They kept asking about what I wanted to do with my life, but what if I don't know? - Part 1

Updated: Sep 26

This is the 5th article of our "Stoic's Arbitrage" series. This series will empower your Personal Finance success.

Personal Finance and general financial literacy are critical for making the most of your financial resources. It is very doable!

This article is about career choices and their impact on wealth. We clarify the path through the complex web of skills, abilities, attitudes, occupations, and industries to optimize your personal finance journey.

Often, we think of job and career choices separately from personal finance. Our career decisions are based on our skills, abilities, and desire. We often see wealth-building implications as a career decision outcome. We do not generally think of our career decisions as a cornerstone of our personal finance success strategy. Also, we often think of personal finance in the context of technical decisions about securities to purchase or portfolios to manage. We generally do not think of personal finance in the context of attitudes, cognitive biases, and discipline.

We need to change that thinking.

This article is presented with the following sections:

Part 1:

  1. Background - our attitudes, behaviors, and career segments

  2. Notes

Part 2:

  1. The three long-term value segments - building the personal finance arbitrage

  2. The personal finance arbitrage outcome

  3. Conclusion and Notes

A little further in the article, we will introduce Liam, Mia, and Bob. They represent three people that, on the surface, seem pretty similar. They are about the same age, have similar educational backgrounds, and live in the same city. However, we will show that Liam, Mia, and Bob will end up with very different wealth outcomes.

This article makes the case that our career decisions have a tremendous impact on our personal finance success. We show how to actively make career decisions that build our wealth and attendant financial security. We demonstrate the personal finance success arbitrage via a straightforward financial model.

Background - our attitudes, behaviors, and career segments

Attitudes and behaviors

Before we dig into the career segments, we will discuss some of the underlying attitudes and behaviors that power our career segment decisions. This usually starts when we first enter the workforce, post our primary education. This could be after high school or college. It does not mean you completed your education, but it is usually a transition point into the working world. It is often a time when the industry decision is first made. This is a key point. It does not mean you can not change your mind. However, as you get more senior, your degrees of freedom shrink in terms of available industry options. Especially if you wish to stay on the same or higher compensation level.

I often see career decisions made in terms of "skills I have" and "tasks I like." This could be limiting. Instead, I suggest making decisions based on "skills in demand" and "missions I believe in." Skills can be developed and you can learn to like many tasks.

In terms of skills: Position yourself to learn skills you believe are in demand. This is started during your primary education, but skills are enhanced and deepened with continuing education. For example, Data Science and Statistics are very hot today. You may say to yourself, "I do not like data science much." Well, now is a good time to learn to like data science! (3) Change your attitude. Take classes, network with people in the field, learn how to position yourself to be credible in the data science space. My belief is, you can learn to like something when you get positive feedback. You get positive feedback when you do something well. You may say, "I'm not good at math." This is a short-term attitude. Not long-term reality. The reality is, the human brain is incredibly adaptable, which is sometimes referred to as ‘neuroplasticity.’ For example, you may have knowledge gaps generated from missed high school math concepts. Now is a good time to leverage your neuroplasticity and fill the gaps. (4 - please see the note for a practical example) With all your other experiences, the good news is your brain will relatively quickly build math understanding, but only if you train it AND have a positive attitude. Data science is only one example. Please see the BLS chart and website for more skills and related occupations. Also, please see our article Success Pillars for more information on driving success by maximizing luck with an adaptable mindset.

In terms of mission: An important decision element includes why you want to work for a particular company. Your personal mission and the company mission should be aligned. The basis for focusing on why comes from a powerful, but non-verbal part of your brain. That is the "high emotion tag / low language" pathway. Your neurotransmitters provide the tagging feedback for your mission because it is often an emotion-based and value-focused mental input. Information containing a high emotion tag will get routed through the low language-based right hemisphere. Low language makes it very difficult to interpret the feeling. So getting mission alignment right becomes very important. Misalignment of the mission may cause you stress and a "nagging feeling something is not quite right but you cannot put your finger on it" kind of sensation. Please see our Brain Model for more information on different mental pathways and the interactions of our brain's major functional areas.

In an interview with Steve Levitt, University of Chicago Behavioral Scientist Sendhil Mullainathan provides a very interesting and related perspective. Mullainathan suggests most people think they are choosing between employers, say, Company A and Company B. What they are actually choosing is their future self and who they will become. That is, in the future, they will become like the people in their chosen company, either Company A or Company B. We are so adaptable, that we cannot help but become similar to the company we choose to keep. So choose your future self wisely by focusing on the mission.

