Professionals, even people who remain at the individual contributor level their entire career, have unique options in the world when it comes to income:  They can aspire to make more than most trades people can ever dream of.  The challenge with making a tremendous income is that it’s not easy, in fact it’s quite difficult.  Every person reading this understands that very basic point.  If they have a high income they probably worked their butts off and sacrificed greatly to get there or they were the beneficiary of a very lucky career break.  The reality here is that most people, even professionals, simply don’t make a huge incomes.  

In the modern economy jobs are not nearly as stable as they have historically been over the last century when manufacturing and the industrial age institutions ruled.  This being said jobs are more stable for professionals than for what we can consider to be the modern proletariat who, in some cases, tend to measure job tenure in months.  The greater percentage of the professional individual contributors, for the most part, measure their career positions in years, and sometimes if they are lucky, decades.  These positions tend to have lower income levels simply because of the relentless drive to limit all costs to the business but at least they are steady.  

We work to have the lifestyle we want.  The ultimate goal, the nirvana is financial freedom, to not have to work to meet our needs.  This is not because professionals are lazy, but because by not having to work to earn a living we are given the most precious prize of all: The time and resources to do the things we want to do in life.  There are two paths to speed yourself to this financial nirvana, you can play financial offence or you can play financial defense.  There are pro’s and con’s to both of these approaches.  The key is to decide what approach is best for you.  

Financial Offense

There are several avenues to generating a very high income.  The first is gritting your teeth and getting through the highly demanding gatekeeper credentials which is fundamentally a near guarantee on achieving a tremendous income.  You could go to school and become an anesthesiologist or one of several other high demand medical specialties where the median salaries range from 250K to over 400K or more.   You could go to law school and specialize in some unique in-demand form of law and then put in the 80 hours a week plus you’ll need to work your way up the boutique law firm.   You can become an IT specialist in a highly in demand field such as security by getting every single advanced security related credential available.   These are highly competitive programs and require putting nearly every other component of your life on hold such as family, friends, and relationships while you are achieving them.   If you can do that they are nearly guaranteed ways to make a tremendous income as an individual contributor.  They demand great sacrifice and an intense discipline in overcoming the hurdles designed into the credentials and related experience required for attaining those jobs.  If you can do it, it is a clear path to a virtually guaranteed in demand career, and some careers simply make a ton of cash.

Most people don’t play on that level.  They aren’t willing to put their lives on hold for years to achieve the license or credential.  The allure of family and interpersonal relationships is simply too great for those who are emotionally wired to buy into the classic life path.   Hey, that’s ok, there are other options, for example there is always Luck.  A great illustration of this is a personal story that was told to me by a very seasoned sales executive as he was exiting his career working for a chemical manufacturer.  Decades earlier, this particular professional had gotten a job for that very same chemical manufacturer when he was fresh out of school. He had been given the old “work hard play hard” and “there is huge untapped potential here” speech that all new sales reps are given.  The same one that he had himself given to newer reps countless times to motivate them to get up and knock on doors.   He recounts that for several months after starting his new job he beat the pavement diligently and he made zero headway.  He was just the latest in a long line of reps who came before him in a heavily overworked territory in the corporate backyard.  He quickly learned that if the area manufacturers were going to buy from the chemical company they were already a customer of some other rep from the company.  If they were not going to buy from the company generally their minds were set in stone because the local prospects had also been given the sales pitch innumerable times over the years. This executive’s favorite story about how tough his predicament was included one sales call he went on where he walked in and the prospect behind the desk didn’t give him a second to speak, he just immediately said “just gimmee ya card and ya can go”.  The customer took out a two-inch thick pile of cards from former representatives of the chemical company and then he said “I just wanted you to the stack before you quit or are fired, I’ve been keepin a collection ya’ know”.  

It was at this point in the story the sales executive got very serious in his presentation, because he was about to focus on the main point he wanted to drive home, which was that he kept at it.  One day the rep walks into another account that was solidly owned by the competitor but the competitor had just screwed up royally.  It was a massive account, and the customer was so disgusted they turned on a dime and gave the now executive, then newbie rep, the business.  This was right before he was going to go bankrupt from having no income in his straight commission sales job.  The executive recounts that he went from rags to riches that day and then he emphasized the moral of his story, which was that  you should never give up.  

