Introduction
Welcome to the FI (Financial Independence) by 30 blog! If you’re here, it’s likely because you have an ambitious goal: achieving financial independence by the age of 30. Or if you’re a little or a lot older, retire in the next 10 years. One crucial aspect of reaching this milestone is to increase your 9-5 income. Frugality is a great tool and an important skill to have, but it will not be enough to get you to retirement in 10 years. We need to get that $ up!
In this blog post, we’ll explore why starting with your 9-5 income is a smart choice, the importance of prioritizing learning over immediate income gains, and how adopting a service-focused mindset can accelerate your journey toward FI.
Why Start with 9-5 Income
Definition of 9-5 Income
Let’s begin with a fundamental concept: W-2 income. This term refers to the income you earn through traditional employment, where your employer withholds taxes and provides you with a W-2 form at the end of the year. It’s a steady paycheck, often seen as the bedrock of financial stability.
Some of you may be saying, “Hold on, I’m a 1099!”. Don’t worry, the main thing is that to focus on your day job income and not worry about whether you’re contracted or employed. 1099 is a tax form for independent contractors given at the end of the year. It is their W-2. Basically, if you don’t own the company, I’m talking to you!
Reliability and Stability
W-2 income offers a level of reliability and stability that other income sources, such as gig work or investments, may not provide. Knowing that you’ll receive a paycheck on a regular basis allows you to plan and budget effectively. This allows you to have longer-term thinking, planning, and budgeting.
Second, we’re going to leverage this W-2 income to get cheap mortgages. Lenders love, love, love W-2 income earners and make it the easiest to get approved for a loan. Because W-2 income is seen as highly stable and predictable, lenders feel more confident that you’ll be able to manage this debt burden. If you’re 1099, you’ll need 2 years of tax returns before you can get a traditional mortgage.
Foundation for Financial Growth
Think of your W-2 income as the foundation upon which you’ll build your financial empire. It provides you with the financial stability needed to start saving, investing, and making informed decisions about your money.
It is not the fastest way to get rich, but likely you’re not ready yet. I know that I wasn’t. There is so much that you can learn from working with others and letting yourself mature a bit before jumping out into the deep end, sink, or swim. But don’t worry, we’re not going to stay here for long. We’re not going to just punch a clock. We’re going to be intentional about using the W-2 to springboard into entrepreneurship.
Focusing on Learning Over Income Initially
The Learning Phase
Your early career years (1-3) should be viewed as a learning phase. Instead of fixating solely on earning the highest paycheck right away, prioritize gaining experience, acquiring new skills, and expanding your knowledge base.
If I could do things over again I wouldn’t have gone to graduate school and pursued more education (and debt, and time lost). Instead, I would have gone out and found a real estate investor operating at a high level and worked for them. Potentially even for free for a while! In all jobs remember that you’re either there to learn, to earn, or both. If you have neither, time to leave. All experience is good, but experience learning and doing the exact thing that you’d like to do in your life is best!
If you don’t know exactly what you’d like to do for a business, no worries. You can certainly retire in less than 10 years with other jobs. Just make sure that the earn side is higher to compensate you. At a minimum, you want to have a high enough income from your W-2 to qualify for a mortgage on a rental property in your city. Here’s a calculator to use.
Investing in Yourself
Consider this phase an investment in yourself. The more you learn and grow during these formative years, the greater your earning potential will be in the long run. This investment can translate into higher-paying job opportunities and career advancements. You are compressing the spring and once we let that loose on a higher opportunity vehicle, your success will explode!
Delayed gratification is a very important skill. I want you to be patiently aggressive! Work your ass off to get results ASAP, but know that they will take some time to come to fruition.
It always seems like things are going to take a ton of time looking forward, but as everyone who is older will tell you, things go so fast in hindsight.
Long-Term Benefits
Remember that the benefits of learning early in your career extend far beyond your initial job. The skills and knowledge you acquire will remain valuable throughout your professional journey, leading to higher income opportunities as you progress.
Don’t rush this process. Do push yourself to do, have, and be more constantly, but know that it takes time to gain skills, knowledge and experience. The average age of a successful entrepreneur is 45 when starting their venture, and the chances of success go up by 85% if the founder has at least 3 years work experience.
Having a Service-Focused Mindset at Work
What Is a Service-Focused Mindset?
