300millionjackpot,aftersplittingthewinnings among30people,eachofuswouldbeleftwithabout $2.5million.
Often,fortherestoftheday,manyofuswoulddream aboutwhatwewoulddoifweactuallywonthelottery.Much ofwhatwesaidisprobablywhatmanypeoplewoulddoin thatunlikelysituation—quitourjobs,takeabreakfrom working,buysomerealestate,getbackinshape,andtravel. Inotherwords,we’dlivethedream.
Alas,ourteamneverdidwinthejackpot.Aftereach drawing,allofuswouldreluctantlygobacktoworkand continuetogrindoutanotherday.Perhapsmoreunfortunatewasthefactthatmanyofusfeltthattheonlywayto livealifewewantedwasbywinningthelottery.
You You’reWorthMoreThanYouThink11
Can TakeBackControlofYourLife
Althoughitsoundscounterintuitive,financialrunwayisprimarily influencedby howmuchyouspend,notby howmuchyoumake. Letthatsitandmarinateforamoment.
IalwaysthoughtIneededtoreachacertainincomelevelor accumulateamassiveamountofmoneybeforeIcouldsecure somebufferinmylife.WhatIdidn’trealizewasthatcontrollingor decreasingmylivingexpensescouldactuallymakealargeimpact.
Considertwofriends,JohnandMark,whobothmakeagross salaryof$150,000andtakehome$100,000aftertaxes.Johnhaslivingexpensesof$95,000ayear,whileMarkliveson$60,000ayear. BycomparingtheirsituationsinTable1.1,youcanseehow spendinglessallowsyouto:
• Savemoneyfaster: BecauseJohnspendsmostofhisincome, afterayearofworking,heisn’tevenabletosaveamonthof financialrunway.Meanwhile,Marklivesmorefrugallyand saveseightmonthsoffinancialrunwayoverthesameperiodof time.
• Reducethecostofcertaingoals: Interestingly,because John’sexpensesarehigher,healsohastosavemoremoneyon anabsolutebasistobankrollanemergencyfund($23,750vs. $15,000)andhisretirement($2.375millionvs.$1.5million). Thecombinationofhishighexpensesandlowsavingsrate meansitwilltakehimnearlyfiveyearstosimplyfundaminimumemergencyfund(i.e.,threemonthsoflivingexpenses), whileittakesMarkjust4.5monthstofundhisminimum emergencyfund.
• Gainflexibilityinjobchoices: Johnisprettymuchlocked intohiscurrentjoborrolesthatpayasimilarsalary.His expensesaresuchthatifhemadelessmoney,hewouldbe runningupsignificantcreditcarddebt.Mark,ontheother hand,hasafairamountofflexibility.IfMarkreceivedajob offeratasalaryof$100,000,hecouldacceptthepositionifhe wantedbecausehislivingexpensesarelow.
Table1.1 HowLivingExpensesCanImpactYourCareerandLifeFlexibility.
JohnMark
GrossSalary$150,000$150,000
Taxes$50,000$50,000
NetPay$100,000$100,000
Expenses$95,000$60,000
Savings/Year$5,000$40,000
FinancialRunway/Year0.63Months8Months
EmergencyFundNeeded$23,750$15,000
TimetoFundEmergencyFund57Months4.5Months
RetirementSavingsNeeded$2,375,000$1,500,000
MinimumSalaryNeeded$150,000$90,000
Thebottomlineis,yourexpenseshavea huge impactonthe amountofflexibilityyoucanhave,thecostofyourfinancialgoals, andthetypesofjobsyoucantake.
YouDon’tNeedtoBeFinanciallyIndependent toHaveFinancialFlexibility Takeamomenttothinkaboutyourcareer,finances,andoveralllife. Whattypeofpainpointsdoyoudealwithonadailybasis?How wouldyoufeelifyoucouldeliminatethesefrictionsfromyourlife? Howmuchfinancialrunwaywouldyouneedtobeabletodoso?
