The keys to a salary that will get you to financial independence up to 10x faster
I should start this by saying that there’s nothing necessarily wrong with making a modest salary. Not everyone is ambitious – nor should they be. As Caddyshack sagely told us “the world needs ditch diggers too”. I’d hate to live in a world where every single person wakes up with $$$ signs in their eyes, rabidly pursuing wealth at all costs.
Having said that, I have also (and recently) written extensively about the benefits of an ultra high salary. Not only does it get you to FI faster, it builds confidence, character, and an unequaled sense of accomplishment.
So, having put the bait out, I kind of feel compelled to show people how to achieve this goal, out of reach as it may seem for so many.
In this post, I decided to focus on some concrete steps that will get you started. This is not all you need – there are also several key attitudinal components to achieving a high salary. But the following steps typically provide a solid foundation for a mid-six figure career.
It all starts here. I can’t emphasize this enough. The strongest career head start will be provided by a solid, if not stellar, education. There are two big components of education that will drive future income:
- Where you go: I’ve already said that an Ivy League education is worth literally any price they ask. Obviously the vast majority of readers will not make it into an Ivy, so suffice it to say that you should seriously consider just going to the highest ranked school that will accept you. Don’t worry about fit, cost, or location. Yes, the executive suites contain the occasional State grad – but most high earning execs went to top schools.
- What you study: I would start with STEM (not STEAM) – Science, Technology, Engineering, Math. Of course, science degrees are in demand and tech is all the rage. But that’s not why I’m recommending this. The real reason you should choose a difficult major is to signal to future employers that you can handle cognitively demanding tasks, either through smarts, persistence, or both.
And this advice does not just apply to 16 year olds working on their college applications. If you are 30 and majored in Art History at State, I would seriously consider a graduate degree to fix that. Take me, for example: I was a liberal arts major undergrad, then got an MBA from Wharton. Problem solved.
There are many high paying careers you can choose from. None are cake walks, but as I have said in the past, you only need to spend about 5-10 years doing these before you get to FI:
- Medicine: and by medicine, I mean a medical doctor. Not a nurse. Not a physical therapist. Not a physician’s assistant. And not a “doctor” of physical therapy, nursing, physician’s assistantdom, etc. Oh, and you should try to specialize. For example, an anesthesiologist makes about $400k per year. That’s a good start.
- Finance: preferably in investment banking, investment management, mergers and acquisitions, etc. Think, investment banks like Goldman Sachs, or Hedge Funds like Blackrock. Hedge fund managers earned about $1.3m in 2018. Of course, that figure applies to the senior guys. Lowly analysts pulled down a little less than $700k.
- Consulting: I’m not referring to that thing you put on your resume to show that you were busy between jobs. I mean McKinsey, Bain, Boston Consulting Group. Strategic consulting, 100 hour work weeks, lots of frequent flyer miles. MBAs start at about $200 – 250k and go up from there, providing a nice first job starting salary.
- Technology: a senior software engineer at Google makes about $200k per year. This is a great job for anti-social introverted types, as most of your time is spent coding, vs. meeting, collaborating, politicizing, etc. But as someone who has budgeted for tech hires, I can tell you that the salaries ladder up significantly once you reach management level.
OK, let’s pause a second. If you went to a top school, majored in STEM, and are currently working as a consultant at McKinsey, you really don’t have to read any further. You’re pretty much set. Also, you probably don’t have time to read any further.
For the rest of my readers, there are still other steps to catch that $500k salary if you haven’t already.
You should be willing to live, and to move anywhere in order to increase your salary or title. This include Podunk towns (you can tough it out for a couple years) or astronomically expensive big cities (there are ways to manage the cost).
Employers know that they need to compensate more generously to attract people to Tier 2 (or Tier 5) markets, and reflect the higher cost of living in say, a NYC or San Francisco. Plan carefully, but take advantage of these salary arbitrage opportunities.
Willingness to Job Hop
You should be prepared to switch jobs every two years, if necessary, at least at the start of your career. This is because:
- The market is always evolving, and salaries in your field could be rising quickly. You need to take advantage of this while you can
- Job security is often low: restructurings, new management, or even a disagreement with your boss can mean a layoff or at least a major slowdown in the growth of your career
- You need leverage when negotiating for a raise or a promotion (see below)
Now there’s nothing wrong with staying at the same job for 10 years+ if it’s working for you. But if you’re not seeing steady growth in salary and title (notice I said title, not responsibility), you should be looking for greener pastures – especially if you are going for that mid-six figure goal.
I think this piece is sometimes overemphasized given its potential impact vs. the other criteria discussed. I mean, I’d rather be a hedge fund manager with no negotiation skills vs. a freelance writer that’s a negotiation savant.
However, at the mid-six figure level, negotiation can make a big difference in compensation, so you should get the basics down. The best times to use these skills? When considering a job offer; and importantly, when you feel you’re ready for a title or salary increase at your current place of work. Sadly, many companies don’t promote or give significant raises unless the employee threatens to leave. So you should always have an alternative lined up that lets you walk away from the table.
Wrapping It Up
These are the basic building blocks to a $300-$500k + salary. Admittedly this is not a list of easy tactics you can do from home in your spare time. But, consider that compensation at this level will allow you to reach financial independence in a tiny fraction of the time – and provide a life that in my opinion is fuller, more interesting, and delivers so much more than just monetary gain.
Have you achieved a high salary? Are you on your way? Tell us what’s worked for you in the comments below.
Categories: financial independence