Tuesday, January 10, 2017

What Do You Have to Show for Your Work?

A question that I think people should ask themselves, particularly early in their working careers is
“What do you have to show from all the money you’ve earned so far?”
It’s not too hard to add up all the money you’ve been paid over the months or years. For anyone who has worked for a least a few years, the total will look impressive. So, where is it? Obviously, we need to spend some of it to for food, clothing, and other necessities, and there’s nothing wrong with a few indulgences, but surely there is something left of all that money. Or maybe not.

One good answer to this question is savings. If you can say, “I’ve been saving for 5 years now, I’ve got no debts, and I have a portfolio worth nearly $50,000,” I’d say you’re in good shape.

Another good answer is equity in your home. But don’t mistake mortgage payments for saving. The interest is gone. Principal is what matters. And if you’ve re-advanced your mortgage or taken on a line of credit for a new kitchen, you may not have anything to show for your years of collecting pay cheques.

For young people working their way through school, a possible good answer is a degree. If working part time while going to school meant you didn’t need student loans (or the work allowed you to borrow less), you can say that you have a degree to show for your efforts.

A pension is a good answer. I think it makes sense to build at least a modest amount of savings in addition to a pension, but pensions are certainly valuable. Some people build debt knowing that they’ll be able to make debt payments with future pension income. This is almost always a mistake. Pensions are great, but don’t pre-spend them.

A poor answer is stuff. If you’ve got an iPhone and a car with little residual value, you don’t have much. Stuff rarely brings happiness for very long. It’s sad to say that all you have to show for years of hard work is a bunch of stuff.

Pointing to experiences is not a good answer to the question of what you have to show for your years of pay. I’m a fan of spending money on experiences rather than stuff, but experiences won’t put food on the table. It’s possible to have great experiences while still saving some money. You should have something more tangible to show for your work.

A possible emotional answer is family. Children certainly are expensive. But using them as an excuse for not saving any money won’t help much in the future when lack of savings limits your family’s choices. It’s best to find a way to have a family and save some of your income. Some people genuinely have trouble making ends meet for their families because of very low incomes. But more often when I hear such complaints, people have just built up lifestyles for their families that are too expensive.

Advertisers like to tell us that we should buy what they’re selling because “you deserve it.” Well, I think what you really deserve is to have something tangible to show for your years of work. But that’s not going to happen unless you decide to make it happen. Instead of focusing on what you can buy with your income, focus on what you have left to show for your years of hard work.


  1. After a while the term "... you deserve it..." became more derogatory to me. If someone I don't know tells me I "deserve something" I always feel they are "stickin' it to me" (to quote George Costanza).

    I am lucky I have great memories from work (worthless) and a pension (the only thing worthwhile).

    1. @Big Cajun Man: I agree that "you deserve it" is a red flag for me. My guess is that it only really works on compulsive shoppers.

      I agree that your memories are worthless from a financial point of view (but not an emotional one). You definitely ended up with a valuable pension.

  2. "Instead of focusing on what you can buy with your income, focus on what you have left to show for your years of hard work."

    If approaching the question solely from a financial perspective, then yes, this is the answer. However, if that's the answer, then one should simply take the highest paying job they can get and work it for the longest amount of time they can.

    Fortunately, and hopefully, for most, work is not life and vice versa. But I guess in modern times it's easier to find meaning in a paycheque than to find a meaningful career.

    1. @SST: I'm aiming this post at younger people who live hand-to-mouth and have nothing left each month. It's always possible to take anything too far, including saving money.

  3. And when you finally kick the bucket, your kids will LOVE you for all those savings you left them!

    1. Better yet, give them a nice inheritance while you're still alive to see them benefit from it.

    2. Better yet, let your kids take out life insurance on you so you can live on the money you worked for instead of giving it to those who didn't work for it. They will collect when the time comes.

      Not only that, but if you give away a "living inheritance", you have zero control over what the recipients do with the money. They might use it in non-beneficial ways which cause you mental strife instead of happiness.

    3. @kaunha: I know that one was for me. I think I have enough now, but my wife is less sure. The longer I work now, the more my kids will get.

      @Anonymous: I like that idea. If I'm going to give my kids money, I'd rather do it while I'm alive.

      @SST: Buying life insurance is actually a money-loser in most cases. I would try to discourage my sons from wasting money on life insurance on me. Life insurance is most useful for protecting against the early death of a bread-winner.

    4. Or you could buy yourself a nice single premium life annuity and ensure that you will not only die broke, but also never become a financial burden on your children.😊

    5. @Garth: Unfortunately, annuity returns are based on bond yields. So, all the benefit you get from mortality credits get seriously eroded by fees and low bond yields.