Develop your own mission statement. Do you want to help people? Do you want to be in creative environments? Do you get excited about driving economic success? Do you want to be part of an environmentally friendly organization? Do you think data is cool and want to help use it to create value? Getting excited about the company's mission is positive reinforcement. It will be key to "liking" whatever task you are assigned. By the way, the key neurotransmitter to liking something is called dopamine. Dopamine is also involved in the mission alignment neurotransmitter tag mentioned earlier. There is a strong neurological connection between the mission and the task. As such, you can find ways to like most tasks, as long as you are bought into the mission.

Also, being clear about your mission will help you decide when it is time to change jobs. There are many reasons to change jobs. As we will discuss below, a job change may result from better monetary opportunities with more responsibility. But sometimes, especially when you get later in your career, a job change may occur because your mission goals become misaligned with your employer. See our article Changing Our Mind for more information about the methods of changing our mind, especially related to your career.

Career Segments

To help further build on attitudes and behaviors, the above graphic shows 3 segments based on 2 important career dimensions. Initially, we will describe the career dimensions.

Career Personality - First of all, we all have a career personality that drives our career progression. Our adaptability and how we handle uncertainty is often a key driver of our career choices. Our willingness to change companies is often a significant driver of our compensation as salary jumps are generally higher when changing companies. Career Personality is a big deal, as our models will demonstrate later in the article. To be clear, I consider this a learned behavior, not some genetic destiny. Our predisposition will likely be the result of how we are taught in childhood. As an example, Reshma Saujani, founder of Girls Who Code says:

"We're raising our girls to be perfect, and we're raising our boys to be brave"

This suggests women may be more likely to fear uncertainty because of how they are raised. The good news is, if desired and with some work, we can all adapt our Career Personality.

For new employees, companies offer salary increases as a job change incentive. For current employees, companies often have policies that reduce their ability to adapt to market salary reality. Somewhat paradoxically, companies often have broad job category salary ranges to accommodate new employee salary increase incentive needs, but that does not require them to increase current employee salaries to current market levels. As an example, here is a quote from May 24, 2021, The Economist article called “Why paying a pittance is passé.” Notice, average current workers will not be caught up until 2024, whereas new employees get an immediate increase:

“entry-level wages for new hires would go from $11 to $17 an hour and that average wages for all staff would reach $15 by 2024”

This is a standard Finance / HR department approach to increasing wages to attract new hires and lagging the increase for existing employees to protect profitability.

Some of the underlying factors are:

  1. Information Asymmetry - the employer has more information than the individual employee or job seeker, and

  2. Market Subjectivity - your market salary can be subjective and not always easy to determine.

  3. Employee Inertia - companies rely on inertia to reduce the need to adjust current employee salaries

As such, changing companies to improve your salary by adapting to market inefficiencies is an employment market strategy arbitrage. Those that are willing to arbitrage their skills and abilities (1) have a great opportunity to create wealth. We will show the value of this arbitrage later in the article.

Industry - In addition, we have the choice of different industries for our employment career. This is significant as our employment value becomes more industry-specific as we become more senior. Our ability to switch industries and increase salary declines as our value becomes more industry-specific. Making a good industry choice in terms of growth will make a difference in your long-term salary and wealth-building ability. The U.S. Bureau of Labor Statistics (BLS) has a treasure trove of information regarding industry growth.

By the way, in 2022, the pandemic is forcing many to rethink their industry choice. The U.S. has and will face labor shortages as market demand moves faster than people can change industries. This friction may create salary inflation. As said in a recent The Economist article (2) -

“It takes time for people to move from dying industries to growing ones.”

For those thinking of an industry or company change, the pandemic may represent a once-in-a-generation opportunity. Also, another way to think about a growing industry is in terms of its upside compared to its downside. See our article Antifragile career choices for an approach for considering upside and downside when evaluating an industry or company.

Next comes the arbitrage. That is, what are the potential personal finance implications regarding the different career segment choices? I call this an arbitrage, because you have control, especially when you are younger, over the career decisions you make. In effect, you are buying your skills out of a lower value career market segment and selling your skills into a higher value career market segment. This is the essence of a classic arbitrage trade. As such, the following analysis helps you understand the long-term value opportunities based on three different persona segments.

See this link for Part 2.


(1) Skills and abilities have a specific meaning. Generally, we think of skills more like tools we can put in our tool bag. They are generally based on rote learning from school or practice from work. It may include analytical skills, software knowledge, writing proficiency, knowledge about history, science, etc. Skills are generally inward-focused. Abilities are generally more linked to our personality. They will include leadership abilities, collaboration abilities, team-building abilities, etc. Abilities are generally outward-focused.

