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Is It Wrong To Strive For Job Security?
| June 4, 2010 | Posted by Roshawn Watson under Uncategorized |
By: Roshawn Watson
Suppose you have a job that you like but is grossly underpaying you. What is the correct response? You certainly have a lot to think about because working is not all about the money, right? For example, this job could help you reach your potential and be the spring board into a brilliant new career. Having a low paying job that expands your skill set, knowledge base, or network certainly could have a role in your career plan. However, you also have a responsibility to your family and your own financial well-being. Many of us are striving for job security while simultaneously diminishing our likelihood of becoming financially independent and paradoxically becoming less secure as a result.
Where’s My Safe, Secure Job?
Often when money is involved, people want to “feel safe and secure.” A solid job seems to be new graduates main goal. However, some companies hire and fire employees with the bat of an eye. Although this is scary, it is the world in which we live. Becoming a valuable asset to an institution may not be a choice if we want to keep our jobs or advance. If fear of losing your job is driving you to become indispensable, then you have a good outcome even if you have the wrong motivator.
Here’s why. As I already iterated, job security has changed. Staying with the same company for forty years is unfortunately a thing of the past for many. Job security in today’s volatile market often means something entirely different: the only true job security is our abilities to get other jobs. This isn’t to say that we shouldn’t be loyal to our employers but to emphasize that we have to mind our investment portfolios and stay marketable. Financially speaking, putting all of our eggs in one basket is extremely risky. We can’t fall into the trap of thinking that everything will miraculously work out just because we do a good job and have a livable salary. A financial plan that only works if everything goes perfectly is not much of a plan at all (more like wishful thinking). A good plan must make allowances for undesirable events, including a job loss.
It’s Only an Illusion
Even if a job loss isn’t in your future, what keeps people at lower paying jobs? Typically, this is where people spew out a lot of reasons, such as passion, favorable working hours, a stimulating job environment, all of which are completely valid reasons in my mind. Surprisingly, I don’t see money as a main motivator for choosing a job, as long as the job provides a reasonable wage. The reason is that income from a job can only take you so far with respect to achieving financial security and more importantly financial independence. Thus, you’ll be a lot happier and more productive if you choose something that you enjoy. Just yesterday, my boss commented on how excited I was regarding the recent data I collected. If your job doesn’t bring you any contentment and pays poorly, that is a real problem. One reason people don’t choose jobs from which they derive pleasure, have advancement opportunities, and earn a reasonable wage is because of fear over loss of security.
The first problem with this fear over loss of security is that is that such security is hardly even worth it if you are miserable, stuck, and broke. Secondly, you are sacrificing your family’s financial-security for your illusion of job-security. In doing so, you likely missed several opportunities that could have dramatically changed your financial life. You played it “safe” while your financial solvency is at the whim of an employer. That’s not too wise in many cases. I know what it is like to suddenly lose over 80% of my earned income in one month and not have to worry about meeting financial obligations. That’s the power of not basing your financial well-being on a job. Believe me, you will be a lot more secure once this concept becomes your reality.
Win the Battle But Lose the War
Even if you get the higher salary, that in itself won’t automatically change your financial destiny. This is the sad truth. Whether you make $40,000 per year or $400,000, you can still be broke. I can point you to stories of thrifty engineer’s making no more than $50,000 per given year dying with millions in the bank and point you towards people who make hundreds of thousands per year and still feel financially stretched. A low income doesn’t doom you to financial obscurity just as a high income doesn’t give you financial intelligence nor guarantee financial security. In fact, few people who have high incomes become financially independent, at least before retirement age. Additionally, fewer than ten percent of people ever reach an affluent level of income during retirement. Getting a hefty income is great, but don’t assume that the income alone will guarantee you financial success.
