Your Lack of Income Can Be an Asset

From the Praxis blog.

Let’s say you want to do something awesome.  Maybe you’re interested in being a part of a startup or an entrepreneurial business.  Maybe you’ve got a creative side, and you’d jump at the chance to work on a movie script.  The less cushy your current life, the higher the chance you’ll be in a position to answer when opportunity knocks.  The lower the cost of exit, the easier exit becomes.

A lot of young people just starting out in their careers feel pressure to scratch and claw for a few thousand more in salary and keep up with friends who are moving into nicer houses, driving nicer cars, eating sushi every Tuesday, and shopping at trendy places.  There’s nothing wrong with any of these things, but if you have a stomach for more risk than the average person, and a desire to do some really cool stuff, you might want to resist the urge to upgrade your lifestyle.  Your relatively low income can be a huge asset.

Even the most frugal and self-controlled among us have a propensity to adopt a standard of living right up to our capacity (sometimes beyond).  It makes sense.  In fact, it’d be a little weird if you were raking in cash and sleeping on a park bench, just waiting for the opportunity to use your capital.  Living in the moment is fine.  The thing is, there are so many ways to happily do this.  I’ve found that, whatever the income level, once it’s above a certain very low baseline, you can organize a pretty happy life around it.  The higher it goes, the more you spend and it is damn-near impossible to go backwards.

I knew a guy once who had a great job, making more than any of his peers, but at a place that pressured employees to upgrade their cars, houses, etc.  He soon found himself in a lifestyle that only that well-paid job could sustain.  Then the job turned sour.  He wanted out.  But how to convince his wife, his kids, and himself to downgrade the car, the monthly budget, the mortgage?  Some of these things couldn’t be done at all on short notice.  His high income was not a source of freedom, but a chain, preventing him from doing what he wanted.

So you’re young and and your income is low.  That’s a huge advantage for you.  That means if your friend tells you she wants you to help launch a new business, but you might not get paid for the first six months, you can probably swing it, since you’re already accustomed to eating Ramen and you have no DirecTV to cancel.  Some of the best and brightest are incapable of jumping on great opportunities because they’ve earned decent money quickly, then hemmed themselves in, unable to ever downgrade their short term quality of life.  If you can, you have a competitive edge.

Obviously, no one wants to stay forever on a diet of canned chicken.  But when you’re young, and at the beginning of the discovery process of what makes you come alive, it’s helpful to be free from a huge list of material needs.  You’d be surprised how much an early high income can stall further progress towards your goals.

So if you think you’re poor compared to your friends, smile.  When you consider all your assets and liabilities – your skills, interests, strengths, weaknesses, capital, time, flexibility, etc. – include on the asset side of the ledger the fact that you don’t really need much money to maintain your current quality of life.  It may come in handy when the chance to do something amazing, and far more rewarding in the long term (materially and otherwise), emerges and you’re ready to jump while your buddies have to turn it down to stay with a job that pays for their $15 “happy hour” cocktails.

Why I Don’t Care About Income Inequality

AbundanceSmartPhone

In the 1980’s if I told you for only a few hundred dollars anyone could have a $1 million asset in their pocket you’d call me crazy.  But here we are.

The chart above (actually a picture of a chart taken with my iPhone and uploaded to this blog with an app to further emphasize the point) is from the book Bold: How to Go Big, Create Wealth and Impact the World by Peter Diamandis and Steven Kotler.  It illustrates why I think worry about and policy efforts aimed at changing differences in income between rich and poor are dumb, destructive, and miss the point by being stuck in a dead paradigm.

The above chart only scratches the surface.  It’s hard to comprehend just how much wealth (not income) we have today compared to 20, 30, or 50 years ago, let alone a century or two ago.  Anyone who complains that income gaps are growing misses the miracle under their nose of wealth exploding, and more accessible to individuals at any income level than ever before in human history.  50 years ago, it could take a hefty sum to launch and run a basic advocacy organization, for example.  You would need a secretary, long-distance phone line, office space, filing cabinets, a travel agent, a print shop that you’d have to visit to approve runs of literature (at least several thousand at a time), space to store them, shipping cost, etc. ad nauseum.  Today you can setup a WordPress website, bid out for design work on Fiverr or 99 Designs, get VistaPrint to run a few hundred after proofing a digital copy, book your own travel, store your own files, run email campaigns with MailChimp, etc. ad nauseum for a few hundred bucks.

Anyone can write and record songs, publish books, start businesses, sell goods and services, learn anything in the world, or meet people across the globe for free or close to it with a phone and some WiFi.  These things are equally accessible to rich and poor.  Wealth – as measured in opportunities and fulfilled desires, the real end of money – is greater than ever and flatter than ever.

The biggest obstacles are those erected by the wealthy to stymie competition from upstarts taking advantage of all this accessible capital.  Licensing requirements, regulations, wage laws, tax laws, immigration restrictions, intellectual monopoly status on non-scarce resources, and subsidized education and idleness are the biggest hurdles to the poor seizing the newly available wealth and creating a better life.  It’s not about income or even net worth.  It’s about what you can do and the value you can create and consume.  The chart above and the world around us indicate that there has never been a more broad and deep spread of wealth.

GDP doesn’t matter.  Neither does income.  Opportunity matters.  Value matters.  Times have never been better across the board, which is exactly what most threatens those precariously perched at the perceived top.  Don’t worry about them.  Let the doomsayers and wannabe warriors of equality clamber for an illusive goal that doesn’t make anyone better off.  Take advantage of the exponential growth in opportunity all around you.

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