financial independence

Show Me the Money

Why you need a huge salary

You have no desire to live on more than $20k -$30k per year… you don’t even understand why anyone would ever need more. Here’s why you should pursue a giant salary anyway.

As I have said in the past, it seems like most FI bloggers focus on the spending side of the equation. They scrimp and save, collecting side hustles, clipping coupons, even moving to third world countries in their lust to reduce expenses down to the barest essentials.

But they rarely seem to focus on the income side of the equation, particularly, the salary side.

On the contrary: they seem to place the bar ridiculously low here: scrounging together a living through cobbled together side hustles; feverishly gathering small dividend payments; or targeting modestly paying careers chosen for how conducive they are to working remotely in an inexpensive market.

I assume they see no point in making the sacrifices required for a huge salary  – they not only can, but prefer to live on $40k, $30k, or even $20k a year; and are repulsed by the big spending lifestyles of high earners.

Why sacrifice your time, soul, and mental health for an enormous salary, when you have absolutely no intention of ever spending it?

Therefore, I’m not going to write about the lifestyle benefits of a huge salary – first rate education for your kids, gold plated health care, a short commute even in an expensive city. FIRE adherents have made it abundantly clear that they care nothing for these things.

However, I think that there are some other  benefits of a large salary that have nothing to do with lifestyle. I rarely see these acknowledged.

Speed

This is the number one reason the Financial Independence fans should strive for a higher salary: it drastically accelerates the path to FI. Take 2 cases, one earning $50k and another earning $200k. Both save ½ their income and have a $2m retirement (or at least, FI) goal.

Mr. $50k, at a 5% growth rate, will take about 29 years to reach his goal of $2m

Mr. 200k, at the same growth rate, will need 13 years to achieve the same goal

And let’s not even start on the feasibility of living on $25k vs. $100k per year!

And just for fun, let’s see where Mr. $500k lands: about 4 ½ years of savings to reach his goal. Not such a long wait, is it?

With a high salary, you eliminate money worries much earlier in life – sometimes decades earlier than with a modestly paying job.

Ethics 

Let’s face it: to achieve that $300k-$500k salary, you will likely have to compromise your ethics at some point. You’ll cut corners on quality, do things that are just this side of legal, work for a company who may be a net contributor to human misery. But this same high salary allows you to, ironically, live a more ethical life.  You can be an ethical role model: giving to charity, living sustainably, never disguising affiliate link lists as financial advice.

Confidence

If need be, anyone can get by on $1000/month – even Bill Gates was a starving student at one point. But not everyone can achieve a salary in the top .5% of all earners. This will not only give you vast confidence, it will inspire confidence in you by others (whether justified or not). I know that many FI adherents claim to care nothing for what others think – and I do understand that they have no need to keep up with the Joneses. However, the confidence you gain by reaching a huge salary does help attract investors and others who can positively influence your financial well being. This not only further accelerates your path to FI, it allows you to continue to build wealth long after you leave your 9-5 (more like 8-9) job.

Learning and exposure

I maintain that in 10 years of toiling at a $300k job, you will learn more, meet more interesting and intelligent people, have a broader set of diverse experience, and encounter more successful role models than you ever would in that $50k job. Think of the life experiences of a school teacher vs. a tech executive, or even a writer vs. a banker. These are all laudable careers, but the high paying ones will likely take you to more interesting places, geographically, personally and professionally.

So Why Not Go Out and Grab Your $500k?

In short, I don’t think it’s that hard to understand the powerful role a high salary can play in not only achieving financial independence, but in living a fuller, richer life. In fact, the major objection I usually hear is that these high paying jobs don’t just grow on trees – and in fact are not even available to most.

There’s some truth to that, but there are also some simple steps you can follow to achieve this ultra-high salary, or at least get you started. I will write about those in an upcoming post.

Have you achieved a high salary? Was it worth it? Tell us about it in the comments below!

2 replies »

  1. I made $300-500k the last few years I worked full time. I did meet more interesting and useful people, did easily save and invest enough for a multiple six figure retirement annual budget, but I disagree that high paying jobs are challenging ethically. I was never pressured to do sketchy things, bend rules, etc. In fact as the head of a billion dollar operation I was able to insure it was a safe, fair and ethical workplace for all my coworkers. If anything, the power that comes with high paying jobs gives you a real chance to help others reach their potential. I agree with your advice, why wouldn’t more pay always be better?

  2. Thanks for sharing your experiences, Steve. Of course more pay is better but I often see people rejecting this path, insisting that they achieve their goals on a low salary. Perhaps, but you can achieve them better and faster on a high salary. It’s also nice to see that you were able to parlay just a few years of $300-$500k into a comfortable retirement. Appreciate the input!

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