Information Make Your More Secure
Your true financial leverage typically lies not in what you can convince a banker to lend you but in what you know. Never underestimate the value of intellectual capital. For example, one of my mentors runs a small business and got very sick a few years ago, so his doctors told him to stay home. During this time, the gross annual revenue of his business was $4 million. He got very scared because he is a very hand’s on operator and is the key proponent to his business’s success. He kept his involvement in his company to an absolute minimum and didn’t even leave his house for the next three months. This is remarkable because he doesn’t have the kind of business that lends itself to being run from home. However, through the sickness, he learned a completely different way to operate his business. That same year, his small company increased its revenue to $20 million and hasn’t looked back since.
Another example illustrates this point even better. I have been impressed with John Paulson for the last 18 months. He is a hedge fund manager who built his own fortune and then taught himself the complex world of mortgage-backed securities. He read the writing on the wall and decided that there was a real estate bubble that wouldn’t continue. He created a package of distressed and overpriced assets and distributed it through Goldman Sachs to sophisticated investors who failed to do due diligence in evaluating the deal. Paulson’s financial interests ran contrary to the investment deal he set up, and his “gamble” paid off handsomely to the tune of billions for him personally and tens of billions for his hedge fund. That’s the power of intellectual capital. It sets you apart even from the very wealthy who refuse to gain this type of leverage.
Remember that there is certainly nothing wrong with job security, but financial security is a much more pragmatic goal. Financial independence will give you freedom to pursue your passions like never before. Finally, the more you increase your content and the paradigm with which you view your finances, the safer you will ultimately be.
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Copyright 2012, Roshawn Watson, Pharm.D., Ph.D. All Rights Reserved.
I'm unemployed and I've been searching longer that I would have liked. Right now I would take a job that I was over qualified for, in fact I applied for one just a moment ago. I would rather have a job that bores me a bit, then to be unemployed. When I had my last job I didn't mind 12 hour days and working while on vacation because I loved my job. I suppose that was the best possible work condition to have, but now I only want any job.
@RichardUnemployment is a whole another issue altogether. The focus in unemployment is survival if your passive and portfolio income do not cover your expenses.Regards,Shawn
Well, Having a job that is growing your career is the most important thing. If you have a degree and you have a dead end job, you are wasting your skills and your hard earned money
The dead end job issue is a BIG deal in my book. With so many people hating their jobs, having a job that provides no room for growth can make even an okay working enviromental untolerable. The situation is utimately hopeless.A waste of your skills and money (opportunity costs) is exactly how I would describe it too. Friendly regards,Shawn
My Fellow Americans: Don't take any job that does not increase your financial standing. Strive to be rich that is the only security in the long run. Your loyalty must be to yourself. You are the most important individual in your world. Money, Riches, and perhaps Fame are the only ingredients to success. Your leader will try to make you believe that everyone should be equal financially. That Striving for Perfection is not fulfilling. That Striving for Wealth is Selfish. That being the best is an Ego Trip. Well! look at who is talking. Would he be where he is today if he did not step on some toes? If he did not have higher aspirations. If he had not sacrificed everything, including family, to achieve his goal of Top World Leader? Standing on his pulpit and deriding Americans to give up on being rich, successful, and independent while his corrupt organization is fleecing the American Tax Payers of their land, their homes, their jobs, their incomes, and yes even their families. He does not believe in God. Why? Because God wants us all to be independent and this independence includes wealth and success. God wants us to be happy. God wants us to strive to be in the best possible situation we can be in all the time. If we have Faith than we can defeat all the Evil Forces that are launch at our lives. There are Evil Forces trying to destroy our happiness but having Faith and believing in God to get us through the tough times is what we should be Striving for ever single day. Plain and simple, O is wrong and if you follow O you'll lose everything you have, everything you hope to have, and everything you could have had. Take My Word For It! The Real American
@icantwaitI certainly can't speak to the politics; however, I can say that I truly hope there will be a return to capitalism. I do believe it is the only type of economy that gives poor people the chance to raise up en masse. We don't need governmend-mediated redistribution of wealth. That said, I support the president, regardless of who is in office. This isn't a political issue for me at all.