Regardlessofhowyouansweredthosequestions,Ihavesome goodnews:youlikelydon’tneedtobefinanciallyindependentto haveflexibilityorfreedomtochangeyourcareerandlifeforthe better.Infact,theamountoffinancialrunwayyou’llneedcouldbe aslittleasathree-monthemergencyfund.Theexactnumberwill dependonthenatureofthepersonalorprofessionalchangeyou’re lookingtomake,whetheryouhaveapartnerorparentwhocanhelp bridgethegapinlivingexpenses(ifnecessary),andyourownpersonalrisktolerance.
You’reWorthMoreThanYouThink13
Thefirststeptowarddeterminingtheamountoffinancialrunwayyouneedistogaugeyourcurrentjobandfinancialsituation, whichyou’llbedoinginPart2.Then,you’llcompleteaseriesof exercisestoidentifyattributesofyouridealcareerpath.Themore dissimilaryourcurrentandtargetjobsare,thelargeryourfinancialcushionwilllikelyneedtobetofacilitateaswitch.Ifyoucan continuetoworkinyourcurrentjobandbuildtheskillsorexperienceneededtopivottoyouridealrole,youmayneedlessfinancial runway.
YourIdealCareerIsWithinReach Ihopethattheconceptswe’vecoveredinthischapterhaveconvincedyouthatyou’reworthmorethanasimplenetworthstatement.Regardlessofyourparticularsituation,thecombinedeffect ofyourhumancapitalandyourabilitytobuildfinancialrunway meansthatrealchangeispossibleinyourcareer—evenifyou’re startingwithanegativenetworthandhaveloadsofstudentloans topayoff.
Inthenextchapter,we’lltakeadeepdiveintounderstanding whysomanyofusfeeltrappedinourjobsdespitebeingabletotap ourhumancapitalandfinancialrunway.I’llchallengeyoutoreconsidercertainbeliefsthatyoumayhavesubconsciouslyinternalized, allowingyoutomovetowardthecareer you wantinsteadofapath thatsocietyhaslaidoutforyou.
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Chapter2 EverythingYou’veBeen TaughtAboutJobs IsWrong “Moreisbetter.” “Everyonehasacalling.” “It’scalledworkforareason.” Dothesesayingssoundfamiliar?They’rejustafewofthecountless messageswe’rebombardedwithonadailybasisaboutwhatconstitutesa“good”jobandlife.Butwithsomanyofusdreadingthe arrivalofMondaymornings,maybethelessonswe’vebeentaught havebeenwrongallalong.
Youmightknowwhatit’sliketoworkina“good”job,onlyto feelmiserabledoingit.Thinkingsomethinglike,“Thisisit?”can putusintoaviciouscycleofcontinuingtoaspireformore–ahigher salary,amoreprestigiousjobtitle,abiggerhouse,andanicercar–at theexpenseofourotherneeds,whichthenmaymakeusevenmore dissatisfied.IknowbecauseIdidthisforyears.
Mystoryisn’tunique.Ispentmuchofmy20schasingafter thejobmythsthatI’dbeenfedinsteadofwhatItrulyvalued.IfI
16 WORKYOURMONEY,NOTYOURLIFE
happenedtoachieveanyofthetraditionalcareermilestones,like gettingagoodbonus,anicepayraise,orapromotion,itwould putasmileonmyfaceforacoupleofweeksandI’dindulgein ablow-outdinnerorafewfancyties.Butprettysoon,lifewould normalizeagain–whichmeantIwasbacktogrindingoutmy jobandworryingaboutmynextperformancereviewinsteadof addressingsomemoreimportantquestions,likewhytheheckI wasworkingsohardinthefirstplace.
