Oct 6, 2021

Advice For People With No Money To Invest

Andrew D. Ellis avatar Andrew D. Ellis
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“If you want to beat the S&P 500, start thinking of the index as a filter and not a benchmark. It’s the starting line; not the finish line.” Andrew D. Ellis, Founder, ThinkingLonger, LLC

Recently, I read a post by Rocco Pendola in Making of a Millionaire that struck a nerve. It’s title, We Don’t Write Money Articles For Poor People tells an important truth. Rocco correctly notes that most of us write for an audience that has the financial wherewithal to make choices about how we spend our money. He then goes on to note – again correctly – that “Having choice is luxurious, if not privileged.”

He is right. But . . . it also seems pretty clear that, while everyone is not rich, and less than many have the opportunity to become rich, many have an opportunity to do better. And, let’s agree in advance that the “many” are living thin as it is and are not spending money needlessly. Rather, the “many” are just making ends meet and those ends are filled with necessities and not luxuries. So, how can the “many” do “better?” The answer lies in understanding the relationship between jobs and doing “better.”

First, doing “better” starts with being honest with yourself and about yourself. If your primary income is based on being an employee, then the only way to do “better” is to make yourself more valuable, no matter where you currently sit in the financial food chain. Second, you make yourself more valuable by recognizing that “more valuable” means more valuable to someone else. Many people reading this post know this to be true based on their own life and work experience.

In a market economy (and leaving aside wealth as an indicator), value is often measured by reference to what someone is willing to pay you for your time and effort. But, to do “better,” you need to have a more nuanced view of employment. Specifically, while it is important to get paid, it is just as important – in fact more important in the long term – for your job to make you “more valuable.”

So, let’s drill down and really think long and hard about jobs in general, the job you have and the jobs you’re going to get:

  1. YOUR BUSINESS IS YOU. Every day you are in the business of maximizing your value to you. This is not the same as your job. Your job is what you do for someone else.
  2. YOUR EMPLOYER IS NOT YOUR FRIEND. As an employee, you can’t expect your employer to care about you or act in your best interest. (Don’t get me wrong; some employers do care about their employees but you can’t count on it.) Your job is a way-station to the next job or financial independence; nothing more and nothing less.
  3. BE LOYAL TO YOURSELF. Given your skill set, find an employer that is going to pay you the absolute greatest amount for the skills that you have. This is an on-going process that prioritizes loyalty to you.
  4. ALWAYS UPGRADE YOUR PAY. Your first job as an employee is to continuously look for a better paying job, with your current employer or elsewhere.
  5. ACCEPT ALL OFFERS FOR NEW SKILLS. Your second job as an employee is to maximize the quantum of skills that you can acquire doing that job and freely take with you when you leave. Acquiring knowledge that belongs to your employer is ONLY good for your employer; it isn’t good for you.
  6. SHIFT CATASTROPHIC RISKS. If possible, and it isn’t often possible with low-paying jobs, your third job is to shift catastrophic risk to insurance companies. They can afford it; you can’t. A job with medical and disability benefits is “found money” for you. Absent that benefit, get insured.
  7. ENLARGE YOUR NETWORK. Maximize the number of people you meet who do not work for your employer. Make the effort – every day. These people become YOUR network and your network belongs to you.
  8. ADD SKILLS YOU DON’T CURRENTLY NEED. Acquire skills outside of your job that can pay you more down the road; invest in yourself to do so.

As a general rule, there is no point in staying at a job that doesn’t make you more valuable. It’s just that simple. But, I’m the first to admit that life gets in the way of theory. From time to time, other considerations do apply. For example, medical benefits may be worth their weight in gold if your partner or child is ill. And, there may be other priorities to consider. Quality of life? Family time? Reduced stress? Social contribution? All of these priorities represent choices that may reduce your market value but be worth it to you. That’s for you to decide. But, it is important to see that jobs are more than what they seem and less – both at the same time.

I’d also readily admit that, as a young man, I didn’t understand the nature of jobs or my responsibility to myself when it came to employment. I don’t blame my past employers for hiring me; quite the contrary, they were smart to do so. And, I acquired useful skills in most of those jobs. But, and I have only myself to blame, I stayed too long in most of those jobs, long after my learning curve had flattened out. What I previously thought of as growth was either inertia or an unwillingness to embrace uncomfortable change. Neither are particularly admirable.

Now, at age 68, I see the world of work quite differently and it isn’t a pretty picture. In the 21st Century, if work can be digitized, it will be digitized; if not today, then tomorrow. What value can young men and women create in themselves that cannot be replaced by off-shore labor or a server farm loaded with AI? One thing is certain: we cannot rely on employers to be partners in crafting a life, a career or a future. Their priorities are not our priorities and the circle of common interests is getting ever smaller. Operarius cave – worker beware.