"I earn $300k, but everyone I know earns more"
I'm an analyst in a hedge fund and I feel poor. I dress cheap and I act cheap. I'm a cheap date (ask my wife), but most people would find my claim to poverty laughable. I'm on a multiple six figure package. The problem is that everyone I know seems to make more money than I do.
You might think I'm crazy for thinking this way (and maybe I am), but this is a pretty common feeling across the Street.
Finance is an interesting industry. People in this industry are more focused on pay than people in any other industry I know. This is partly self-selection bias: finance pays well and therefore attracts people for whom pay is overwhelmingly important. It attracts people who are hyper-competitive. - You have to jump through a lot of academic hoops to enter this industry and the people who succeed want to be the best. They want to go to the best restaurants, have the nicest houses, and drive the fastest cars. This requires money.
Then there's the actual job. Working in finance is all about money. We deal with it all day, all the time. And the sums of money we deal with are enormous. This means that even large paychecks can seem tiny in comparison.
The upshot is that if you work in finance for too long, you lose track of reality. This is why you need friends who don't work in the industry. I recently spoke to a long-term friend who doesn't work in a hedge fund or a bank, and it was illuminating. He was debating between two jobs. One paid more, but had longer hours. The other paid less, but had much better work/life balance. He chose the lower pay.
For me, this was almost incomprehensible. Personally, I would not have chosen the lower paying job, and nor would anyone I work with. Trying to understand his perspective was like trying to do advanced algebra in my head. My friend was genuinely okay with making less money, just to spend more time with his family. Does that mean I dislike my family? Or do I just have different priorities?
My friend wasn’t getting a six or even seven-figure guarantee to switch jobs. He wasn't getting relocation assistance to move. He was just a regular guy who wanted to switch to another regular job, but with better work/life balance.
It's changed my perspective - slightly.I’m still going to put a high priority on my career progression and continue to look for opportunities to pull in the big bucks. But I'm also going to be a little more appreciative of what I have, instead of focusing on all the people that make more money than I do. That's a trap that's too easy to fall into when you work in finance and everyone you know does the same.
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Margin of Saving was created by an analyst at a multi-billion dollar hedge fund to help others learn how to invest and save.