Guys,Used to be, you could "count on" being safe and secure in your job(retire, without any worries).NOW????????????
The pension plans of yesterday are gone. Social insecurity is limbing along. I do hope it will endure but can't count on it for me and my wife. The promises of yesterday just aren't there for us today, which necessitates increasing our financial literacy. It's one of the few things we can do to make sure that we don't get left behind financially.
Employees are the tools of the business. Any business is ideally designed so that if the tools break or if a better tool comes along, those tools will replaced. Therefore, from a business perspective, there is no such thing as job security for employees. The problem is that the dependence only works one way. The employee needs the employer, but the employer does not need the employer. If it is mutual it is more of a partnership. Otherwise, the only security for the employee is to be in high demand. This can be done by working harder than the other employees. Harder work, more education, etc. It is essentially a race. It's not wrong, but it's pretty stressful.Indeed, it is much better to take the other side of that dependence relationship.
Roshawn – I've got a job opportunity to guarantee me 30% more money a year for two years, but I'll have to relocate to another city (one of the best in the US).What would you do? Start up, big brand name though.'
@EREYou have an interesting analogy: employees are tools for a business. Thus job security is an illusion since the tools can be replaced in many situations. What I was trying to communicate in this post is to use your employer as a tool to your retirement portfolio. For example, don't just stop at the 401K. That's a great start, but as you know so well, it is only a start. I agree there is nothing inherently wrong with the system if people know what they are getting into: the rat race. Hopefully, people also know how to get out of it too.@SamI think you wrote about a similar scenario on your site last month. My thoughts are 30% is a sizable increase in salary, but you have to look at the impact such a move would have on your life. Do you like your commuity and your present job for starters? Moving to someplace new just for 30% more money is not enough of a motivator for me, especially if the job takes me out of my field. Additionally, my future investment strategy necessitates that I be around to manage my properties. I am not too keen on long-distance landlording. Friendly regards,Shawn
Shawn,Good post and commentary. I think the best sentence is "Your true financial leverage typically lies not in what you can convince a banker to lend you but in what you know."Real security comes from our ability to produce, not from any employer. An aside: have you written about how you lost 80% of your earned income in one month without having any trouble meeting your financial obligations? If not, you should. I would like to read it.
@JoeThanks so much. All too often people focus on borrowing as their primary leverage, which is why they often end up in trouble. If you can just increase your knowledge base and the context with which you analyze deals and make financial decisions, you will be tremendously ahead. The security that comes with generating multiple income sources is so freeing. There is nothing wrong with job security, and the more financially secure one feels the less financial stress they have.
Not wrong at all. It's nice to have one less thing to worry about, and if it's your job and whether you're going to have it the next day/week/month/year/decade, then that definitely puts your mind at ease
Another great piece! Where to start on your comments…My two favorite is:1.) In doing so, you likely missed several opportunities that could have dramatically changed your financial life. You played it "safe" while your financial solvency is at the whim of an employer. This is so important. Dedication to one's company leaves you at their mercy and hinger your growth. There's nothing to say being "on the lookout" in an effort to re-position your goals is wrong.BTW – your twitter profile is hilarious! I'm going to have to follow simply for that reason.
@gobankingrate There's nothing wrong with striving for financial peace. I just don't think you have much financial security if you are not building your investment portfolio while working in most cases.@FinEngr, you are too kind. Opportunity costs are real even if they are rarely acknowledged. Financial solvency should be a minimal goal for everyone, yet so many people neglect this, as evident by consumer debt. I agree with dedication to your employer and don't believe that minding your investment portfolio is at odds with being dedicated. I think some people stop with job security, which might have worked during the industrial age but is only an illusion nowadays anyway.Thanks for the twitter profile comment.Regards!!!Shawn
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