I heard the story a little differently than was intended.  I heard that the chemical company lied to dozens of reps, made them unrealistic promises about opportunities and then set them out on a path where they would probably starve in the hopes that one of them would get lucky and the company would ultimately benefit.  I had been in a few sales jobs by that point and was generally expecting the ‘work hard play hard’ speech and its derivatives.  This one was especially well delivered which is why I remembered it so clearly.    There was one thing I did agree with the sales executive on, and that’s sometimes the professional simply gets lucky and the income flows.  His story is about sales, but there are other options where luck is the thing that drives tremendous income.   You could have a job with stock options in a company that starts exploding.  You could simply have had a speciality in a job that nobody expected to grow in demand.  A recent example is having photovoltaic experience in a state where green legislation is passed that drives completely unexpected demand in your specific solar energy speciality.  

So we have the brute force attack of commitment and sacrifice that gets you a credential or the simple, but tremendously rare, lucky break.   Those are the big bang ways to do it, but there is another way to make a great income, it’s to play offence in every financial related decision you make.  It’s slower but it works.  If your in sales this looks like fighting over every single account.  If your in some other non-commissioned job it’s more about continually looking for increasing income and a willingness to take those risks or make continual career and lifestyle jumps with the focus on income.   This type of outlook turns every single decision into one of a decision on financial risk and reward.  If I move from Orlando to Austin, what are the median incomes and the increase I can get just being there? If I take a medical terminology course, can I get into medical sales even though i’m not a nurse?  If I join this professional peer group will it increase my chances of landing a job at the company known for paying higher than the average for this area? There are other less scrupulous ways to get a bigger paycheck.  What if I just lie through the teeth on my resume and linkedin and jump jobs before anyone realizes it?  

Then of course there is the financial offence we have spoken of often here, the desire to climb the ladder and continually increase your managerial responsibilities at work to the point in your career that you have tremendous income.  With the flattening of organizational charts across all enterprises except for possibly government, this requires a dedication similar to the type of commitment of time and focus as putting your life on hold to be a physician, maybe more as it never ends for your entire career.   It’s just that difficult.  As we discussed previously, unlike the financial certainty of becoming something like a dentist, working your way up the corporate ladder has no long term guarantees.  It’s always up to someone else to choose you for that next level and keep you there.  I know several people who either never achieved the magic of ‘right place, right time’ for the big promotion, or did get it and eventually got the corporate bullet in the head due to downsizing and never recovered.

It’s not always just career related.  The individual who plays offence financially is aware of the tax benefits of retirement accounts and always takes the match and then some.  They chose their home’s location first and foremost on how much appreciation is expected over the years.   Their conversations with their peer groups tend to be focused on career ladders and income opportunities.  The point of most financial offence is that your always moving and looking for the next jump.  Income, not your lifestyle, is always one of the top, if not the very top, consideration in your decision making.  It requires sacrifice of some form or another and a huge commitment in time.  In some instances the sacrifice is nearly guaranteed in others it’s not.  These people are ‘playing the game’ and they are playing the game to win.  

Financial Defense.  

For many many people they take the alternate path, the flip side of the coin.  Financial defence has little to do career.  Most people who play financial defence are doing so because they are working very little or just have the steady job with predictable income.  Maybe it’s work in a traditional union style environment  like industry, government, or teaching (which technically is government although a unique form of it).    There are many analogous, although potentially less secure, positions in the private sector.  HR, general or speciality administrative, marketing and events,  customer relations, basic engineering, etc.  These are all professional individual contributor jobs which typically have lower but stable incomes.   The point is that all of these positions tend not to have dynamic incomes nor do the people doing them have a particular passion for maximizing their income through their work.  For them it’s just a J-O-B and life happens outside of the work environment.  That means their income tends to be stagnant.  To better their life they have to play defense.  They must always manage their resources to pay as little as possible to achieve the goals in life they want to achieve.

So what does playing defense look like?  Ironically it’s got a similar intensity to playing offense, but flipped.  It’s always considering buying things used before they buy them new.  Where the person who plays offense would carefully consider their vehicle purchase on what it’s impact will have on their career and income, the person who plays defense will look at what economy car has the lowest price and can go the most miles before it starts experiencing major problems.  When those ‘defense oriented’ cars do need to have repairs done, then it’s done by the owner or a shade tree mechanic.  The person who plays defense clips coupons and compares prices.   Kellogg’s never gets the business if Malt-O-Meal bags are in the cereal aisle.   Grocery runs always include a trip to the dollar store.  Their kids stay at grandma’s rather than pay a daycare.  Christmas is a craft wrapped in 75% off wrapping paper purchased the day after Christmas the previous year.  You know, the one with the tacky emoji shaped snowflakes. Conversations with peer groups always include ways to save money,  great new deals, and what the pot-luck should look like at that next social gathering.  For the defensive it’s all about cut, cut, cut.  