Now, let’s delve into the concept of a service-focused mindset. This means viewing your job as an opportunity to provide value—to your employer, coworkers, and clients. Rather than seeing your role as a mere transaction, it’s about building relationships and making a meaningful impact.
One thing that is consistent across younger workers is a sense of entitlement. We all go through this. Up until now, the majority of our lives were others catering to our needs, but now the roles are reversed.
“Paying your dues” is a load of horseshit. But don’t get bitter and resentful about your role. You were hired solely to solve a need by your manager. Don’t bite the hand that feeds and make sure to always focus on the needs of the company and your manager before looking at your own needs. We will talk about how to apply this principle in upcoming posts in this series.
Building Relationships
Invest time and effort into building strong relationships in your workplace. These connections can open doors to advancement, mentorship, and even income growth. People are more likely to support and promote those they have positive relationships with. Often your first business partnerships and funding come from people who know like and trust you already from your day job.
Don’t simply hang out with your department though. You want to try to learn a little bit about what every department does. This way you learn what things you have an interest in and what things you may have some innate talent for. When you get ready to run your own company, you’ll need to manage every position. So may as well start learning it now.
Identifying Opportunities
By adopting a service-focused mindset, you’ll naturally become more attuned to opportunities for growth. Whether it’s taking on new responsibilities, solving problems, or suggesting improvements, your proactive approach can lead to promotions, raises, and even new income streams.
The more you make your boss and company look good, the more they are going to want to reciprocate. This is so common that it’s known as the Law of Reciprocity. It is a powerful sales tactic and you’re going to use it to sell your company on giving you raisins and promotions.
You will be seen as a leader (which you are). People genuinely want to help each other. By networking across the company, providing as much value as you can, and persistently advocating for yourself many doors will open for you quickly.
Pitfalls of a Day Job
So we’ve got the game plan: get a W2 to learn, preferably for a company that you’d like to start yourself; become very valuable; leverage that goodwill to scale income rapidly. Simple enough, right? Pretty much! There are a few pitfalls that I want you to be aware of and pay special attention to.
Staying Too Long in the Same Role
Remember that your purpose in working a day job is to learn or earn. If your earning is not on a high growth trajectory (like 3x in as many years) then you need to leave as soon as you’ve mastered ~80% of the role. If you’re outperforming all of your peers, and your company doesn’t have a plan for growth and promotion you are working well beneath your potential.
You don’t need to switch careers entirely, but you need to make sure that you’re progressing in your field. Companies and bad managers love to find awesome, talented staff and then box them into roles where they excel, but go nowhere. Be persistent in advocating for growth and if your manager cannot articulate an exciting vision for your future, it is because he doesn’t have one. Time to leave! I recommend no more than 2 years in a job without promotion or significant raise before you quit in your 20s.
Not Getting the Recognition You Deserve
You’re a boss’s dream employee. Talented, ambitious, a fast learner, a natural networker, and someone who shows up solely to make their life easier. This should be rewarded. Promotions, development plans, regular check-ins, raisins above the standard 4%, and more should be coming your way. If you’re not getting rewarded for your extra hard work and dedication, go somewhere that you’re wanted! Don’t stay in a bad relationship with your employer.
Working for Too Little Pay
Earlier on said that it is okay to work for free, and it is. But only when you’re working for the exact business that you’d like to start. You need to be able to pay your bills and put food on the table.
It is also okay to work a low-paying job to get specific skills or industry experience, but don’t make this a long-term plan. You can learn and become proficient at nearly any job within 6 months. And entry-level jobs are especially easy. You must ensure that after a year or two you’re making enough money to put down a down payment and qualify for a mortgage in your city. In order to retire early we need to start getting property early.
Steer clear of these roadblocks and you’ll come out of the W-2 world richer, more self-assured, and ready to take on the world of real estate.
Conclusion
In your quest for financial independence by the age of 30, remember that your W-2 income is your starting point and your safety net. It provides you with financial stability while you embark on your journey. By focusing on learning, investing in yourself, and adopting a service-focused mindset at work, you’ll not only increase your earning potential but also accelerate your progress toward FI.
As you continue reading our blog and exploring other financial strategies, keep in mind that the path to FI is not just about the numbers; it’s also about your mindset and your approach to work. Stay dedicated, be open to learning, and always strive to provide value. Financial independence by 30 is an ambitious goal, but with the right mindset and strategies, it’s achievable.
