Disclaimer: I am not writing this piece to discourage people from being employees, but rather to provide guidelines on putting a job in perspective in the grand scheme of long-term financial freedom and purpose.
Working as an employee can be put in perspective for two different categories of people:
Your job is a bottomless pit, but you cannot break the cycle, therefore enslaving yourself to a government that considers you as an additional burden to take care of and provide benefits for (thanks to your recurrent spending towards retirement funds, pension funds, tax etc.)
An employee in this category is a government chore. He requires resource planning & budgeting, spanning over a lifetime until their last breath is exploited before retirement (if you are lucky to live in a country with a decent Global Health Index to enjoy the benefits).
A temporary tedious trajectory you have to undertake as part of an overall financial plan. I further break down this category into two subcategories:
1) The Free spirits (euphemism for scr** you money): These want to remain in control to break the monthly salary dependence when it’s time to. They keep their job on the side of parallel income-generating sources, to leverage it as a financial cushion in the face of adverse events.
2) The 1 Billion dollar problem solvers: these are the visionaries and mission driven people. They want to break free of the job/salary- anxiety cycle to improve the state of the world and work on global issues that matter the most. This is a path that does not always garantee great returns but provides a significant moral and noble purpose for whoever wishes to undertake it (which, in my opinion, should be the major goal for seeking financial freedom, not just for the sake of it).
Financial Literacy — A Market of Lemons
So where does the problem lie? In financial literacy. I call it a Market for Lemons (from a paper written by Economist George Akerlof — for which he wins the Nobel Prize in 2001), because simply: financial literacy is an asymetrical information problem. I come across a number of people everyday, whose concern 24/7 is their ability to get a job or keep their job to pay the bills, without knowing that there is a way out for all economic classes, although at various degrees of difficulty and time span.
We need to do some basic unlearning, relearning to start “minding our own business”, in Robert T. Kiyosaki’s words from Rich Dad, Poor Dad.
Your skills, job, and company are not your business. They are your profession.
So, how do you mind your own business?
1. Scalable Business
You go to school (or self-teach) to learn high income skills, save cash 20%+ to put it in your (1) scalable business, (2) investments, hopefully towards a bigger purposeful goal. The point here is, you were already already lucky enough to get or access education, land a job, reach a decent quality of life although through a mutually dependent agreement (aka job) — it is time to become an independent agent of change and create opportunity for others in return, while benefiting from the resulting advantages of a government partner status.
The Triangle Strategy
If you have to necessarily go through a job phase in a grand scheme of financial freedom or driven purpose, the framework to adopt is what I call the Triangle Strategy:
1. High income skills
2. Scalable Business
3. High Return Investments
The goal is to use savings from (1) to mind your own business in (2) and (3).
How do you do (2) and (3)?
By using the tools of Capitalism: Always incorporate, take advantage of tax breaks, and expense everything.
Alright, so what’s the link with governments in all this?
Category 1 looks for jobs and employment.
Category 2 creates legal structures to become government partners. That’s why they get tax deductions.
Think about it. The government taxes Category 1 more because they don’t want you to do that. The government wants you to do business, create economic value, create jobs, or provide housing instead of holding an employment status. And they’ll give you incentives to do that. That’s why you get tax breaks for investing in real estate or building businesses or foundations.
So always deal in corporations, never personally. Be a government partner.
But if you have to be an employee to start off your career, do it. But do that with the Triangle Strategy in mind. Do what you have to do to get to your goals. Don’t drop out of everything because you suddenly feel motivated and empowered to challenge the system, or because you’ve read how all successful entrepreneurs dropped out of school to build the next unicorn.
No, they didn’t. For the less privileged ones, they started in parallel until they proved market traction. For the more privileged ones, they could afford the risks because the risk hedging part came from a shock-absorbing family cushion.
Because remember: you’ve still got to pay the bills before you take over the world.