Career Speculation Is A Risky Path to Financial Independence
Career Speculation
We all know that when it comes to financial independence, it is better to concentrate more on investment and less on speculation. This path to financial freedom is a good deal more straightforward and much less risky. Few in this community would argue this fact. On the other hand, we not only embrace but encourage rampant career speculation above career investment in our young people. We glorify the get rich quick schemes and the over night internet millionaires. Although easy to find success in these highly podcastable stories, the majority of out of the box business ideas fail. Are we in the FI blogging community (who are mostly engineers, doctors, lawyers, and computer programmers) being intellectually dishonest by encouraging such risky behavior?
Is career speculation the right path?
Definitions
Not all start-ups and new businesses are career speculation. There are many who spent years investing in education and sacrificing to bring their new idea to fruition. These are the people with the advanced degrees, or attended extra training courses, or side hustled along their main hustle for the early years till economic viability.
Career speculation, on the other hand, is jumping into a new venture with little training or knowledge and even less of a back up plan.
The gal who does airbnb on the side while maintaining her accounting day job doesn’t count. Even if she is able to leave her job after a few years when revenue streams build.
I’m talking about the guy who drops his W2 to start an online T-shirt company with no experience in design, no training in internet marketing, and a dream of having fun while working all day.
So why does career speculation usually fail?
Know How
If you listen to many podcasts or financial independence blogs, you are likely to come across stories of people who left the work place and within months were making money on some new hustle or another. Although these successes definitely occur, you usually have to have the know how to know how.
The problem with rampant career speculation, like investment speculation, is it relies on luck and market inefficiencies for success. While you might happen to have the exact right skill at the right time, most career investment unfortunately takes some type of higher education and training.
If you leap before you look too many times without a safety net, you are likely to crash.
Sacrifice
Career speculation relies heavily on luck or even short-term gaming of efficiencies that lead to profits. Be the first on the market to produce a certain product or provide a certain service and you’re bound to make a killing. Go viral. Get a gazillion followers. The idea is to capitalize quickly. Make a surgical strike.
Investment in a career, however, takes long-term sacrifice. Especially at the front end. There is much less glory and many more hours of struggle. These are the proverbial nights and weekends that get you ahead. While much less sexy, they are often the boosts that bring a career into focus and lead to long-term achievement.
Not always fun, but effective
Safety Net
Career speculation often eschews the safety net. There is the idea that when you are young, youth itself can be the safety net. There is always time later to get serious. But this could not be further from the truth. By front loading sacrifice and career, you are compounding wages and experience to pay even greater dividends as you grow older.
If you have dreams of early retirement, those first ten years of making money are very important. The inability to pay off debt and create cash flows at that time of life can be devastating to future financial well-being.
Final Thoughts
While I am a big fan of second generation FI and young people thinking about early retirement in their twenties and teens, I think it is a bad idea to fall prey to rampant career speculation. Although you don’t want to spend your whole life grinding away at a desk, jumping into speculative ventures with little knowledge or training may eventually lead to poverty, not financial independence.
Invest in your career. Speculate with side hustles. Create a safety net so that you can leap before you look and still land on solid ground.
Well said. While your day job may not be all that glamorous it does offer a steady paycheck for you and your family. There is nothing wrong with trying to build a new business, or make money from your passion, but for heaven sake don’t leave your regular gig until you are certain that your new gig can provide for your financial needs.
-Ray
I agree. People drop their regular gig too quickly after spending a lot of time to get there.
Absolutely! For the most part there is no shortcut to success, hard work, spending the time to learn and grinding a little are part of growing in any aspect of life. You are right, we can get swayed by the success stories and jump too fast, but listen to too many horror stories and we won’t jump at all. I’m blessed enough to have found a career where I only had to grind hard for 3 or 4 years and now it’s become fairly routine, however I still stay on top of changes, continue to search out new material and strive to do a great job every day. I have friends who see the result of 4 years of hard work and think man you’ve got it easy (I work part time and travel full time in an RV), but they forget the hard work it took to get here, admittedly that hard work only took a few years.
If you front load the hard work correctly, the time course is much shortened. Compounding is an amazing thing. Then you can go part time as you said.
I couldn’t agree more. One of my goals is to get to a point financially where I feel like I can slowly start a side-hustle and transition to it full-time with no risk. The stories of people leaving their job and then losing everything just don’t get told enough.
I think these stories are definitely out there. It is much more fun to talk about those who made it big. Speculation is speculation. Whether career or investment.
Awesome and thought provoking as always…. I think the problem with the new generation is that we want everything now, and if we don’t get it now, there’s a million people on twitter and Instagram reminding us how much better we could have it….
After all it’s so easy, even a monkey could do it lol. These models of success usually rely heavily of a one or two year track record as proof of concept. Not only is it dangerous, it’s bad to encourage others to follow your barely tested out path.
Cheers!
Yes. Proof of concept is important. There is no easy ride. if you want wealth, you are going to work.
Woah… are people seriously thinking about retiring early in their teens? That’s crazy! That sounds more like wealthy parents and a generous inheritance!
I definitely agree with you. Most people should invest in their career before even thinking about retiring early.
I think the second generation FI group is getting younger and younger.
I waited until I was FI to start my “businesses”. It’s in quotes because they’re not LLC’ed, but might be one day. I needed the safety net.
I think you did it just right in the end. I’m sure you go the LLC route soon with the blog.
All self employed or corporate ownership involves risk and speculation. People take the W2 job to avoid that risk. They off load the risk on their employer who has to come up with enough cash to pay them come hell or high water. The W2 issuer becomes a middle man for risk. As an employee you presume your employer has the chops to market your labor profitably. He assumes all the legal government and corporate overhead while you bitch about what a raw deal your getting but that paycheck magically appears every two weeks along with health care, vacation and so on. Side gigs are simply activities (jobs) which accept the market risk and don’t have the corporate buffer. YOYO If you fail no one to bitch to but yourself.
I have loved working for myself. But in order to do it, I had to pay the price of employment for awhile to learn my chops.
There was a time when I truly believed I could and would become an otherwise retired bison rancher by 30.
What was I missing?
An actual plan or path forward and the work in between a dream and a reality.
It’s important to have a game plan and to execute knowing even a good game plan may be a long, hard ride.
Not sure how you come up with so much great stuff, but keep it coming!
-Mr. Thrifty
Wow, a bison rancher? Agree about the game plan. Even if it is a big audacious one.