Your Well-Paying 9-5 Job Will Build You Wealth

This is the third post in a five-part series that explores how the traditional “American Dream” does not fit today’s world. The rest of the series will discuss what once constituted success and whether these sought-after milestones should be left alone, tweaked, or changed altogether. Read the first two articles here: “The American Dream: How Has the Definition Changed Over the Years?” and here “The American Dream: Are Traditional Values and Beliefs Helpful or Harmful Today?“

In the last two posts of the series, we looked at the current definition of the American Dream and what was wrong with the first two steps. Here we will critique steps three and four.

But first, let’s look at all 10 steps again:

Go to high school and get good grades.
Go to college and get good grades (while probably taking out student loans).
Get a good job.
Continue to spend more as one makes more.
Get married and have 2.3 kids and a dog.
Buy the nicest house and car one can afford (financing both).
Work for 40+ years to support one’s family.
Retire at age 65.
Enjoy the good life.
Leave your children a nice inheritance when you die.

What’s Wrong With the Traditional Version of the “American Dream”?

Step 3: Get a good job.

Let’s begin to analyze the current status of this step by looking at pay and total compensation. These are, without a doubt, a large part of what would make a job “good.”

When someone is looking for a job and they are told they will make $50,000 a year, what does that really mean?

First, they would need to think about how many hours that job will require. Will it be 40 hours a week? Sixty hours a week? Eighty hours a week?

A Gallup poll found that full-time salaried U.S. workers were, on average, working 49 hours per week. (1) And that’s the average.

It includes many people who are in the latter half of their careers and have found ways to decrease that amount of time, sometimes out of necessity for things like having kids at home. The truth for those who are just entering the workforce is that they will find themselves working more than the average of 49 hours per week.

Companies often expect newer employees to work more because they know the young employees are single with no kids and thus have fewer commitments. Also, new and young employees are more ambitious to make their boss/company happy since most are working their first job and want to succeed. It’s the unfortunate truth.

The same Gallup poll found that 25 percent of the salaried workers were working more than 60 hours per week. My guess is that the vast majority of those people were under 30 years of age.

Many companies entice new hires with high salaries but also expect them to work much more than 40 hours a week. They won’t say this outright, but they will tell you precisely what you have to get done to “be good at your job,” knowing that your workload will require you to put in way more than 40 hours per week.

What would be the hourly pay equivalent if one did take that job with a $50,000 a year salary, and they only worked 40 hours per week and received three weeks of vacation time? That would come out to $25.51 per hour.

$50,000/ [(52 weeks – 3 weeks) x 40 hours]

But if they ended up needing to work 60 hours a week to “be good at their job,” then that comes out to earning $17.01 per hour. Eighty hours a week? That equals $12.76! Maybe you would be better off mowing lawns?

And, if someone is working 60 or 80 hours per week, what things are they giving up that would make life more enjoyable? The most likely items to be cut would be their time with family and friends, as well as their hobbies.

Is there an annual salary that would make giving up time for those items worth it to you? It’s a personal question that will change depending on who you ask.

The sad part is, however, that nobody gets asked that question. Nobody gets offered a job where the employer says, “I will pay you $50,000 a year, but you’ll have to work 60 hours a week, which means you will have less time to spend with your family and friends and on your hobbies. Do you want the job?”

People find themselves in a job that requires a substantial time commitment to “be good at their job,” and then slowly their happiness takes a back seat. It’s hard to put a price on your valuable, non-renewable resource of time. This is one sad part of the American Dream that is not too glamorous.

Related: How to Ask for a Raise (and Get It)

I have a salaried job. I average way more than 40 hours a week, probably around 55. When I do the math, my annual salary doesn’t look near as good as if it were a 40-hour-per-week job. Luckily, I did the math years ago and was OK with the numbers because I love my job, my coworkers, my students, and my school’s culture. Plus, it’s a very fulfilling and rewarding job.

What if your job is not like mine? What if you dislike or even hate your job? Doing something you dislike or hate for 40 to 80 hours a week is devastating to one’s happiness.