There are challenges with both approaches

No matter what direction you move in, the solution isn’t easy.  There are roadblocks, stumbles, and core issues that can’t be easily overcome.  Let’s start with the problems with financial defense.    

The key challenge with defense is the foundational costs and their effect on lifestyle.  You can only go so low before you hit a wall and can’t go any further.   Although the person playing intense financial defense would most likely buy a used ceiling fan at Habitat for Humanity Restore, they are a great example of a product where you can see the ‘foundational costs’ at play.    Anyone who has ever shopped for household goods between Walmart and Target can see the difference.  Walmart, with its corporate focus on being the low priced leader stocks the lowest priced products in the product categories they carry.  Target tends to be a step above walmart choosing instead to focus on lower priced products that compete in quality against name brands and traditional big box speciality retailers.  It’s my experience that there is an obvious difference in quality with just a minor increase in costs.  The $25 ceiling fan from walmart feels like it’s going to fall apart.  The $35 version from Target may not have the same look and feel of a $75 Hunter fan from lowes, but it feels like it’s in the same category and light years ahead of Walmart.  The difference between these two is the additional extra money put into materials.  No matter if you are Walmart, Target, or Hunter, the cost to assemble the product is probably $15.  That means Walmart has $10 in materials in the fan, Target has $20, and Hunter has $60.  From a quality standpoint you can’t go any lower than $10 in materials and pass something like UL testing, and once you add just a little bit more to the materials used in the product the outcome is significantly better.  For example, aside from workmanship and aesthetic benefits of the slightly higher quality product, there is also a high  probability that the lower cost walmart product will break sooner mitigating any savings you may have realized.  Is it any wonder why the financially defense player tends to focus on quality used items?

foundational-costs-good-better-best

No matter what quality you choose, the base cost to put it together is the same, you can never go below that base cost in life.

These foundational costs exist everywhere and in every service. This means there’s only so low anyone can go.   Even if you build your own house with used materials you still have to pay for the property, permits, approved install technicians and when it’s finished there is insurance and property tax in perpetuity.  Want to save on groceries?  On top of having a home garden you can coupon clip and always purchase the off brand products.  My favorite example of this is wannabe pop tarts.  They always have uneven frosting and half of the different flavors the kids don’t like.  You can always find these generic ‘toaster pastry’ items from a discount grocery store like Aldi, but like the ceiling fans the manufacturer can’t use less heat in the industrial ovens and can’t really get the raw materials for less.  Because of this you won’t pay that much less than name brand Pop-Tarts. You are still paying $1.50 for the box where the Kellogg’s brand is $2 a box.  But for the extreme defensive player, Discount-mart’s house brand lingonberry jam filled toaster tarts are the way to go.   

Playing defense is a constant and unrelenting battle because the modern world is aligned against them.  The entire capitalist infrastructure is designed to drive as much money as possible out of people in every possible level.  Kids are indoctrinated at the earliest age to be consumers.  The toys McDonalds sells with the kids meals are not just there to drive the kids to buy the nuggets with the fries and soda, they also are always hooked into some other media project.  So not only do you pay $5 for the unhealthy food with the plastic toy, the toy makes the kids want to see the movie and buy the other toys in the collection at the local big box toy retailer.   Bait and switch and price increases are built into nearly every service and product offering.  $25 a month for satellite TV? That’s only for a limited time before it doubles.  God help you if you want sports programming like most people, then your bill is $150 a month.   So much for discounted multi channel television options!    

Like the aforementioned example of the poorly designed ceiling fan, there are risks and potential disasters everywhere when playing defense. I have a friend who wanted to save money on housing.  He probably could have found housing in a mobile home park or some hyper low cost neighborhood, but there are a whole host of security issues relating to those choices that are outside the bounds of this article.   He wanted inexpensive and somewhat safe.  To this end he bought an inexpensive houseboat figuring that he would be able to pay it off in a few short years and live in it for free without a mortgage or a property tax.  There was an issue relating to the boat’s mobility and the marina he had the boat moored at.  The boat was condemned and destroyed.   My friend was left with a boat payment for a boat that didn’t exist.  Not to be dissuaded from his intense focus on financial defense, several years later my friend tried this tactic again.  He bought an inexpensive RV and was going to live in that and realize the related savings in housing.  Again the hand of fate made a mockery of my friends financial defensive  plans as the fuel line in the RV caught fire burning the RV to the point where it was deemed a total loss.   I’m not making this up, I have a photo.  Yes my friend’s story is extreme, but these stories illustrate that there is risk when you play defense.  On the whole the savings realized are lost in other areas when things don’t go according to plan.  Sometimes the hidden costs in the plan doesn’t really meet the financial needs and goals that are originally intended.

