My money epiphany occurred at 8:21am on a Thursday. As a thoroughly exploited, freshly minted graduate accountant, I emerged from the office bleary-eyed after a nightmare month end all-nighter.
I was heading home for a quick shower and change of clothes, when a fire engine red Lotus Elise sports car roared past me before screeching to a stop in the parking space next to my crappy student car.
My boss climbed out, looking remarkably fresh and rested, which was unsurprising given he had no doubt spent the night sleeping soundly in a nice warm comfortable bed.
He nodded hello, before pausing and asking where I was headed. I replied that I’d been working all night. Again. I would be back in half an hour.
The boss looked thoughtful, made some vague promise about having to remember all the extra effort I had been doing at bonus time, and then told me to pick him up some breakfast on my way back to the office.
Without waiting for an answer he headed inside, bound for his corner office.
When I reached my car I realised the boss had badly parked his sports car, half blocking me in. I briefly considered etching some thoughtful parking advice into his car bonnet with my keys, but I was so tired I couldn’t remember how to spell “inconsiderate”.
As I carefully performed a 20 point turn to extricate my car from its parking space without denting my boss’s shiny new Lotus, I reflected on our relative lots in life.
Money epiphany: Compounding applies to time as well as money
By working in someone else’s business, any great work I did would earn profits for them.
If I owned the business, any great work I did would make profits for me.
If I then employed others, the great work they performed would also make profits for me.
In time I should be able to employ a manager to operate my business, which (all going well) would free up my time for other pursuits while the business continued to make profits for me.
In short: it is good to be the boss!
“it is good to be the boss!“
Bonus time… screwed with my trousers on
A couple of months later bonus time arrived. My boss made a big fuss about how much he appreciated all our effort, and presented each staff member with a cheque for a moderate sum.
Being an accountant, I automatically ran the numbers in my head.
I divided the bonus amount by the number of unpaid overtime hours I had worked.
It turned out I was making less per additional hour than I earned doing my paper route as an 11 year old!
Over the next couple of weeks, I sought advice from family and friends. Almost all were salaried employees, who talked about “paying dues” and “climbing the ladder”.
However none of them drove new red sports cars. Nor did any of them take off for surfing or skiing holidays nearly as often as my boss did.
Escaping life as a wage slave
Some months later I left life as a permanent employee, and started working for myself.
Twenty years on that one decision has generated me more wealth than any other.
Over the years I have accumulated a diversified collection of income streams including business ownership, direct real estate investing, a stock/bond porfolio, and equity investing in businesses owned by others.
In many ways I am grateful to that balding, pot-bellied, middle-aged boss with the red sports car.
He gave me the opportunity to start my career after university, after I had been rejected by 74 other potential employers.
He exploited me ruthlessly, which taught me the importance of control, and maintaining a strong negotiating position.
He demonstrated that life is lived by our own self imposed constraints. This includes:
- Control over how we invest our time
- Establishing for ourselves the value of our time
- Being consciously aware that every hour worked has an opportunity cost.
- What was your money epiphany?
- Consider whether you reap the rewards of your efforts. Are you making money for yourself, or somebody else?
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