Do you Remember Jason and Julie?
They were the couple with the campervan who got to FI aged 43 and whose story I featured in Our Gap Year For Grown Ups.
When the Daily Mail wrote about them in an article earlier this year, a troll-party kicked off in the comments section.
A common theme was:
Well its no wonder they were able to retire at 43…they earned a massive £90,000 per year between the 2 of them…this is totally inapplicable to the lives of normal people
It was as if Jason & Julie had cheated by earning more than the UK national average of ~£28,000 per year. But earning more is not cheating.
The complainers seem to assume they can never earn £45,000 per year. But despite what you read in The News (I warned you about that), it is possible to earn more. We hear more from the complainerz because they are more vocal. Meanwhile, The Millionaire Next Door is not shouting about their financial situation…they’re keeping quiet and making bank.
I’m here to tell you that earning more money is not impossible…nor illegal…nor unethical. I’d go as far as saying that earning more is A Good Thing.
The time it takes to get to financial independence depends on your savings rate. And its easier to save more when you’re on a higher income. Obviously.
So let’s take a look at 5 ways you can earn more money:
- Work harder
- Take more risk
- Do something that others can’t (or won’t) do
- Get a side hustle
- Negotiate better
Unfortunately, none of these come with a guarantee. That’s because there are no guarantees.
1) Work harder
I wanted to make money whilst taking as little risk as possible and was not prepared to be self-employed for the first 20 years of my career.
Instead I followed the money, seeking out an industry that paid well (finance) and I was then prepared to do pretty much whatever it took. I’m not saying that everyone should do this…I’m just telling you what I did.
The bad news is that there’s a lot of competition for high salaries in nice middle class occupations. The top jobs come with hidden costs; the main one is that you have to accept that your employer owns you. Or, to put it another way, you are now in The Prison Camp.
The good news is that these days top jobs are (mostly) allocated by merit (let’s not mention the Royal Family here)….a big part of which is: who’s prepared to work the hardest?
It sometimes seems like people assume that all jobs have the same hours and the same level of stress. But I don’t see it that way. I’m pretty sure being Prime Minister is harder than being a local government clerk.
So before any local government clerks leave angry comments about how unfair it is that they’re paid less than the Prime Minister, they might want to ask themselves…why are they not standing for election?
What % of people are prepared to do (not just talk about) whatever it takes to get and hold down a top job? How many are prepared to get by on 4-6 hours of sleep a night for 10 years, catch 5.30am flights, stay away from home and family in soulless airport hotels, carry the team members that take duvet days, manage clients with ridiculous expectations, do public speaking, cancel holidays, do cringey networking, live with email always on, sales targets and generally suck it up?
Ed Latimore puts it this way:
Crackheads hustle 4 days straight to get a rock. No sleep or food. You ever work that hard for something?
Don’t get outworked by a crackhead.
2) Take more risk
One way to earn more money (and more freedom) is to cut out the middleman and sell your services direct to the customer / end-user rather than to an employer.
I know someone who is a plumber near me. He’s employed and makes about £40,000 a year doing the work that his employer finds for him.
I also have a mate who tells me that a self employed plumber in our part of the world should be making £70,000 – £80,000 per year. He should know as he is one. He’s also been known to come to the gym with me during the daytime…he can do that because he’s his own boss. The downside is that if there is no work to do, he doesn’t get paid. For him, this downside is mostly theoretical as he has more than enough work.
So the choice here is £40,000 for employment versus £70,000 – £80,000 for self-employment. In this case, being employed is like a very expensive insurance policy where the cost is £40,000 a year.
Maybe being a self employed plumber should be the benchmark for middle class professionals? If you are not in a job where you are (or will be) earning £80,000, that begs the question of whether university / college, student debt, PhDs, MBAs and other further qualifications followed by long commutes to office jobs, wearing ties etc etc are all that they’re cracked up to be??
3) Do something that others can’t (or won’t) do
Talking of plumbers, I watched a fascinating documentary about 5 years ago where the employees of a large plumbing business in central London all revealed what they got paid. The top plumbers were paid £250,000. It would be an understatement to say that The Escape Artist was surprised by this…I was gob-smacked.
Maybe that firm was unrepresentative? Yes, maybe. But around the same time, I was talking to someone that ran a company that installed double glazing, windows and conservatories. He told me that their top salespeople made £300,000 a year. No, that is not a typo. And trust me, this bloke was not the bullshitting type.
At that point, I slunk home to reflect on my lame-assed middle class assumptions that office job > sales job > manual labour. As Keynes once said:
When the facts change, I change my mind…what do you do?
In capitalism, salaries are determined by the interaction of supply and demand. The fewer people that are willing and able to do a job, the more it gets paid. And the more demand there is for a specialised skill, the more wages get bid up by competition.
This is why you should always look for opportunities to make yourself more valuable, gaining rare skills that employers / clients are looking for. And be prepared to move location to take advantage of those opportunities.
This also explains why nurses get paid less than footballers or bank CEOs. You sometimes see angry internet comments complaining that this is unfair. But whoever said life was fair?
Please do not blame The Escape Artist for this…I don’t pay for cable TV (which funds footballers salaries). And in 2008/9, I’d have capped CEO pay for taxpayer supported banks. If you run part of the government machine you should get paid like a civil servant, not a Master Of The Universe.
4) Get a side hustle
If you are in a well paid job, a side hustle may be a distraction that you don’t have time for.
But, for other people, getting a side hustle up and running (without taking risk) can be a great strategy. This includes people approaching financial independence who want something to do and some side income after they quit.
Just remember The Correct Way To Start a Business.
5) Negotiate better
In zee Prison Camp, zere are Rules.
Memos are sent from on high dictating what the annual
gruel pay increase shall be for the prisoners. These go something like this:
It has been a tough year in our industry with profits held down by intense competition, the high oil price and the shortage of leprechauns [insert own corporate bullshit here] but due to our CEO’s general awesomeness, we are able to give everyone a 2% pay rise this year…count yourself grateful
suckersvalued team members
Its interesting how people often accept the frame that is presented to them. By frame, I mean the background assumptions.
I was talking with someone recently whose annual performance review was coming up. I asked what their salary expectation was and they mentioned a firm wide inflation increase as if this were some unbreakable law. ARRRGHHHH!!
At this point, I administered some tough love and reminded them they’d turned around a failing department, built a team, taken on increased responsibilities and recently been appointed to the board. In a situation like that, YOU DO NOT JUST ACCEPT A 2% COMPANY WIDE INCREASE. No, you should be shooting for a 25+% pay rise. Again, that is not a typo.
Of course, there are no guarantees you’ll get that…but not asking is an automatic no. You can think of asking for a big pay rise the same way as going over to talk to an attractive woman at a party. Just doing it is no guarantee of success. But not doing it effectively guarantees lack of success. Both can feel uncomfortable but, if done with some grace and good manners then, honestly, what’s the worst that can happen?
There will be times when you have unusual negotiating power. These opportunities appear when you move jobs or on big promotions or on restructurings or when your skills have become rare because others have left. At these times you need to signal to your boss that if they want you to continue solving their problems for them, you are gonna need your salary re-based. And that if they want loyalty, they should buy a dog.
This is important because if you get a couple of big pay bumps in your career, all subsequent % rises work off that higher base. The compounding effect applies with wages as it does for investment returns.
Last but not least, a bit of luck is also gonna help. So all the best to you and to everyone in 2018! 🙂
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