Over the years I’ve become incredibly focused on achieving financial independence (FI). Simply put, FI is the point at which one amasses a personal net worth large enough to support your lifestyle through investment income. Essentially, it’s the point you can retire. There are a ton of great communities, blogs and websites out there dedicated to the topic. I’ve found however, they mostly focus on the personal finance aspects of the pursuit: budgeting, investing and generating incremental income through side hustles. Those are all important tools in the wealth building toolbox, but they don’t offer much in the way of optimizing the biggest piece of almost everyone’s finances – salaries. By huge margins the biggest piece of nearly everybody’s financial puzzle is labor-based income.

Income Over Investment

Lets look at two young professionals making a yearly salary of $50,000. Professional A, lets call him Saving Sid, focuses his efforts on cost-cutting and intelligent investing. Sid is able to cut $10K/year from his spending and invests the money wisely over the long term, earning on average 8% a year. He never really outpaces inflation with his yearly cost of living raise but, thanks to the magic of compounding interest, after 30 years Sid admirably added $1.2MM to his retirement portfolio with that $10K/year investment. Nice job Sid.

Now lets take Professional B, lets call her Ambitious Anna. Anna focuses her effort on driving her yearly earnings higher and higher every year through aggressive negotiation, career management and organizational savvy. Every 5 years Anna is able to increase her real income by $25,000/year. So, in the first 5 years after her pay bump she earns an incremental $125K, in the 5 years subsequent she earns an extra $250K, 5 years later $375K, then $500K, and in the final 5 years of her career she earns an extra $625K. Let’s say Anna isn’t very good at managing her money, and simply stows that extra cash away in a checking account and blows $175K on a luxury sports car during her mid-life crisis. Even with those abysmal personal finance decisions Anna still added $1.7MM to her retirement portfolio by the end of her career – $500,000 more than Sid! With even a modicum of smart investment decisions Anna would easily have built millions of dollars of incremental wealth by focusing on maximizing her earnings.

The people who claim the secret to wealth building is cutting $4 lattes out of your life are lying to you.

To be clear, I’m not suggesting you ignore the important work of budgeting and building a diversified investment portfolio. It’s just the majority of your efforts should be focused on the simple act of making more money. And the smartest way to do that is by climbing the corporate ladder.

Enterprise Over Entrepreneurism

I’ll admit, becoming an entrepreneur is a sexy idea. You come up with this brilliant insight into how to make the world a better place, build a knock-your-socks off prototype and successfully pitch an initial round of funding for $2MM. You nail the product/market fit and grow like a weed. Subsequent rounds of funding are valuing the company at over $500MM dollars and your mug is on the cover of Fortune Magazine. Your business model hits scale and the company turns profitable immediately joining ranks among the unicorns (private companies worth over a billion dollars). After growing the company for 5 years you sell to Megacorp for the astronomical sum of $6.3B and personally pocket $1.5B dollars. You live the rest of your days immersed in third world philanthropy and yacht racing.

Incredible, right? Before you run out and make a pitch deck it’s worth considering the chances of this happening to you: 0.008%.  Only 0.62% of new businesses get outside financing and of those only 1.28% become unicorns. In other words, this vision is a lottery-ticket pipe dream.

“But Hack”, you say, “I’m not trying to shoot the moon with my business, I’m not even looking for outside funding – I’ll just bootstrap my way to building a nice, successful lifestyle business.” Again, a reality check here is useful. Chances are good you’ll survive your first year in business (80% do), and you’ve got a 50/50 coin flip to survive through 5 years but by your 10th year of operation you only have a 30% to still be in business. So chances are good that you’ll have spent multiple years of your life under-earning (or even losing money) building a business that no longer exists. Now your career is off track and hiring managers at big companies won’t know what to do with you. And should you be among the lucky few to succeed, you’re not exactly swimming in it – yearly income of small business owners ranges from $31K to $105K. All this for longer hours and more stress.

For me, that’s a hard pass.

Look, there is absolutely no way you can make a billion dollars working for the man. Hell, there probably is no way you can make $50MM off a paycheck. But for most people building dynastic wealth isn’t the goal, building more-than-comfortable personal wealth is. And I am 100% convinced the surest way to do that is through a successful career in the corporate world. It isn’t sexy, it’s smart.

If you have a burning desire to start a business and just nothing else will scratch that itch within you, Godspeed my friend. But for most people founding or joining an early stage startup is taking on way too much risk for very little chance of reward. It’s been glamorized in our culture almost as much as corporate work has been belittled, but I’d rather be sipping Mai Tai’s on the beach using my paid time off than struggling just to get by working 60+ hours a week.

The Ideal Career Path

One of the themes in this blog is self-reflection; taking an honest assessment of yourself to measure where you stand and where you may be falling short. It’s probably the single greatest tactic in developing a growth mindset, a disposition that is absolutely critical to personal and career success. Those with a growth mindset understand that intelligence, ability and effort are not fixed. They are hungry to learn new skills, lean into challenges, bounce back from failure and find inspiration in the success of others. Critically, it imbues the deeper sense of confidence needed to manage a career like Ambitious Anna – a satisfying series of increases in authority and income.

I’ve often found people don’t grow in their careers because they aren’t sure what an ideal career path looks like or simply don’t have the confidence to actively manage their career. So, what does a growth mindset career path look like? Something like this:

  • Years 0-5 (entry level / front line manager)
    • Salaries depend on industry/region but range from $25K-$50K
    • Representative titles: Specialist, Coordinator, Technician, Team Lead
    • Should focus be looking for promotions every 2-3 years with pay bumps in between 20% and 30%
  • Year 6-10 (middle management)
    • Salaries depend on industry/region bur range from $75K-$150K
    • Representative titles: Supervisor, Manager, Sr. Manager, Head of,
    • Should still be looking at promotions every 2-3 years but more aggressively courting larger pay bumps in between 25% and 60% (you should expect a large change in compensation structure between this level and the next; this is your biggest/best chance and meaningful increases in salary)
  • Years 10-15 (junior executive)
    • Salaries depend on industry/region but range from $150K – $350K
    • Representative titles: Director, Associate Vice President, Vice President
    • You’re getting into rarefied air and making the next jump will be really hard; stick here up to 5 years and target more than just pay increases with new opportunities (equity, flex time, contract employment with termination clauses, executive benefits, etc.)
  • Years 15-20 (senior executive)
    • Salaries start to dip into the extreme here depending on industry/region but range from $4ooK-$750K
    • Representative titles: Senior Vice President, Executive Vice President, General Manager
  • Years 20+ (officer)
    • You are at the top of the food chain, reporting to the CEO or board of directors; salaries here are primarily driven by company size and performance ranging from $500K to tens of millions of dollars
    • Representative titles: Chief ____ Officer, President, Principal

Don’t worry if your career hasn’t followed this timetable, most don’t and it’s never too late to renew focus. Plus, I’ve got a few tricks that will help you leapfrog a peg or two and get back on track. I am a firm believer that anyone can retire comfortably with a net worth of millions of dollars after a prosperous career in corporate America. All it takes is a steady stream of promotions and pay raises.

I will teach you how to get them.