Are you an addict?
If you work for a salary, you have a harmful addiction, according to an article in Entrepreneur.
While I understand this article is supposed to nudge people into entrepreneurship, and it does make a couple of thoughtful points, I disagree with the premise that working for a paycheck is inherently a bad thing.
The article, by Rick Biseo, who makes his living selling franchises, contends that salary addiction prevents people from reaching their full potential, i.e., owning a business.
Bisio argues that salaried employees get “high” on payday – that cashing your paycheck gives you the same satisfaction that crack addicts get from a fix. Well, sure, I suppose. But all sorts of things light up the reward/pleasure centers in our brain – some healthy, some not. Receiving compensation for work well done seems healthy to me.
Because you’re addict, he adds, you need your salary fix on a regular basis. Again, true enough. We need it to stay alive and support our family. Of course salaried people get anxious when they lose their jobs. Of course we jump at a job offer when we’ve been out of work for a long time. Anyone who loses their means of support – trust fund, commission, salary, business profit – is going to freak out.
Salary addicts supposedly allow their addiction to control their lives. They place the job ahead of family and prioritize work over family time. Yes, that’s probably true to varying degrees. We Americans tend to overwork. But is Basio suggesting business ownership is the antidote? If so, I disagree. One definition of entrepreneur is a person willing to work 80 hours a week to avoid working 40.
But here’s my biggest disagreement with Bisio. He claims it’s hard to build wealth as a salaried employee. His reasoning: You spend what you make, and the job takes so much time and effort that you have no ability to build additional wealth.
Wow. I’m not even sure where to begin to dismantle that ridiculous claim. Upwards of 90% of my financial planning clients are salaried employees, and many of them have amassed considerable wealth over their lives and careers. Whether highly-compensated professionals or modestly paid public employees, these folks have reached aggressive retirement savings goals through discipline and smart investing.
These “salary addicts” don’t spend every dollar they earn. Instead, they live below their means and earmark a significant portion of their raises for savings. Equally important, they prioritize saving by enrolling in their employer’s 401k and/or otherwise setting up automated deposits that go straight from their paycheck to their investment accounts. Many of my clients took second jobs to turbocharge their savings efforts.
Finally, Bisio is less-than-realistic in touting business ownership. It isn’t all sunshine and lollipops. It’s a high-risk/high-reward option studded with pitfalls. Plenty of business owners limp along for years or fail outright. It’s certainly not for everyone.
But Bisio’s article does offer one lesson for those on the verge of retirement. It may be a little jarring to suddenly find yourself without a salary. Even if you know you have the financial resources to support yourself, you may miss that twice a month paycheck.
There are a couple of ways to address that anxiety. The first might be to get a part-time job. Do something you like. Work in the starter shack at a golf course, tutor children in your area of academic expertise, or work at a hobby shop if you are crafty. Work enough to offset some expenses without cramping your new lifestyle.
You might also consider “paying” yourself on regular intervals. Set up a household expenses checking account and deposit a check into that account from your retirement funds on some set schedule – first and fifteenth of the month, every other Friday – whatever works for you. This might ease any “paycheck anxiety you may be suffering, and it will certainly help you stick to your post-career spending budget.
Bottom line: There is no shame in being a salaried employee. The fact is, ultimately we all work for ourselves, whether we own a business or sell our talent, skill and experience to an employer. The goal is the same, to maximize the revenue we need to support our families and save for the future.
Working towards those goals on a daily basis sounds to me like a healthy addiction.