Why You Should Invest in Jobs Like You Invest in Stocks
You might think that all we do at Monte Largo is advise people and write blog posts, but that’s simply not true. Outside of helping others become financially independent we have lives just like everyone else. We hang out with friends, explore our local neighborhoods, and we do other paid work. I hope that was a spit take moment — “Wait, aren’t you financial planners? Shouldn’t you know enough about finance to not have to do other paid work?” Well, yes. So let me explain why we choose to.
After people graduate from high school or college, our exhausted parents expect us to get a job to provide for ourselves. But when we get that job, the company’s friendly HR representative often requires us to sign a non-compete agreement so that we can’t do other paid work. Even if we aren’t bound by a non-compete agreement, we may blindly accept the default choice of working full time for a single company. Nobody ever tells us to “get some jobs,” they tell us to “get a job.” After all, most of our friends only have one job at a time and our parents probably did too because they had to go to discos or anti-war protests in the evenings.
The problem is that the world is changing and working just one job is becoming an increasingly risky decision. As an analogy, if you wanted to buy a company’s stock and the company responded, “Sure, sign this non-invest agreement. You can no longer invest in any other company’s stock” you’d laugh in their face. Nobody would invest and the company wouldn’t get funded. This is because one of the core concepts of investing is that diversification is key. “Don’t put all your eggs in one basket,” your grandma probably told you, reminiscing about a simpler time when eggs were sold in baskets. So why do we do the opposite with our income-earning strategy? Why do we work for one company and just hope that it doesn’t fire us or go bankrupt — and then start all over again when exactly those things happen?
There just aren’t that many people out there who we’d consider company “lifers” anymore. According to the Employee Benefit Research Institute, the average job tenure among males near the end of their careers has dropped from 15.3 years to 9.5 years since 1983. And if you look at young adults between 25-30, that number drops to just 2.8 years. So then why do we still act like we should rely on one company to take care of our needs?
Companies feel no obligation to take care of their employees in the way they once did (if they ever really did at all). Private industry is the backbone of our economy, and companies are likely serving their customers and their shareholders better than ever. But their employees? I shouldn’t have to remind you that your boss is calculating at the end of each quarter whether she should replace you with a robot or a software program — and that your competitive advantage is slipping year after year.
Let’s take a step back and imagine a different world where we all work part time at any number of jobs we choose. In effect, we diversify our income streams while at the same time diversifying our skill sets and increasing our human capital. People would probably be skipping and singing out loud on their way to those jobs. Every day would be casual Friday because a lot of these jobs would let you work from home! Instead of being a full-time physicist sitting under ground in fluorescent lighting all day, you could be a part-time physicist, a bicycle repair man, a teaching assistant at the local community college, and run your own startup creating physics software. Wouldn’t that be awesome? Losing one job would hardly threaten your finances, you’d develop multiple valuable skills, and you’d be happier because of the intellectual and emotional variety of your day.
I already do this. Sometimes I work twelve hour days, but I’ve never once worked twelve hours in a row for one company (and I never will — I’m useless after four to five hours on one task, let alone twelve). I break up my days with drastically different work for different folks. A little sales consulting, a little nonprofit work, a lot of financial planning, and once a week I host trivia at a local bar. Some jobs are more fun, some pay better, some have more interesting people, and others still are more fulfilling. I bet you my twelve hour day doesn’t feel nearly as long as your eight, and it’s because I purposefully choose the work I want to do rather than being a wage slave.
Most companies probably don’t think that this setup would be advantageous for them. “Employees that can leave when they are unhappy or want to try something new? We can’t have that,” says the executive as he smokes his cigar and waxes his moustache. However, it’s likely that people who need their jobs to survive are less likely to speak up against authority, causing groupthink and one-sided communication. Innovation happens when a company can fully leverage the ideas of all of its employees, not just the loudest, most secure, or most senior. Diversifying our income streams is not only good for us, but for our companies too!
So exactly how dangerous is the single income stream? In his new book Leaders Eat Last, author Simon Sinek explains that over a third of employees want to quit their jobs in any given year but only about 1.5% actually do because we feel like we couldn’t survive without them. When at least a third of the population is unhappy at work, something is clearly very wrong with the way we’ve designed our lives. Seeing our jobs as a source of income rather than a source of fulfillment is a recipe for unhappiness. Having the ability to leave, speak up, or change careers gives us the strength to make decisions based on the only question that really matters: “Am I happier today than I was yesterday?”
If you think balancing multiple income streams is impossible, you’re not alone. Even though I live this lifestyle, I have also struggled to leverage my income diversification when it really matters. Recently, one of my paid pieces of work took a turn for the worse, and I had to make a decision about whether to leave or stay. I’m still working through all the details, but the fact that my gut reaction was “Nathan, this is income you’ll be leaving on the table. Don’t quit!” told me a few things about myself.
1) I clearly wasn’t having a positive experience in the work or I would have been thinking about the mission of the organization or my fulfillment rather than my wallet.
2) Even though I can step away from any of my jobs within reason, that gut reaction is hard to get over. I have designed my life purposefully to avoid the exact problem I found myself in, and yet I still have trouble walking away from unfulfilling work.
Transitioning to a life of multiple income streams isn’t easy and it doesn’t happen overnight. Living this lifestyle can, however, help fulfill our need for work-life balance. Add multiple passive income streams on top of that and you’re living like a Fortune 500 CEO. Successful, wealthy people don’t work because they need the money; they work because it brings them joy. We don’t think it’s strange when Richard Branson starts a company that sends people to space, Sandra Bullock opens a restaurant, or Jay-Z decides to design clothes despite none of those things being in their original areas of expertise. But why are the wealthy the only ones allowed to be renaissance men and women while the rest of us are expected to specialize to the point of irrelevance? Ultimately, we can all find meaning in our work, especially when our work is diversified. We just have to start approaching work a little differently.
Nathan is the CEO of Monte Largo Financial Advisors LLC.