The biggest issue of all is that there is an absolute floor without alternatives.   Then there are the things you simply can’t save on.  Healthcare is a great example.  The way the system is setup you have to pay your premium that is decided by your employer.  Even if the employer pays the individual deductible most workers  still are responsible for paying  for the lion’s share of the deductible for their kids coverage, and that is a massive monthly bill as compared to the moderate income of those that play defense.   Another great example is property tax.  Even if you save your whole life and pay off your property, you still have to pay tax on the property year in and year out.  There are also household utilities, even the bare minimum utilities are still due every month. Yes, i’m sure you can go extreme and become fodder for a reality tv show, but living without utilities, never shopping at a grocery store, and moving to an area without property tax makes it hard to integrate with the rest of society.   That being said, if you choose this path I’m sure your two foot long beard and deer skin overcoat would look awesome!

I could go on forever, but the basic challenges are pretty straight forward.  You can only cut costs and live so frugally.  Inflation and capitalism is continually driving costs up.  It’s a never ending battle.   So the logical mind would say that since you simply can’t play defense to the point of perpetual and complete self sufficiency, then targeting financial offense is the better option.  All you have to do is out earn the costs of life and sock so much away that you look up one day and you don’t need to work anymore.   Unfortunately this tactic, while a valid option, isn’t flawless.  Their are analogous issues to the challenges experienced with the following the financial offense philosophy.  

Something has to give.  I’m reminded of the old marketing rule:  Price, Quality, Service: Pick any two.  It’s the same with earning money.   Only the balance is: Low Cost, Low Time, Low Stress.   It is tremendously rare to the point of being nonsensical to consider a position in the top 3% of income earners that also allows for a balanced life.  Generally if your going after the big bucks your time is tremendously limited.   So if you don’t have the time you have to leverage your income to make up for the inability to realize the savings inherent with additional time resources.

Do you need a new piece of furniture, maybe a bed for a child?  The person playing financial defense would search every craigslist ad daily for all of the surrounding areas to find a good deal on the right fit.  They would work the deal and then borrow a truck to go pick it up with a buddy.   The person playing financial offense can’t do that.  As they say in North Carolina and i’m sure other areas, they  ‘Don’t have time to fool with all than mess’.  If they do have any time after the workday is over it’s precious little and generally needed for unwinding and recharging.   The person playing financial offense would go by one of the overpriced mattress stores that are located in every single strip mall and just spend the $4500 on the new elite emerald edition mega pillowtop double plush with white glove delivery, stain guard and a fifteen year warranty.   It’s a low stress purchase that generally requires very little time and provides for a great sleep experience, but boy does it come at a really high cost.  This model works for household repairs too.  Financially offensive players just make a call and things are fixed, again, they don’t fool with it.  $200 and the clogged toilet line is fixed.

If you are playing financial offense there generally is a cost of doing business.    One example is the general expense of life in different areas.   For the most part you have to be in an area where there is money to make money, and those areas are more expensive to live in.  Rare is the case where you can make $200K/year at a corporate job but live in a 2000 square foot house that cost $125K.   So if you make $200K, the odds are you live in an area where others make the same.  That means housing is more expensive, cars are more expensive, milk is more expensive.  Your kids want to do what the other kids are doing.  A night at the movies or the local bowling alley costs three times what it costs in the low income neighborhoods.   Something breaks, the repair guy is that much more expensive.   

One of the challenges relates to the corporate environment and the dynamic nature of higher paid positions.  You always need to be ‘picked’ and if you are picked to get into one of the higher earning positions, there is always a bullet aimed at you.  This is reality in the corporate environment by the very nature that you are a high earner.  Who do they look at first when it comes to cutting costs?  You have to hope someone picks you.  Yes, even if your path of high wages is through credential attainment you have to get approved to go into the program, but generally that’s more of guarantee sooner or later if you do the right things.   If you get picked, and then you get let go, your never worth as much as when you are jumping, so all that work at driving your income up goes out the window and you get to start over.  The bigger your bets the more you stand to lose.    

