Your Career is a Path to Financial Security
In the personal finance world, the focus is often on budgeting: mindfully controlling and cutting expenses to gain financial security. This is good, but it is only half of the equation.
What’s the other half? Growing your income through growing your career.
Growing your income is just as important as watching your spending. It’s a vital piece of your financial well-being.
Here are two ways to think about the importance of earning additional income and how to get there.
1. Even $1 More Per Hour Makes a Difference
A person working full time, 40 hours per week, works approximately 2,000 hours per year.
- Each additional $1 per hour of wage equals $2,000 more income per year.
- Increase the hourly wage by $5 per hour, and you’ll have an additional $10,000 of income in the year.
2. You Need a Growing Income to Outpace Inflation
In the past couple of years, we’ve all seen dramatic increases in the cost of daily essentials, such as food, and big-ticket items, such as homes and cars.
According to the United States Bureau of Labor Statistics, “the Consumer Price Index for All Urban Consumers increased 4% from May 2022 to May 2023.” However, “Consumer prices for food rose 6.7% for the year ended May 2023.”
Inflation means you lose purchasing power as items get more expensive. Put another way, if your income growth does not keep up with inflation, you can afford less this year than last year.
To stay even with or, even better, get ahead of rising costs, you’ll need to build a career that will increase your income from year to year—and often, this means seeking new opportunities, increased responsibilities, and promotions.
Focus on Your Career Trajectory to Grow Your Income
Trajectory means the direction you’re heading and will continue to head. Imagine an airplane taking off. It has an upward trajectory. It climbs higher and higher in altitude until it reaches its cruising altitude—high above the ground where it started.
Your career and income should have an upward trajectory, too. Just as a plane takes off from the ground, your income may start low. But as you build your career, look for new opportunities at your current or another employer, expand your training and knowledge, and grow in work responsibilities, and your income should grow and grow.
Eventually, like an airplane, the goal is to reach a “cruising” income level, far above the starting income and enough to build financial security, and in the future, wealth.
The additional income that comes from building your career is noteworthy. It should be said that there are also non-monetary reasons for having an upward career trajectory. There can be great personal satisfaction when you build a career using your unique skills, talents, abilities, and personality. That in itself is rewarding.