5-Step Plan to a High Salary
In my interview with Jacob about my path to early retirement (or career 2.0), one commenter correctly pointed out that an integral part of being able to step away from corporate life was having a plan and saving 45% of my income. This is absolutely spot on and I wanted to expand on this further. Accumulating substantial savings, especially in the last 5 years of my work time was really key to feeling comfortable in early retirement. For me, the path to large savings was more on the income side of the equation than on living frugally during my work time. I had deliberately focused on increasing income as much as possible, as rapidly as possible and dealt with the consequences of that decision regularly. While spending was kept within reason, my focus and a good deal of the success had more to do with earning a high salary.
I will be very candid and say that working an intense job and earning a large paycheck was NOT fun most days. While I had friends who pursued what sounded to me paradise opportunities, such as musician, museum curator, and writer; I felt much like a hamster on a treadmill who didn’t know how to step off. However, I do think that the savings accumulated, and the skills and resume I earned, paved the way for what I am doing today. So, without delay, here is the un-varnished Modern Gal 5-step plan to earn a high salary. I should mention, I am not recommending the steps below, but simply documenting my own experience, which probably coincides with a large corporation, rather than a small entrepreneurial start-up:
1) Pick a career path that pays well, really well — forget about following the “do what you love and the money will come later” niceties. There are industries and professions that are very highly compensated; and on the other side of the coin, there are professions where people do good and important work, social work and primary school teaching come to mind, that are just not compensated well in monetary terms. The extension of this is to prepare yourself, in your studies and career development path, for this career plan. Save the anthropology classes and hobbies for later, after early retirement.
2) Identify what the key drivers for revenue and position yourself as closely as possible to these drivers. This means not working in functions that are not core to the business you are in.
3) Apply for, and compete your way to, increasingly senior roles that you do not feel qualified for — this is key. After 4 decades of observing people in a wide range of situations, I have come to the conclusion that many ostensibly successful people are not that smart or effective. One distinction that I saw between myself and some people who called me for advice was the relative lack of fear of trying something new and un-tested.
4) If you have started to stall on the promotion ladder, vote with your feet. I made 3 distinct career moves in about 10 years. All 3 moves resulted in ultimately putting me in a position to be promoted much further later on. Keep in mind that a company is unlikely to ever promote you over your boss. Thus, if you are in fact more capable, the only way to succeed is for that person to no longer be your boss.
5) Take a lot of risk and consider unconventional moves — One of the best things that I did in my career was to move and work overseas (outside of the US). Not only did I gain valuable experience, but I moved to a managerial role very quickly, which I could not have done in the US. In addition, the tax exemptions for residing overseas built up over the years. Another good move was to agree to leave the safe confines of a large successful department in the company that I worked for to head up a small start-up division. While the start-up work was much harder and had less support, it gave me visibility that would have been diluted in the larger group. While the stable safe, climb the ladder path may work for some, I really see the large, risky moves as having higher payoff.
And yes, keep in mind, your mileage may vary.
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I really enjoyed reading this post. I particularly agree with your observation that some very successful people aren’t necessarily effective or that capable, but are unafraid (and I would add confident). Fear holds a lot of us back a lot of the time..
I do think there is a middle way that balances medium income and medium-high savings. I trained in a high paying profession (law) but didn’t pursue the most lucrative positions in my field, mostly because the thought of doing so felt very dreadful. I’ve worked at good jobs that I’ve enjoyed, mainly in the broader public sector – probably for about half the pay of the most lucrative ones, but they’ve still paid well. They’ve been positions where I haven’t had to maintain high-end airs (I ride my bike to work and slap on some basic work clothes I keep in my office, I don’t have a cell phone, etc.) and where I’ve always worked reasonable hours (35-40 hr weeks). These factors have helped me to save the majority of my income (sometimes upwards of 80%) and keep life relatively balanced and happy.
I expect I’ll get to early retirement around the same time or maybe 1-2 years later than I would have had I followed the highest income path. And they’ve been better years for me because I’ve had time to dream and figure things out along the way. I also suspect I’ll transition to early retirement more easily as I won’t be moving suddenly from such a fast ambitious pace and I’m already living at the frugal level I’ll need to for the plan to work.
Also, I think there is a risk of getting trapped on a corporate path, even if you never intended to remain there when you started out.
I support your comment about anthro classes. Completing education in a timely, efficient way and working throughout so that debt is minimized has been very important for me.
Hi Julie, you raise many interesting points in your comment. In particular, the “middle way” approach to career and life balance. I personally have had some trouble in finding balance when I embark on things.
I see so many people that get trapped on the corporate path and never manage to get out and warn a number of people about this. Getting into high mortgage debt is often a part of this trap.
Thanks for commenting and I look forward to reading more about your own path to early retirement.
Best, E-
One question is “if you could do it all over again”, would you do it the high-paying way again? I picked an academic career in the sciences which pays okay (think toll booth operator or UPS driver), but completely ignores 1 and 2 as your salary is pretty much fixed by the field you pick. Also 3 is pretty much impossible as 4 and 5 are pretty much what’s expected of everybody. In other words, there are about 250 applicants for each position. Even if just 10% of them are qualified (and my guess is that it’s higher), it becomes a question of luck and connections rather than skill and talent (which most already have).
Still, it was fun and energizing for most of the time. I worked overtime without thinking about it. At one point I said to my wife that if I ever retired I would still keep doing what I did. (Obviously I changed my mind). Towards the end of my career I started thinking that hey … why kill yourself on the off change of getting tenure, when you could be earning three times as much on Wall Street or just about the same as a long haul trucker. Fortunately, at that point I had already concentrated on the savings side, simply because low pay and a deep fascination with research (and no dress code) simply meant that there was never any real desire to spend money on stuff. Maybe it all evens out in the end.
ERE, I attribute part of my success while in the corporate world, and to some extent today, in the ability to force myself not to look back with a sense of regret over past events, especially on opportunity costs of past decisions. So, with that in mind, when I read your question, my first thought was if I had the chance to do it all over, I would be a lot smarter and more strategic about some of my choices and follow the 5 steps more closely rather than blundering toward the realizations above, which is what it felt like in real time.
I think that my childhood experiences color a lot of the decisions that I made. Both parents were on the academic track, and while very smart (especially my Dad) never really had the earnings commensurate with what were expected given his degrees and hard work. I think my Dad’s frustrations soured me on academia at a young age, and this was before it became as cutthroat for assistant professorships or tenure track positions as today.
I will say this, if all I had to show for my time in the high-stress corporate arena was my bank account, then I would definitely feel cheated. But even though I might not have enjoyed much of that time, I really feel that the experience that I gained is hugely valuable and frankly is what puts me in demand today for non-profit organizations and advisory types of positions. So, in that sense, there are on-going benefits independent of the money.
One area that I think the high paying track extracted a toll was on relationships. Not being able to plan long vacations, missing friends’ birthdays and interacting in a fairly cutthroat environment most of the time made it challenging to maintain certain relationships with friends and family. I plan to blog more on this later if there’s interest, as I think this is an issue that is under-discussed, especially among professional women.
Thanks for commenting.
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