TheproblemstemmedfromthefactthatIhadsubscribedto manyfalsehoodsaboutcareersuccesswithoutknowingit.Even whenIdidfinallyrealizetheerrorsofmyways,Istruggledto correctmyjobsituationbecauseImadethemistakeofreplacing onemythwithanother.Whileseveralofthesemessagesseemingly contradictedoneanother,theyallsharedthesamebasicpremise: youcanonlysolveforhappinessormoney.NowIknowbetter.
Let’sdispelseveralofthemythsthathaveheldmebackatvariouspointsinmycareer,andwhichmightalsobepreventingyou fromfindingtherightpath.
“It’sAllAboutMoneyandPrestige” Irememberaclassmateaskingmeinthirdgradewhatmydad’s jobtitlewasandhowmuchmoneyhemade.Unfortunately,Take YourChildtoWorkDaydidn’texistbackthen,soIhadnoidea. Besides,Iwastoobusyorganizingmybaseballcardcollectionto concernmyselfwithsuchpedestrianmatters.Butthatexchangeleft animpressiononmethatmoneyandprestigewerewhatmattered inyourcareer.
Iwasn’tentirelywrong,ofcourse.Money is important.Weall needsomeamountofcashtofundourlivingexpenses,afterall.And wantingmoneyisn’tabadthing,either.AsbusinesstheoristClay Christensenexplainsinhisbook HowWillYouMeasureYourLife?, “Thepointisn’tthatmoneyistherootcauseofprofessionalunhappiness.It’snot.Theproblemsstartoccurringwhenitbecomesthe
EverythingYou’veBeenTaughtAboutJobsIsWrong17 priorityoverallelse,whenhygienefactorsaresatisfiedbutthequest remainsonlytomakemoremoney.”1
ThescenarioChristensendescribesisexactlywhatIexperienced asayoungbanker.Duringthoseyears,Ithought–wrongly–thatif mysalaryandbonusdidn’tmakemefeellikeamillionbucks,maybe Ijustneededtoworkharderandearnevenhigherfigures.Butin reality,Iwasplayingalosinggamebyhavingfallenintothetrapof thinkingmorewasbetter.Intheyearssince,I’veseenanumberof myclientsmakethesamemistake.
Sowhat really makespeoplehappy?Oneofthemostfamous theoriescomesfromAmericanpsychologistAbrahamMaslow,who in1943proposedthatallhumanshavespecificneedsthatcanbe depictedasafive-level,pyramid-shapedhierarchy2 (seeFigure2.1). Afteryourbasicneedsaremet,wemoveontoneedsatthehigher tiersofthepyramid–includinglove,prestige,andself-actualization. Whilemanyotherstudieshavesubsequentlybeenconductedon humanneedsandhappiness,theygenerallydrawthesameconclusion:solvingfor only securityandfinancialswillleaveyouunfulfilled.That’swhatcausestheempty“Isthisit?”feelingthatkeeps usonahamsterwheel.
EventhoughIexperiencedthatemptyfeelingoverandover againwhileworkingininvestmentbanking,Iwasscaredtomake atransitionbecauseIthoughtitwouldbelikethrowinginthe towelandgivingup–goingagainstallthatIhadbeentaught aboutsuccessandhappiness.Infact,Imightneverhavewillingly changedpathswereitnotforthefactthatchangehappenedto me: afterworkingintheindustryforsevenyearswhileclimbingthe corporateladder,Iunexpectedlylostmyjobaspartofamasslayoff. Althoughthisturnofeventswasscaryanduncomfortable,it gavemethetimeandspacetoredefinewhatagoodjobmeantto me.Withalotofencouragementfrommygirlfriend(nowwife)and friends,Iwasgraduallyabletoshiftmymindsetanddeprioritize moneyandprestigeasbeingthemostimportantaspectsofajob.As aresult,Ifinallydidtransitiontoanothertypeofworkthatbetter alignedwithmyworldview,whileaddingonasidehustleinpersonalfinancethatcouldsatisfymyentrepreneurialinstincts.
