Regional Director EMEA
Finance Director, Africa
Director, Group Corporate Communications
Group Head, Human Resources
As you move through a corporate career you may aspire to have one or more of these labels; they come with prestige, status and money. Yet, why are so many successful, hardworking, high-performing professionals, underachieving when it comes to their personal finances?
I have closely observed smart, driven, high-earning corporate people, accomplished in their roles. They do all it takes to drive multi-billion naira organisations to success whilst providing an exceptional lifestyle for their families, yet they often underperform financially when it comes to sustainable long-term financial security.
Many haven’t carefully considered what it will take to fund children’s education, weddings, travel, and 30+ years in retirement. The easier option is to just stay on the corporate treadmill until they are asked to step off, are pushed off, or fall off!
It is bizarre that this category of accomplished professionals in spite of the high income and comfort remains one of the most vulnerable. The truth is that complacency sets in and as it is hard to imagine the life after. Sometimes financial compensation can become a “handcuff” that ties you to a particular job or company and makes it almost impossible for one to leave.
“Golden handcuffs,” are the financial security, comfort and safety of high-paying, cushy jobs that keep us bound to our desks and offices because we become dependent on them or are too scared to leave. Many people are fed up with their long term jobs and just working for that pay check because they feel that they cannot survive without it; it is understandable as often the perks are just too great to give up.
Yes there may be a well-appointed residence in a choice part of the city, your children are in the most expensive private schools, one or two fully fuelled generators, luxury cars in the driveway replaced every few years, first or business class travel and holidays, access to the best health insurance and medical care for you and your family, stock options, a team of domestic staff to attend to every whim, your business card and the corporate brand that opens doors and which you wear as your identity…the list goes on and on. It is easy to get used to having everything you want and need even though you have nothing of substance.
How do you give up that lifestyle, the huge monthly “credit alerts” to your bank account and many other benefits that that just keep coming? The real issue is that most of us are living far above our means. For those who have lived large, when the carpet is pulled from their feet through illness, retrenchment or retirement, the shock can be staggering. If you have been spending excessively, living a lifestyle that society “expects” of your status, things can go awry.
Beware of the “Entrepreneurship”
There is absolutely nothing wrong with staying in a long-term corporate job. Indeed beware of the narrative that everyone should become an entrepreneur; entrepreneurship is just not for everyone. It requires a certain disposition, tenacity and risk appetite that is not natural to all. Your path might be a corporate one within which very many achieve enormous success and fulfillment. A successful career in a corporate organization is a laudable path and one in which you can leave your mark and legacy without going into business.
Freedom of Choice
What is important however is to have the freedom of choice. This means that you should be conscious of the way you live and very deliberate about building assets over many years when you are earning significantly. This will ensure that your standard of living doesn’t plummet if and when you decide to leave the lucrative position.
Breaking free from the golden handcuffs is never easy, but if you have been conscious about building financial security over the years in spite of your job, it will be so much easier to walk away from a role particularly if it gives you little or no fulfillment. If your bonuses or your “upfront” payments are the key motivation for staying in a particular role that you are very unhappy in, then you should start to think of what really matters to you.
Ask yourself these questions. Be honest.
- If you left your job today, do you have a plan?
- Would you still be comfortable or would your standard of living take a tumble?
- Are you preparing for life after corporate?
- Do you have investments that give you passive income to support your lifestyle? Can you afford to rent the property that you live in?
- Do you own your own home?
- Can you afford the school fees without this income?
- What is the cost of your lifestyle including the perks?
- How did you spend your last bonus or your last raise?
Did you invest it or spend it largely on things, or experiences?
It is so easy to spend all that comes in when you know that the money will be replaced in a few weeks or months. But remember that investments don’t just happen; you must be deliberate about creating them. Use that high income and bonuses to build a solid foundation of passive income so that you can work because you love what you do and want to do, and not because if you step out, your life will change in an instant.
We all need to get to that place where you can go to sleep and receive the alluring credits of passive dividend income from your stock and business investments or rental income from property you have invested in. These must be just as enticing as your corporate bonuses.
Timing is always important, particularly when you have significant responsibilities and obligations. Of course it would be foolhardy, even irresponsible to walk away from a high paying prestigious role when you have enormous bills to pay. Don’t just walk away if you cannot afford to. Indeed in these times of staggering unemployment, one should feel very fortunate to have a job that pays your bills and keeps you in comfort.
But always keep your sights on the prize, on your goals and what you want out of life. Never lose sight of what you really want to do or what you should be doing with your life. Remember, money buys comfort and luxury but it does not buy lasting happiness and fulfillment. Determine what truly matters to you and what you wish to achieve in this your one and only life then begin to work towards it, step by step.
Golden handcuffs are very real. It is tempting to stay locked in; they look great on the outside, they can even feel great on the inside, but be careful; they can lock you up for a very long time.
Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create greater awareness and understanding of personal finance.
For more personal finance tips, contact Nimi:
Email: [email protected]