Your career is your biggest financial asset. Most people determine the value of their work by the dollar amount on their paycheck. However, judging your career based solely on your take-home pay is a short sighted evaluation. Learning to manage the full value of your career will translate into a higher quality of life and a higher net worth.
Two aspects of a career should be evaluated. One is the obvious quantitative measurement of salary and employee benefits. The second is a set of qualitative measurements which are even more important. As you will see, focusing on the qualitative measures is the surest way to maximize your bottom line in the long run.
The quantitative measurements are the easiest to assess but still involve much more than just comparing the base salaries of different career options.
A career’s financial value can be determined by computing the net present value of wages and benefits minus the financial cost of the career, which will be explained in a moment. Don’t overlook the value of your employee benefits. Employer matching contributions made to a 401(k) can be considered as valuable as a salary. Other benefits should be evaluated based on their value to you, not simply their cost to your employer.
If you are married with children, and both you and your spouse work, then be sure to account for the added cost of having both parents working. After subtracting child care, work clothes, transportation, prepared foods, and taxes, many two-career families would do just as well without the second career. Reducing household expenses and starting a part-time home business may be a better way to increase the family’s bottom line.
The qualitative measurements of a career, although they are more difficult to assess, are even more important in the evaluation.
A job should be evaluated in relation to the new skills you learn and master as part of your employment. One job may pay you more because you are already a master of those skills, but a lesser-paying job may be better for your long-term career because of the skills you will gain.
It is your future skill set that will determine your future compensation. With the increase of project-based employment, longevity and seniority no longer have as much capital. Those who are the most successful at managing their careers are able to work at different jobs to gain the skills needed for each progressive step of their career.
In doing this, they treat their career as their own asset, not that of their employer. By taking ownership of their employment, they accept the fact that they are captains of their own fate. Those who follow this strategy often end up as top executives of large companies or start a business of their own.
A second important consideration is the social connections you will make on the job. Careers are as much about who you know as they are about what you know. No successful person in business functions alone. It is important to respect the value of building and maintaining relationships with other talented professionals as part of your career.
You don’t need to be part of the “good ol’ boys” club to benefit from a network. Simply knowing who can get a job done properly is a valuable commodity that will pay you back many times over. Every mom with a list of reliable babysitters or competent electricians knows the value of such a network. Just as you would evaluate how much money the company is going to put in your 401(k), you should try to determine how much social capital the company will help you build.
Finally, make sure that your job is in harmony with the rest of your life and goals. It does not make any sense to spend the best decades of your life chasing after money so that you can finally do what you really enjoy in retirement. The strange truth is that people who do what they love often make more money that those who are simply after a big paycheck. And if you really love what you do, you’ll find you’ll never have to “work” a day in your life.
Fitting work into your life often begins by analyzing family constraints. Raising your children isn’t worth missing. No matter how much time you spend with them, you blink twice and they are grown. If you are lucky, you will get another chance with your grandchildren, but it’s better to not miss a moment with your children the first time around.
Learning to manage your career is every bit as important as learning to manage your money. Doing so will mean you will get to do what you love. And in the long run that should pay big dividends.
Photo by Brooke Lark on Unsplash