There are other undesirable elements to ponder when considering a potential job. The commute is one—it’s wasted time and gas money. The culture of the workplace is another. One of the most common complaints of a job is the people one has to work with, such as an over-demanding boss or coworkers who always gossip. The work environment is a third element. Does spending several hours a day in a cubicle sound enticing to you?

But having a “good job” is not all bad. There can be many obvious positives to a full-time job. If you do like your coworkers, then the social interactions are a positive aspect. Jobs can also provide financial security through paychecks, retirement accounts, stock options, and the like. In addition, many jobs offer paid time off, sick pay, and vacation days. Some even provide an avenue for furthering your education and challenging yourself mentally. Jobs can come with health insurance at a very low cost, too—sometimes it’s free.

The point here is that a “good job” may have downsides, such as stress, overtime, and an unhealthy work environment. But it might also provide upsides like stable income, benefits, and mental stimulation.

Regardless, one thing is for sure: Most people don’t take into consideration all aspects of a job when they decide to accept a position. You need to define what a “good job” is for you, and then make sure that is where you spend your 40 to 80 hours per week.

Step 4: Continue to spend more as one makes more.

“A low-cost lifestyle enables the saver to accumulate cash and income-producing assets faster.” —From Set for Life by Scott Trench

Today, part of the American Dream is to spend everything one makes. Decades of marketing messages have trained us to do this.

We spend everything we make on cool things like a sporty new car, a posh downtown condo with trendy furniture to fill it, stylish new clothes every season, and maybe even a cool toy like a Jet Ski. But then we find ourselves working so much, maybe six days and 60 hours per week, that we don’t have time to enjoy these nice things we bought.

We’re rarely at our downtown condo—other than to sleep—because we’re at work. We only enjoy our new car as we drive to and from our job. We can only use the Jet Ski on the weekends when everyone else is trying to unload their expensive toys at the same boat ramp. It takes over an hour just to get it in the water—all that to jet around an over-crowded lake.

Spending what we make is a necessity to keep up with the Joneses. If we make $50,000 a year, then we spend $50,000 a year. If we make $200,000 a year, we spend $200,000. And if we made $3,000,000 a year, we’d spend every bit of that, too.

We do this without ever thinking of the long-term opportunities lost. If we would only save 10 or 20 percent (or more), we would find ourselves in a much better financial position in just a few years. So much better in fact, that we could eliminate some of those 40-plus years of work that the American Dream requires of us.

“We are spending money we don’t have to buy things we don’t need to impress people we don’t even know.” —Joshua Fields Millburn of The Minimalists

The credit card is much to blame here. Spending has become far too easy and thoughtless. We buy those things we don’t really need, the luxuries that make us look successful, without really thinking through the consequences.

“The rise of [credit cards] makes it far easier to opt for instant gratification, especially with online shopping. Every transaction we make is simply represented as pixels on a screen. We are no longer limited to what we can afford based on what we have already earned–we can now buy based on what we hope to earn in the future! Debt has become the American way, making it hard to see that it is debt that chains us to our jobs [for 40+ years]. It’s debt that keeps us with our noses to the grindstone, making a dying [instead of making a living] to pay off pleasures we’ve long forgotten and luxuries we scarcely have time to enjoy.” —From Your Money or Your Life by Vicki Robin and Joe Dominguez

The new and improved American Dream is about giving up the idea of a brand new car for a used, average car. Giving up the classy downtown condo for living with a couple of roommates in an average part of town. Giving up the trendy furniture for having a slightly worn couch we got from a friend. Giving up the new clothes every season for wearing what we own for three or four years. Giving up the Jet Ski for a used surfboard.

And what do we get in return for those sacrifices? We get to save more and invest more. We get to supercharge our path to financial independence. We understand this is an opportunity to work for fewer years, gaining back several years of freedom.

“Now I will tell thee an unusual truth about men and sons of men. It is this: That what each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary.” —From The Richest Man in Babylon by George S. Clason

So, we must protest! Protest like crazy that we WILL NOT spend all that we earn!

In the next post of the series, we will continue to examine the remaining steps of the American Dream.

Sources

https://news.gallup.com/poll/175286/hour-workweek-actually-longer-seven-hours.aspx

In what ways are you sacrificing now so that you don’t spend everything you earn?

Leave a comment below.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.