Practicing law is a strange business. Depending on your area of expertise, it can often feel that you’re just as focused on making money as assisting your clients navigate the legal system. I remember back in law school, the main goal was to secure a well-paying articling position that had a decent hire-back rate. For most, the actual details of the position (and field) was secondary.
Once we managed to secure articling, questions about compensation were the first to come up in conversations. “Congratulations! What’s the salary? Think you can get hired back? What's the usual starting salary of a first year associate?” We hadn’t even graduated yet, let alone started work! The compensation and potential for compensation was used as a the main indicator of "success." Yes, I am going places.
Now two years and a half years later, it’s been an interesting experiment to see where my fellow colleagues have ended up - and whether their jobs had delivered the level of happiness they expected.
Salary, in my opinion, is a poor benchmark of… everything. Here are the biggest misconceptions when it comes to utilizing salary as a predictor of wealth.
Your Gross Pay Is Your Net Pay
A large salary sounds impressive, but it’s not like you’re taking that gross figure home. What's the actual amount that finds its way into your pocket? Deductions are important. Once you factor in taxes, employer pension/retirement contributions, health insurance, union dues, and WSIB premiums, it’s a lot less than you actually think.
Your Savings are Skyrocketing
If you’re taking home the big bucks but live a high-consumption lifestyle, your savings amount may be equivalent to someone earning half as much as you. It’s all relative. That’s why you see personal finance nerds insisting on individuals saving 18-25% of your net earnings rather than a specific dollar figure, because everyone’s lifestyle is different. By focusing on percentage, you're more accurately saving for a retirement lifestyle similar to the one you currently have.
You Have a Powerful and Fulfilling Job
You may hear someone mention their fancy job title, but ask them what they actually do everyday. You’ll quickly realize that they still have to follow the chain of command and report to someone else. They may be an important cog in a big machine, but in the end they’re still just a cog. Traditional companies reward for loyalty, not necessarily ingenuity. You are fundamentally getting rewarded by doing what they want, not necessarily what is best. It’s not an egalitarian relationship. This organizational hierarchy is getting somewhat disrupted by emerging companies such as Shopify, which redefines archaic work culture and emphasizes personal development. For example, Shopify doesn't necessarily provide workers with a defined job description, but rather provides the freedom and tools for workers to define their own roles that play to their strengths. This not only empowers workers to develop self-initiative, but reinforces the notion that every worker plays a pivotal role in defining the company. Unfortunately, this isn’t yet the norm in most companies.
What is truly a powerful job? Working for yourself. Being an entrepreneur means you define your company’s mission, targets, branding and employee culture. Success - and failure - rest on you. No one else. You have total control.
Speaking from personal experience, lawyers are great with their words but not with their money. I know plenty of lawyers who buy their lunch every. single. day. My heart hurts just thinking about that. Not to mention, “powerful” lawyers often have to wine-and-dine their top clients by entertaining them at upscale restaurants, sporting events and through other social activities. Depending on what area you practice, it’s seen as the cost of business. And that cost involves the appearance of luxury.
Add in the "work hard, play hard" mentality, and you find lots of high earners seeking happiness through expensive cars, clothes, houses and outings. I can only rationalize this behaviour as that the actual job is so unfulfilling that happiness needs to be purchased instead. What many don't realize is that this only pushes their retirement farther away, should they want a comparable standard of living.
Salary is not a predictor of wealth. Ask anyone who has read The Millionaire Next Door. Some of the millionaires in the U.S. are hidden in plain sight. The owner of a small janitorial business who lives across the street or the married couple, long-time teachers at the same high school, who live next door may be richer than you.
I leave you with one simple message: Don't take a high-paying job that makes you miserable. As I hopefully have demonstrated, a high-salary means nothing and will only impress those who are similarly susceptible to consumerism. Your salary will not impress people who find contentment through purpose and freedom. So instead, take a job that fulfills you, consider more about what the position entails rather than the compensation that is offered. Pursue jobs that encourage your personal development. As you master your skills, the opportunities - and corresponding compensation - will come.