Can you actually save more money in the long run by earning less in your salary? It sounds completely counterintuitive. Most people do everything they can in order to gain a better title and increase their salaries. The concept of downgrading your pay seems almost heretical to people who have their sights set on wealth. However, some people make the decision to switch careers to less-paying jobs that they either love more or that carry less stress. Why would they do this, you ask? Why would anyone jeapordize his/her individual retirement account and compromise with the prospect of retiring young?
It has to do with switching careers for the sake of being happier and remaining committed to a long term work schedule. Here are the reasons why this strategy can work:
If you love your job and feel less stressed out from it, you can do it for an additional five to ten years without depreciating your health. Most people burn out fairly young and by the time they reach the age of 65 are unhealthy and about ready to lose their minds. On the other hand, people who love their jobs can work well into their 70s, easily making up the money lost from a lower salary and maintaining better health in the process. In the long run, better health saves you money as well.
If your job carries less responsibility you can focus some of your time and energy on properly investing your money so that it will earn you money. The whole idea behind investing in stocks, bonds and funds is to earn more money by doing less. ‘Make your money work for you,’ they say. If you’re not slaving away at a job 60 hours a week, you will have considerably more time to make smart choices with your money and what you earn could become your retirement nest egg.
If you switch careers to one that is more future-safe, the salary cut will be well worth it. Your new job may have a lower salary, but if it’s in a growing new field that should be relevant for decades, you’re positioning yourself to earn more money in the future. Web applications, for instance, will probably be more lucrative in the future than video rentals.
This is not advice meant to inspire people to quit their jobs. It is meant to make you think about the value of your time and energy in generating wealth. A healthy career that lasts longer will probably earn you more than stressful one that burns you out.