Here at Blooming Wealth, we advocate for growing your net worth primarily by investing and starting a business. And while the typical full-time job does afford you the opportunity to invest, that doesn’t mean you will get rich doing so.
Yes, if you follow other personal finance blogs/sites, you’ll hear about those who reached FIRE (financial independence, retire early) working a 9-5. But is that really as good as it gets? We don’t think so.
In this article, we’ll take a look at why you probably won’t get rich working a 9-5 – and what you can do instead.
One of the biggest hindrances to growing your net worth is stagnant wages. While the face value of wages has increased over the years, the picture shifts substantially if we consider a slightly different figure: inflation-adjusted wages.
According to Pew Research, the average wage, using 2018 dollars, was $20.27 in 1964. By 2018, that figure had only risen to $22.65. For those that are keeping score, that’s an inflation-adjusted increase of $2.38 in a matter of 54 years.
Many FIRE advocates would take the opportunity to say “Well, you should just save/invest more!” And there’s nothing wrong with that. In fact, as mentioned at the beginning of this article, investing is one of the key ways we help people grow their net worth.
The problem is that “good enough” isn’t good enough for us. We don’t just want people to grow their net worth. We want people to grow their net worth as quickly as possible.
Yes, you can do that over the course of 30 years, and there’s nothing wrong with that. But we think there’s a better way.
Earning a Set Salary
Another reason you probably won’t get rich working a 9-5 is due to the very nature of how jobs pay people. This is especially true for salaries; you agree to a certain salary for the year, and that is all you will be paid.
Some jobs pay overtime, but many do not. Increasingly, people are working 50, 60, or even 70 hours per week without earning an extra penny. This is a bit crazy considering the fact that you very well may be increasing the company’s profitability with that extra time. But are you compensated for it? Maybe…or maybe not.
This is where jobs differ from starting a business, which is something for which we advocate here. No, starting a business will not be easy, but the ceiling is much, much higher.
The Doing-Away of Pensions
As nice as it is getting lots of tax breaks to help fund our retirement accounts, that pales in comparison to having your employer take care of you for the rest of your waking years.
While it’s true no one has ever gotten rich due to having a pension, still, eliminating these programs means retirement will be much more difficult for many Americans.
According to the department of labor, defined benefit plans (where employers pay out in retirement) peaked in 1983 with 175,143 plans. By 2016, that number had dropped to just 46,400 defined benefit plans. Meanwhile, defined contribution plans (where both employer and employee contribute to a retirement plan) have been on an almost constant increase since 1975, with the total number of these plans having more than tripled.
With nearly stagnant inflation-adjusted wages and a doing-away with pensions, it’s not difficult to see why people with “regular jobs” have been struggling more and more in recent decades.
Lack of Upward Mobility
Have you ever been in a situation where you felt you were stuck in your current position? You may or may not have enjoyed that position, but you felt there wasn’t much more you could do with it. You’ve sort of hit a wall, both in terms of earning and of learning potential.
So what do you do? Well, the easiest thing to do is to ask for a promotion. But, wait – there’s no money in the budget for that promotion you asked for. So you look for a better-paying position within the organization. Either you don’t find one, or even if you do, someone else within the organization wins out over you.
Unfortunately, this scenario is all too common in the corporate world. Like it or not, most lowly employees have little control over their own destinies.
Sure, you could try to be patient, but how long will you be waiting? All this is in stark contrast to what it’s like if you start your own business. Sure, things can sometimes still take a long time to accomplish, but the point is you at least have some semblance of control over your own future.
Beauracracy in Business
Beauracracy in business is another thing that can be a major hindrance to your getting-rich plans. And this seems to be a bigger problem with bigger and older organizations.
Early in my IT career, I had been working in the same position for almost 3 years. While that may not sound like an extremely long time, I knew it was time for a change. I felt I had learned all I could learn at my job and, sure enough, there wasn’t any money in the budget for promotions within my team.
Naturally, my first course of action was to look for a better job internally. I applied for the job I wanted, got an interview, and the manager liked me! All good so far. And then…things hit a road block. No offer was ever extended, and the job was pulled from the HR system.
I then waited seven months for the job to be posted. It never was. In retrospect, perhaps seven months wasn’t that long, but it feels like an eternity when you are waiting for something to happen. Especially when the would-be manager more or less implied I would have been extended an offer if it weren’t for bureaucracy.
A related issue is confusing/vague job descriptions. I have worked at several organizations where the job postings have titles that are so vague that they could be almost any job within the broader department (in my case, IT). And even the job descriptions don’t lend themselves to any sort of clarity.
Of course, by asking around you can usually find out if the posting is the one you’re hoping it is, but why is that necessary? Shouldn’t the job postings make it immediately clear which job they are? Well, in my experience, they don’t. And that just leads to wasted time and more unnecessary obstacles to career advancement.
What to Do Instead: Start a Business
The reality is that most people never even attempt to start a business. Doing so is difficult and it can sometimes take years before you see real results. Most people simply want the stability a 9-5 provides.
The problem? Many people also want to get rich (or at least wealthy), and a 9-5 will rarely allow you to make that happen. In a way, the 9-5 is like a savings account, and starting a business is like investing in stocks. Stocks can be riskier, but the reward for that risk is much higher earning potential. In that sense, starting a business is no different.
When you start a business, you work for yourself. That means that that extra time you put in, which increases your company’s profitability, allows you to earn more money – not some executive you’ve probably never even met.
If you’re interested in starting a business, read our articles on growing your business for tips on how to be successful.