Skills can generally be taught quickly, abilities take longer to develop, and may even not be possible to develop without a willingness to change personality. Ray Dalio does a commendable job describing this in his book Principles.

(2) The Economist, May 15, 2021, “The Bottleneck Economy.”

(3) In 2019, I wrote an article series titled Do I need to be a Data Scientist in an AI-enabled world? This is an example of how to pursue certain technical occupations to leverage non-technical specific skills. Spoiler Alert: The answer is "No, absolutely not!"

(4) One of the core problems of our current education system is what I call “The Tyranny of the Semester.” The issue is, we use time as a standard for learning, not mastery. This may have been necessary in earlier times, like the Industrial Age, with different technology and different needs from employers. In today’s Information Age, this approach does not work. I present a new and different higher education model that focuses on mastery instead of a time standard. Please see my article Higher Education Reimagined. Also, Sal Khan of Khan Academy wrote an intriguing book on the subject called One World School House. If you feel like you missed out on math or some other subject when you were younger and want to turn it into a credible skill, here is what I suggest you do:

The autodidactic approach (for those that want a self-taught education experience):

  1. Go to Khan Acadamy (or similar) and design a curriculum based on a series of video lectures. Move at your own pace and complete assessments to confirm mastery.

  2. Hire a tutor if you need some help on some of the topics. The key is, only using tutors when you are truly stuck. Filling in the gaps happens best when you figure it out on your own.

  3. Take a subject-appropriate standardized test (SAT / ACT) to confirm your competence.

  4. Upon reaching 80 percentile plus on the standardized test, print your own diploma.

The low-cost education platform assisted approach (for those that want a more structured, curriculum centered education experience):

If a more structured approach is desired, there are several courses and certificate programs available in MOOCs (Massive Open Online Courses). One example is called EDx. EDx is a low / no-cost reseller of courses from Harvard, Babson, MIT, Stanford, and other exclusive colleges. Colleges rebrand under EDx to minimize canalization from their high-cost campus education delivery channels. You can earn EDx certificates for their courses.

Now that you are filling in the gaps on skills you believe are necessary for growing industries, get practice by applying them via related companies. Education and practice go together, as Forest Gump said, "like Peas and Carrots." Think of it like bootstrapping, your skills will grow with education, then, as a result of practice, new education will help with more skill development. Our ability to adapt to evolving technology and industry opportunities is critical to our success. Lifelong learning is a must.

“Filling the gap” example: When I was in high school, I took the standard "math sandwich" curriculum - Algebra, Geometry, Trigonometry, and Calculus. I was a solid Math student, but no one was beating down my door to convince me to pursue math as a career! My undergraduate degree was relatively light with math. When I decided to go to graduate school in economics, the Economics Department advisor at Virginia Commonwealth University handed me a Mathematical Economics book by Alpha Chiang. He said, if I understood this book, I was ready for the graduate program. It was clear, I was NOT ready! The book was a bear! With that honest feedback, I decided to enroll in VCU's undergraduate Math program. I was not a degree-seeking student but took the equivalent of the undergraduate degree-seeking curriculum. It took me 1.5 years of night school coursework, but I got there! Today, education capabilities such as Kahn Academy and MOOCs are an even better way to fill in the gaps!

Your Personal Finance Journey Guide:

Core Concepts

1. Our Brain Model

2. Curiosity Exploration - An evolutionary approach to lifelong learning

3. Changing Our Mind

4. Information curation in a world drowning in data noise

Making the money!

5. Career choices - They kept asking about what I wanted to do with my life, but what if I don't know? - Part 1

6. Career choices - They kept asking about what I wanted to do with my life, but what if I don't know? - Part 2

7. Career success - Success Pillars - Maximizing luck with an adaptable mindset to reach your goals!

8. Career choices - Do I need to be a Data Scientist in an AI-enabled world?

9. Career choices - Diamonds In The Rough - A perspective on making high impact college hires

Spending the money!

10. Budgeting - Budgeting like a stoic

11. Car Buying - Auto buying and financing thoughts from a Behavioral Economist, a Banker, and a Dad

12. College choice - The College Decision - Framework and tools for investing in your future

13. College choice - College Success!

14. College choice - How to make money in Student Lending

15. Event spending - Wedding and event planning guiding principle

Investing the money!

16. Investment thoughts for my children

17. Using the Stoic's Arbitrage to choose a great investment advisor

18. Anatomy of a "pump and dump" scheme

19. The Time Value of Money Benefits the Young

20. How Would You Short The Internet?

Pulling it together!

21. Capstone - The Stoic’s Arbitrage: A survival guide for modern consumer finance products

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