If you are fortunately close enough in age to know members of the greatest generation you know one of the more unique elements of their group was the cultural norm of boasting about how much they would spend on things.  It was their way of driving up status with their peer groups.  Look how much I spent on my car!  Look how expensive our vacation was!   Over the years and through succeeding generations that has mitigated.  Most realized that it’s foolish to spend 50K if you can spend $40K for the same Caddy.   The trap of lifestyle inflation, of a desire to show that you can afford the bigger and more expensive things is similarly seductive for the individual playing offense.  In the grind of their life, they can easily fall into the trap of ‘work hard play hard’ which really means ‘work hard, play expensive’.  This is another hole in the financial bucket but one that the financial offensive player creates themselves.  Some of it is the culture of the high wage earner.  Some of it is by design.   The culture of having no time and wanting the easy solution means they are already paying more, but  they want to look like their aspirational peers so they dress and acquire things that other top earners have.  What top wage earner wants to be the owner of the 10 year old Toyota camry in the corporate parking lot?  What boss who is a high wage earner wants members of his team to drive up in that car?  There is a whole conversation beyond this article about the “fake it ‘till you make it” trap when you don’t actually have the income but for the purposes of staying on point, we will only concentrate on the lifestyle inflation trap.   It’s not unheard of for a senior level VIP to tell their underlings that they have a certain appearance ‘standard’ they have to adhere to.   If you have the income, the pressure is immense to use it and that pressure can be internal or external.    

All of these things together really mitigate the benefits of the higher income.  Remember the goal: Financial independence.   You want to have enough cash that you don’t have to work.  You can do what you want and not earn a penny.  Guess what? You may have a much bigger financial bucket but the hole in the bottom of the bucket is also much bigger.  It’s really hard to to fill the bucket when it’s going out the bottom nearly as fast as your putting it in.  

Their are Benefits to Both Approaches

Yes, there are challenges, but that’s the human condition.  There are challenges in everything we do. There are also some benefits of both approaches.  The defense player generally has a simpler life.  less stuff = less complexity.  If you don’t have a car and take public transportation  you don’t have to worry about car payments, insurance, or repairs.  There is less drama related to their job stability.  For the most part HR will always have personnel that need to be managed and corporate projects will always need to be managed by a coordinator.   Customers will always need to be serviced.  Senior sales enablement marketing specialists who pull in $250,000+ per year make a tempting target when the annual business review is focused on cutting costs.  

On the other side the high wage earn can simply make the call and give their card number when they need to get something done.  The newer car tends to work better and is more comfortable.  For the high wage earner, that hunter ceiling fan tends not to get a squeak two weeks after it’s put up.  In the rare times when they can relax and watch tv, regardless of the commonly held  belief that there is never anything good on TV, having over 200 channels means there probably is something new and interesting to watch.  Also, if they live in a higher cost population dense area, there is usually an amazing number of different entertainment options available. Even though it is a hit against financial independence, a high wage earner can usually experience a $50 meal at a different restaurant every night.   

What is the best option for you?

Like everything in life it takes time to learn the best ways to manage each approach.  If you are playing defense, where in your community is the high quality shade tree mechanic or low cost home based childcare? What is the best value in every regular household decision you have to make?   If your are playing offense, what is the best career pathway?  What niche job interests you that pays the highest wage with the least possibility for a downsizing?  Maybe you figured out what you need to do to raise your chances of actually getting a promotion to a meaningful leadership position that includes a substantial salary.   No matter if your playing offense or defense it takes years to really figure out the best options.  

This is the point where I would close the article in the same way I opened it by saying the key is to decide what direction you want to go in.  The reality is that you already have, but you may have never thought about it from the perspective of “I play financial offense” or “I play financial defense”.   After reading this your probably thinking to yourself, “I am more of a financial  ______ player”.   Interestingly enough in my life  I’ve played both.  I realized I wasn’t very good at financial offense, at least not consistently and so eventually I switched to defense.  It’s why I understand the difference between the two.  But the biggest lesson from my experiences  is that things were always best when I was more focused on my path.   The middle road, the balance income and life component always has more issues and challenges.  

So what is the best advice I can offer?  It’s simply this: pick a path and stick to it. You have to focus and remain focused for the long term.   It’s that purity of your focus that will get you to your end goal quicker.  When it comes to money the balanced approach doesn’t work well.   If you try to balance the challenges of life will always get in the way of any real progress.  Managing your financial focus is like anything else in life, the more you stay on target the quicker and more frequently you will hit your target.   

Stay focused.  You can do it.  

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Posted by Mike Peluso

Mike Peluso writes about the collision between between the business / professional world and life. He also writes about the journey involved with the Peluso Presents efforts including the Blog, Books, and Podcast so that others may benefit from his efforts. Read the Blog: www.PelusoPresents.com/ Listen to the Podcast: http://pelusopresents.libsyn.com/ Support the Effort: https://www.patreon.com/pelusopresents

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