How to Make Money


What single career issue gives you the greatest anxiety? If you’re at the early stage of your career and thinking about what kind of life you want to live, the answer is probably money.

There is a meaningful disparity about the importance of money between aspiring young professionals and senior business leaders. For those already at the top of the heap, money is not at all their primary motivator, nor is it as important as the meaning of their work or the impact they can have. But if you’re at an earlier stage or trying to make ends meet, you long for the day when money doesn’t matter, or matter nearly as much. In our research about how 15 different areas influence their happiness, 4 out of 5 young professionals report that how much money they are making is an “extremely important” factor (compared to 3 out of 5 top business leaders saying that money is “extremely important”).

While there are a lot of variations as to how young professionals (and everyone for that matter) think about money, if you are like most, you will generally fall into two groups: A) You consider making money your primary objective, as a means to the end of allowing you to live the life you want; or B) You think of making money as an important component and consideration in support of the work you want to do. I am not suggesting that either variation is right or wrong, good or bad. Just different.

The easiest path to making a lot of money is to choose a field that pays well. This sounds rather obvious. But it is also all too easy to overlook in your efforts to find a job and do well. Warren Buffet has famously said that it is much better to be ordinary in a great business than to be great in a mediocre business (he was referring to how he makes his investment decisions but the principle holds just as well when thinking about making money).

Ben Stein, a columnist for The New York Times, wrote a memorable article a number of years ago offering the advice to college freshmen that he wished he had received himself when he entered Columbia University in the early 1960s. “Over the years, I have seen it. Smart men and women in finance and corporate law always grow rich, or at least well-to-do. Incredibly smart men and women in short-story writing or anthropology or acting rarely do.” The point is to go into whatever you do knowing that certain sectors pay much better than others.

Two words of caution if you are ready to declare that you want to go headlong into one of the high-paying sectors. First, you may be absolutely miserable because of the effects on your life outside of your job as well as the environment in which you work. Your job can be pressurized and grueling and populated by people you find distasteful. Secondly, things change. What may seem like a fail-safe profession today could be disrupted by technology or outsourcing, putting you at risk. A three-quarter-of-a-million dollar a year mortgage-backed derivatives trader who has spent 10 years perfecting the arbitrage of yield spreads may find his skills less than transferable if the mortgage market craters or computerized program trading renders his techniques obsolete.

What if you are in the B) camp, where making money is an important component and consideration in support of the work you want to do? How should you think about money?

Your compensation will be dictated to a large degree by the prevailing pay practices in your field. You may become the exception and make a lot of money in a field that generally does not pay well. Or you may fall into an unexpected inheritance or win the lottery. Assuming these are not the case, there are two other principal ways to build financial independence. Develop the habit of thrift and with your savings understand how to invest early, wisely, and consistently. If you start saving and investing when you are young, it is a low risk, high return strategy, thanks to the power of compound interest and the long-term gains of the stock market. Also, any intelligent person knows that it’s hard to build wealth if you spend more than you earn. Similarly, most people know that a smart investing strategy is to build a highly diversified portfolio of assets and hold them for a long time. Mutual funds, index funds, and other managed pools of assets are generally a better investing strategy than trying to get in on the next Alibaba IPO or through individual stock selection.

James Citrin

By James Citrin


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