Our Financial Path.

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Should You Like Your Job?

I was reading this study about happiness in the workplace and it really surprised me how little of us truly enjoy our job. Yet, so many are working over 40 hours a week until they are over 65.

If so few are enjoying their work, why so few are taking the necessary steps to retire early? I understand that financial independence takes a few sacrifices but it does offer its benefits.

 

Only 13% of employees worldwide are engaged at work, according to Gallup’s new 142-country study on the State of the Global Workplace. – Gallup

 

I understand that the statistic above can be misleading given that it is a worldwide survey. Not everyone in the world has the luxury to choose where to work and not everyone has our working conditions but even when looking at North America, almost 1 out of 3 workers are satisfied with their job.

 

At the regional level, Northern America (that is, the U.S. and Canada) have the highest proportion of engaged workers, at 29%, followed by Australia and New Zealand, at 24%. – Gallup

 

work happiness levelsSource: Gallup

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Why are we not saving more?

So only 1 out of 3 workers are satisfied with their job, that is quite alarming given that average Americans are saving less and less of their take-home pay and therefore, are delaying retirement even further.  Personal savings rate have fallen under 5% compared to when they were in the double digits before the 80’s.

With so few workers satisfied at work, I would imagine that more people would make the effort to retire earlier. With simple math, we can determine that this low savings rate mean that people will be working their job they do not like for roughly 60 years (or basically, until the government subsidizes them). Even without thinking about retirement, such a low savings rate greatly lowers your freedom and security.

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retire early Savings RateSource: JP Morgan

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Having enough in savings to be able to pay for emergencies without going into debt is the first step to financial security. Having a few months of expenses saved up gives you the luxury to shop around for the best job that suits you and enables you to negotiate better terms for yourself without worrying about your basic needs. In addition, having a healthy emergency fund allows you to say no to underpaid offers and negotiate a better salary when you are job searching. It worries me that so few Americans are saving a healthy portion of their income. It creates a frail society that is ready to accept any job at any salary just by fear of not being able to pay the bills.

The actual age of retirement is rising rapidly and people are expecting to work even longer. Without the security of a strong nest egg, average American are solely dependent on government programs, which seems to extend the working age ever so farther.

Looking at the chart below from Gallup we can see the actual retirement age among today’s retirees (baby boomers). If we look at U.S. Census Bureau data for a more actual retirement age, the national average retirement age is currently 63 years old. Still surprising to me given that the social security age is now 67.

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early retirement is possibleSource: Gallup

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Early retirement

With all this data on hand, I can just be thankful I am not the average. I plan to retire at 35 years old and enjoy life fully! I simply cannot imagine working until 67. I do not necessarily enjoy my work but having a clear goal in mind and knowing that I have a chance to retire in less than 10 years really helps me get through the day.

I follow simple maxims that will give me the best chances for financial independence and I hope you can find inspiration in them too.

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1. Save at least 50% of your salary and invest it for the long-run.

2. Invest any bonuses or raises instead of spending them.

3. Always try to shop and compare to minimize costs.

4. Always try to maximize your income by negotiating raises, changing jobs, and side hustles.

5. Avoid all consumer debt except for a mortgage.

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Saving more than you spend will exponentially decrease the number of years you will need to work before being financially independent but the biggest key to this is investing your savings for the long-run. Savings enough to be financially independent with a savings account returning 0.5% annually is nearly impossible but investing in the market makes it more than possible in a short amount of time. 🙂 The key here is to invest for the long-run.

Do not follow the financial news or contently look at your balances, staying on course is one of the strongest assets you can give your portfolio!

In addition, if you invest any bonuses or raises you receive, you will not only increase your nest egg but also combat lifestyle inflation. You might get used to a higher lifestyle and this would increase your required nest egg before being financially independent.

Minimizing your cost of living will also minimize the size of nest egg required. If you can live on only $30,000 a year, then you only need a passive income to cover those expenses. For example, you would need to have $750,000 invested to safely withdraw 4% or have $1,000,000 if you prefer to withdraw only 3% to be even safer over a long time horizon.

Doing a job on your own terms is also very rewarding, anyone can start a side hustle and generate income without the bosses. I really enjoy having the liberty of working on projects I believe in, on my time and my terms. Anyone can start earning money on the side now with affiliate programs. Agencies are quick to signup and let you choose which product to promote. Once you mention a product on your site and close sales, you will get a cut out of it. This is how this site is run and I find it much less intrusive than ads.

If you want to start your own site, the first step to any website is web hosting. I use BlueHost and it is ideal to start your own blog or website.

On top of all this, avoiding expensive consumer debt is critical to financial independence. Carrying credit card debt at 19%+ interest or even having an unsecured line of credit at 8 or 9%+ can really cost you a lot over the long-run.

The average U.S. household with debt carries $15,762 in credit card debt, at 19% this costs a whopping $2,994 a year just in interest! Don’t be the average and pay off your credit cards in full every month. Try to invest that $2,994 a year in the market instead. 🙂 Investing this with the average market return of 7% would give you $50,151 over only 10 years.

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how to become financially independentSource: Money Chimp

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Following these maxims does not guarantee anything but it sure guarantees peace of mind. I do not think that you need to be engaged at your job to be happy but I do believe you need to be engaged in your future and your long-term goals.

Giving a purpose to your paycheck will not make the job better but at least it will give you a reason for it. In addition, I having a purpose motivates you to push even harder and maximize your job for that purpose.

What do you think? Are you happy at your job? I wish you the best of luck in your career and in your journey to financial independence 🙂

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4 Comments

  1. Having a nice padded 401k does make it a lot easier to ignore the bullshit at work. Great advice.

    • Xyz

      August 3, 2016 at 10:14 am

      Thanks, I just feel more autonomous when I have enough money saved up. You are no longer trapped by your job once you can survive without it.

  2. You can and should find enjoyment in your work. Doing so is very valuable to your life in many ways, including greatly increasing your probability of financial success. But you don’t have to love, or even like your overall job to enjoy everyday aspects of it. It is critical to distinguish between the job and the way you do it. This is important because every job has aspects that will be very unpleasant for you. You need to be able to get through them with a smile on your face.

    • Xyz

      August 23, 2016 at 5:25 pm

      I totally agree, you shouldn’t hate your job. Then again, I like a whole lot of other things than my jobs!

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