Week 5: Grow Income, Tactic 2: Power Up With A Promotion

What can you do this week?

The below steps from this article provides a starting place when working towards a promotion you can begin working this week.

• Prepare

• Track Your Accomplishments

• Outline Impact

• Explain Why Now Is The Right Time

This wouldn’t be a financial newsletter without also emphasizing you need to be very clear on what you want. More responsibility and compensation sure but what’s going to help you build more wealth?

• Equity compensation - ESPP, ESOP, RSU, ISO, NQSO, are vehicles that if offered at work you should learn more about.

• Deferred compensation - Lovely income streams that build during your high income years (so you don’t get taxed more now).

• Bonus - These come in many forms including cash, life insurance, stock, etc. and can be a larger portion of compensation than salary for some workers.

• Partnership - Ownership in the company you work for can change the trajectory of your long term financial picture in a beautiful way. These arrangements are not all created equal however.

• Sabbatical - This can be time for deep work. Many side-projects and new ventures have been launched from sabbaticals.

• Pension - Sometimes additional monthly benefit for a defined benefit plan, sometimes a lump sum payable. Pensions are rare these days but not dead.

Where are you headed?

There are many ways to grow income so you can accumulate wealth. The lowest risk way for you to increase your opportunity to save more and build wealth is often doing the work you already do.

A promotion is a change in title, not necessarily an increase in compensation so be very clear what you’re working towards. To see what a raise can do for your wealth building potential look here.

• Employment provides reliability of income. Tactics to grow income might include working overtime, taking on additional responsibilities at work to get a raise or promotion, or explore competitor roles in your industry.

• Self-employment or freelance work can help you monetize excess time or talents outside what you do for work. Income will likely be less reliable plus time and/or investment maybe required.

• Investment is not referring to stocks and bonds but becoming an investor in assets like real estate or becoming an owner in a private company. This is risk to invested capital but potential loss is limited to your original investment.

• Business is referring to starting a business, buying a franchise, hiring employees, taking on debt, using personal savings, etc. Greater potential for wealth here as well as risk that could sink your personal finances too.

A Promotion May Not Be What You Want

• You may truly feel a burning desire to do more, that is outside your job now. 

• Saying yes to something can often mean saying no to something else.

• More responsibility at work, if you don’t love doing that work, may pay you more money but could mean more meetings, trade-offs of time with family, your community, your health, your hobbies, or pursuit of your next step.

• It’s harder to find your dream job, create or launch something you really want once you’ve increased your commitment to something you don’t.

• Do you like and believe in your workplace? Not just the mission and your leaders but if you were a long term investor, would you invest your own money substantially in this enterprise?

• What’s your big why in getting promoted? If it’s purely monetary and you know exactly what you’re going to receive and have agreement on next steps with your leader, awesome.

• If you’re still looking for purpose in your work and haven’t found it where you are, not awesome.

• If you’re not seeing a clear path for your long term career after this move, also not awesome.

Is Your Job a Business? Sorta

In his book, Career Asset Management: Getting Ahead, Staying Ahead and Using Your Head to Maximize Your Career Value  Michael Haubrich dives into this concept and makes it part of his financial planning work done with clients.

“Many people think of their career in the context of immediate income. But you need to pull back the lens and look at it as a lifecycle career asset — not just a paycheck in the present, but its future paycheck and how to optimize it so the way you work is sustainable and you don’t burn yourself out.”

Haubrich uses a triple net lease vs. short term lease real estate metaphor to explain how the employment contract has changed over time.

Ways to managed your career like an asset include the following and so much more:

• Building a personal brand is essential for your entire career, not just your current workplace.

• Set growth-focused goals. What are you going to do to improve your proficiency or level of excellence in your work this year?

• Seek skills and certifications required for the work and roles you want, even if your employer won’t support or pay for (do your own cost benefit analysis first!).

• The return on your investment in a new skill can easily surpass what your can earn in the capital markets as an investor.

  

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