[ I have submitted a personal finance essay and right now, I am still canvassing for votes here. Voting will only end on 16th September. I will be writing a set of three essays to elaborate on the ideas presented in my essay in the hopes that I can get more hopes and hopefully win something for this competition. ]
Figuring out how to earn your money is most critical component of personal finance and very possibly something which even the best financial advisors would be unqualified to advice on. If you can manage your career and earnings well enough, more than half the battle for Financial Independence can be won. In Singapore, this is compounded even further by our low tax regime which allows most Singapore workers to retain as much money as they can from their labour.
Unfortunately, career management is the hardest and most complex component in personal finance because it taps on your ability to learn, adapt and play company politics. Your financial advisor will also not have a clue on how you should plan for finances for the occasional 1 or 2 years when you will be searching for a new job in your 40s.
Here are some points to note when considering your career :
a) You will always be better off with better educational qualifications
Companies determine your pay scale by looking at your educational qualifications.
A local graduate draws on average $3,300 as starting pay and has a fairly good increment to look forward to. A local private university graduate draws $2,700 but pays more to get that degree. A fresh polytechnic graduate draws $2,100 but gets to start work at a younger age.
A lot of people cannot accept this fundamental truth.
They keep reminding themselves that Bill Gates dropped out from Harvard.
They should sell fishballs.
b) Extroverts always have an edge in their careers
There is a lot of "hope literature" which tells you that academics may not matter in some jobs, but if you look at success stories beyond academic qualifications, it always boils down to a job with an unlimited upside in sales. This gives the extrovert salesman a huge advantage over the introvert herbivore.
If you are great in sales, it is possibly the easiest job in the world but if you suck at it, life can be a living nightmare.
The situation is changing for introverts who can crunch a lot of numbers and write fantastic code, but the transformation of our economy is currently incomplete, if you don't get along with people, a career in sales is not for you.
c) You can get obsolete holding onto a job
I would say that a solid engineering degree has a shelf life of at most 10 years, after which you need to rely on your working experience to remain relevant. Focusing exclusively on the job without thinking about industrial trends is the reason why so many engineers are driving Uber cars today. MNCs are also notorious for keeping their best R&D projects in North America. So Singapore staff will only get to patch and maintain systems.
Because of massive technological disruption, you can suddenly become obsolete overnight and if you work for an SME that cannot afford to retrain you, its time to kiss your earnings goodbye.
d) Heroically working for a startup or SME generally does not pay off
Over 15 years ago, I had a seminar with Ellen Lee who eventually became an MP. I remember arguing in those days that a good graduate will never consider an SME as a place to build his career because MNCs just look better on a person's resume and provide projects on a larger scale to work on. I was openly elitist because I represented my classmates and had to channel that indifference. My NTU counterpart, who was a really stupid guy who on hindsight should not be allowed to represent a great institution like NTU, argued aggressively for SMEs and said that he wants to "Pao Kao Liao". Then he let slipped that he wants to work hard so that he can join an MNC later (maybe he could end up becoming my subordinate later in life).
Now I am at the age where folks of my generation can sit down and compare notes.
Readers can judge as to how well these SME and startup guys fare on average compared to the MNC or government guys. Just don't tell me about the rare cases where someone lucks out and has a multi-million dollar exit in Blk 71, that's an exception and not the norm.
e) So you have to think like a start-up executive, but work for MNC, government agency or a bank
The only solution is to first hitch onto a stable,well-paying job which allows you to save as much money as reasonable possible at an earlier stage of your life so that you can compound your wealth. This means going after all the well-known names in the industry or the government agencies.
But these jobs also have the effect of lulling you into a sense of complacency. So many of us in MNCs in those days hoped to worked for our companies for life. But over the years we got outsourced, retrenched and restructured anyway because MNCs also like to preserve a youthful culture can be very brutal to mid-career executives.
So you have to think very lean like a start-up executive. Keep learning about industrial trends and remain curious about new technologies and how they can potentially turn your comfy MNC life up side down.
But what does this all mean for earning your money ?
Play a tight game, go where the money is and don't be caught up with any ideology which is anti-elitist or political in nature. If you have spare time and energy to create more streams of income like opening a e-portal or writing a book, do it aggressively if it does not violate your HR policy.