When people think of being an accountant (me) or a lawyer (Mrs YFG) people think of the end result: the identity, the ego or the income. That social status.
What they don’t often consider is the true cost of obtaining and, crucially, maintaining, that lifestyle.
There are two things which hold many people back: sunk costs, and lifestyle creep.
Training is expensive. First your university fees (in the UK these are currently £9,000 per year plus living costs). Take three years, or four, or five if you do a masters degree. In uni if you are lucky you will sign up for an internship ,or for lawyers, a training contract, which is your golden ticket to qualification as a solicitor.
If you’re not lucky, or you decide to self-fund then your vocational course will cost you between £10,000 – £20,000. That’s without a guaranteed job at the end.
If you do get a training then you will be paid to train for several years. Depending which firm you go to, the salary varies wildly.
Once you actually do the training and qualify as a solicitor, you still haven’t got the job at the end, you have to apply to stay at your firm or move elsewhere. Most accountants who start as auditors leave to find a job that isn’t soul-crushingly dull.
That’s when the real work, and the real pay, starts…
However, more money = more things you can afford. Most of Mrs YFG’s colleagues and friends have, naturally, increased expenses in line with their income. Promotion means new house, more salary bigger car, and rewarding yourself for all that hard work. After the tax and the frills, the pay-rise has all gone. You’re no closer to freedom, you’re trapped in a hamster wheel.
And so it goes on. Kids, houses, holidays, cars, nannies, private school….lifestyle inflates to meet salary so that salary becomes essential to leading your life. You need to work to afford the nanny you pay so that you can go to work (!?!).
Mrs YFG has never understood this and so she’s always been understanding of my FI obsession. But changing lifetime habits is hard. After about five years she realised that these things didn’t make her happier, or make her job any more bearable. Buying items didn’t make her more content or satisfied with life. Rewarding herself with a bulk purchase for surviving another week of work didn’t fix the problem- it just made sure she still needed to keep working to self-medicate with things.
The hidden side of lifestyle creep
The hamster wheel means that you lose track of why you do what you do. Earning more money, or just simply working becomes the means and the end.
Mrs YFG is three years into the real work, and she’s already struggling to keep happy. She works long hours with unreasonable demands and the job is tiring. Whilst the job can be enjoyable in itself, it’s not exactly what she wants to do forever. She’s worked hard and trained for six years to get to a position where she can say she is a solicitor. That social status, the identity and the ego traps you. She’s funnelled her energy and life into one profession where she thought she could go the distance, and now has realised that she doesn’t want to finish the race.
When I started to get more senior I was starting to deal with more middle-management, politics and bureaucracy – in other words, un-fun stuff. I was spending more time doing these energy-wasting things than doing my real job. So I said screw it and left.
Over the past couple of years Mrs YFG has come to realise that what she really wants is freedom. It’s got real and she has seriously committed to the FI lifestyle after seeing how happy I have been after I left work. But now she has to effectively make up for lifestyle creep over the past five or so years.
But becoming a professional is the best thing you can do…
So I’ve said how costly being a professional is, but getting a profession is without doubt the safest way to become financially independent. That’s because getting a profession is like working your way into an exclusive club. You’ve got to spend a lot of time, money and effort to get in: through training, bending the knee to superiors and working hard (just like having to queue for a long time and weasel your way onto a guest list to get in the club). But once you are a professional, you’re almost guaranteed a minimum salary, your professional body will help you to keep up your skills (and make you more valuable in the workplace) and means you are unlikely to go without work. As an accountant, there are no shortage of jobs I get offered for great money. But I’m not just talking about office jobs. One of my best friends is a carpenter, he always has a backlog of work and continually has to turn people away because he’s so busy (whilst making a great income and doing a job he loves). Ask any builder – not a single one will say they are quiet!
… But avoid the bad costs
So becoming a professional is great if the only costs you pay are those sunk costs. Really they are an investment in yourself. But that investment can be diminished by bad costs – the lifestyle creep. You lose track of why you started doing what you were doing and you start to lose the passion for what you do.