The common career path is supposed to be the backbone of financial success, but is it really?
There’s a set system of success most of us ascribe to growing up: Go to school, get good grades, work really hard, get swooped up by a company and get taken care of for the rest of your life.
But here’s a newsflash:It’s over. Companies are doing more with fewer people, we’ve got layoffs worldwide, the economy still isn’t as great as it could be and even if it were, we’re not going back to the way things were before the Great Recession.
Ladies and gentlemen, we’re in a new world of work.
This only furthers the thing many of us have always known — you can’t get rich working for someone else. Here’s why:
Time is more valuable than money.
At the end of the day, it’s not all about money. Money comes in and out of our lives. If we spend it, we can always get it back somehow.
Time, on the other hand, is a one-time deal. We never get it back. When you’re working for someone else, your time is being decided for you. Your salary is also dependent on time. If you’re done with your work at 2 p.m., you can’t leave because it will affect your pay. Or, if you’re on salary, you may find yourself working way more than 40 hours.
This leaves you with very little leverage to live your life or make tons of cash, because the power is in the company’s hands. They decide when you work. They decide what you work on. They approve your vacation time. They decide whether or not you get a pay raise.
When you work for yourself, however, there is no red tape. You can just increase your rates when you need a pay raise. You decide when you work, and you can decide who you work with.
It’s not all about saving for a rainy day.
Regardless of whether you work for yourself or someone else, are you putting your money to the best use?
Saving a portion of your paycheck is great, and we should always have some money put away in the bank. You know what’s better, though? Investing.
According to Bankrate.com, the highest return you’ll see on your money is 1.05% from a GE Capital Retail Bank CD. The minimum deposit on that is $25,000. Don’t have that lying around? Then you’re looking at less than 1%.
Here’s the math. To make an extra $100 a week off of interest, you would need a) $100,000 in the bank and b) a 5% interest rate (good luck finding that). Essentially, the bank is making more money off you than you are off them.
The moral of the story is that investing will give you a greater return than just putting away a percentage of your paycheck. You can invest in your own business, paper assets, property, network marketing and so much more. The possibilities are endless and the bar of entry is lower than ever, thanks to things like the Internet.
There are countless resources to get you started, including books, blogs and interviews from Ramit Sethi, Robert Kayasaki, Warren Buffet, and the list goes on.
Working for someone else = building someone else’s assets.
Assets are what build wealth. These are the things that put money in your pocket every month. Assets include your own business, investments, passive income, intellectual property you sell, etc.
Is a paycheck an asset? No. Here’s why: Your money is going out the door on expenses while you build someone else’s asset — their company.
If you had your own company, you’d still have expenses, but the ability to grow your company to the point that it keeps making more income will outweigh those expenses. Like I mentioned earlier, if you’re working for someone else, the glass ceiling is decided for you.
You can also sell your company later if you choose. You can’t sell your job.
At the end of the day…
If you’re looking for the kind of freedom GenY is craving, you may need to move away from the typical success formula. The good news is that it’s easier than ever to build your own assets thanks to the Internet. Countless Millennials have invested in side hustles and turned them into full-blown businesses.
Are you going to be one of them?