IN any new job or business venture, it's more important to focus on the fresh skills and knowledge we gain than the money we earn upfront. In the long run, each of us should aim to steadily increase our income or revenue throughout our prime working decades.
The money we earn from our work is a tangible metric of our perceived value in the workforce or relevant state, national, regional or global economy which we operate in.
But that value in ringgit (or dollars, euros, yen, pounds or whatever currency you favour) constantly changes with dynamic supply and demand market trends.
Only those wise and diligent enough to continually expand their cerebral capital will thrive in a job market or business environment that's morphing at an accelerated pace.
So, as you track your year-on-year earnings, continue learning through books, magazines, webinars, workshops, seminars and conferences. Do so to prepare this year for the anticipated higher paying work you will take on in future years because of your growing effectiveness and efficiency.
KNOWLEDGE AND SKILLS
The late Stephen Covey reframed effectiveness in terms of balancing our ability to obtain the results we want against the vital maintenance of our source of production for those results.
So, if our desired outcome is extracting more and more money from a meritocratic market system, we should proactively invest in our knowledge and skills growth to ensure that we're worth ever more to our employer or customers.
Furthermore, as 19th century British prime minister Benjamin Disraeli explained: "There can be no economy where there's no efficiency."
At first, the simplest way to increase our income is to work longer hours each week. But even if we ramp up our weekly working hours from 40 to say 60, or even 80, we'll quickly hit the upper limit of what our bodies can handle.
That means we need to ratchet up our productivity by growing both our effectiveness and efficiency.
Investing in our own development is how we become more effective. And as Disraeli pointed out, growing an economy — be it national or personal — necessitates raising internal efficiencies. Thankfully, we need not fear harming ourselves in the process.
Academic and industrial psychologist Walter Dill Scott wrote: "It is more than probable that the average man, could, with no injury to his health, increase his efficiency 50 per cent."
WHERE YOU ARE
So, as you mull over ways to steadily increase your market value in the decades ahead, I suggest you carry out this three-step exercise to ascertain where you are today:
Step 1: Figure out your gross annual income, be it RM50,000 or RM150,000 or anything else. Call that A.
Step 2: Calculate the number of hours you work each year. If we assume you take two weeks off each year, then you should work 50 weeks per annum. If you worked 40 hours a week prior to the pandemic, but are now choosing to toil 50 hours a week to maintain your income in this profit-eroding, soul-crushing downturn, that tells us you work 50 x 50 hours, or 2,500 hours a year. Call it B.
Step 3: Your hourly earning rate is A divided by B. So, if your gross annual income is RM100,000 and if you're putting in a ramped-up 2,500 hours of work a year, your current hourly rate must, therefore, be RM40.
Looking to the future, your plan to be paid a rising hourly rate must involve a proactive multi-year uninterrupted programme of personal upskilling.
So, for instance, if you wish to double your annual income in four years while easing up and working 20 per cent fewer hours, that means you hope to earn RM200,000 while working just 2,000 hours a year.
Simple arithmetic then tells us that to achieve your ambitious goal, you must raise your hourly rate from RM40 an hour in 2021, to RM (200,000 divided by 2,000) or RM100 in 2025. Is that possible?
You must answer that yourself.
GOLDEN RETIREMENT
But looking around us to assess what different individuals are now being paid for various jobs and business roles, you should have no trouble realising many people earn RM20,000, some RM200,000, and a few RM2 million a year.
For argument's sake, if they're all earning their respective total annual incomes by putting in 2,000 hours a year, then their respective per hour values (in admittedly different markets) are RM10, RM100 and RM1,000.
Almost all of us start off earning a pittance. Then, over the decades as we accrue experience, knowledge and skills, our value in our chosen marketplace should rise, ideally, until we retire.
The philosopher Immanuel Kant wrote: "Man must be disciplined, for he is by nature raw and wild." Thankfully, Kant didn't preclude that discipline welling up from within.
So, if we possess sufficient mettle in our soul to exercise self-discipline, we'll do whatever is necessary for our long-term success.
We owe it to ourselves, throughout our prime working years, to widen the gap between what we produce and what we consume — which is readily tracked by measuring what we earn and what we spend.
Then, if we save and invest our monthly cash flow surpluses wisely, we can set ourselves up for a golden season of retirement. And, ultimately, isn't that the dream?
© 2021 Rajen Devadason
Rajen Devadason, CFP, is a Licensed Financial Planner, professional speaker and author. Read his free articles at www.FreeCoolArticles.com; he may be connected with on LinkedIn at www.linkedin.com/in/rajendevadason, or via rajen@RajenDevadason.com. You may also follow him on Twitter @Rajen Devadason and on Clubhouse (Rajen Devadason).