What Do You Have to Show for Your Work?

A question that I think people should ask themselves, particularly early in their working careers is

“What do you have to show from all the money you’ve earned so far?”

It’s not too hard to add up all the money you’ve been paid over the months or years. For anyone who has worked for a least a few years, the total will look impressive. So, where is it? Obviously, we need to spend some of it to for food, clothing, and other necessities, and there’s nothing wrong with a few indulgences, but surely there is something left of all that money. Or maybe not.

One good answer to this question is savings. If you can say, “I’ve been saving for 5 years now, I’ve got no debts, and I have a portfolio worth nearly $50,000,” I’d say you’re in good shape.

Another good answer is equity in your home. But don’t mistake mortgage payments for saving. The interest is gone. Principal is what matters. And if you’ve re-advanced your mortgage or taken on a line of credit for a new kitchen, you may not have anything to show for your years of collecting pay cheques.

For young people working their way through school, a possible good answer is a degree. If working part time while going to school meant you didn’t need student loans (or the work allowed you to borrow less), you can say that you have a degree to show for your efforts.

A pension is a good answer. I think it makes sense to build at least a modest amount of savings in addition to a pension, but pensions are certainly valuable. Some people build debt knowing that they’ll be able to make debt payments with future pension income. This is almost always a mistake. Pensions are great, but don’t pre-spend them.

A poor answer is stuff. If you’ve got an iPhone and a car with little residual value, you don’t have much. Stuff rarely brings happiness for very long. It’s sad to say that all you have to show for years of hard work is a bunch of stuff.

Pointing to experiences is not a good answer to the question of what you have to show for your years of pay. I’m a fan of spending money on experiences rather than stuff, but experiences won’t put food on the table. It’s possible to have great experiences while still saving some money. You should have something more tangible to show for your work.

A possible emotional answer is family. Children certainly are expensive. But using them as an excuse for not saving any money won’t help much in the future when lack of savings limits your family’s choices. It’s best to find a way to have a family and save some of your income. Some people genuinely have trouble making ends meet for their families because of very low incomes. But more often when I hear such complaints, people have just built up lifestyles for their families that are too expensive.

Advertisers like to tell us that we should buy what they’re selling because “you deserve it.” Well, I think what you really deserve is to have something tangible to show for your years of work. But that’s not going to happen unless you decide to make it happen. Instead of focusing on what you can buy with your income, focus on what you have left to show for your years of hard work.