The Trap
Writing about career and work alignment is empty without also talking about your expenses.
Keeping up with the Joneses.
The Rat Race.
The Red Queen Effect.
These are all the same effect; feeling or actually needing to keep going even though you’re just running in place.
Being a former Tech worker and speaking to an audience for Tech workers too here at Human Design for Tech Workers, we are privedlged to have typically above-average compensation (salaries, RSUs etc.).
But as any Financial Planner or Advisor worth their salt will tell you then it’s not just about how much you earn, but how much you keep after expenses that truly counts in the long run.
Questions like:
How long is your runway if you were to be laid off today (i.e. the emergency fund question)?
How many years do you want/need to retire fully?
How much money do you need in terms of cash flow or net worth?
Those are just the financial type questions not to mentional all the psycho-social, emotional, familial questions beyond that.
But all the financial related questions anyway really matters is your household cash flow.
And if you don’t consider that today, it won’t have time meet your goals — whatever they may be — in the future.
Think of this like you want a nice bubble bath. You fill your tub with hot water and nice suds form. But if you don’t plug the tub, it’ll just keep leaking.
Part of that where it keeps leaking is how much you spend (and how much doesn’t make it your emergency fund or that eventual really nice bubble bath, i.e. retirement). And perhaps the most egregeious things is what Nick Maggiulli from Dollars and Data calls The Upper Middle Class Trap1.
He calls out how demand for private school, airport lounges or business-class type airplane seating is being crowded out.
Costs are skyrocketing, and frankly, it’s keeping up with the Jonses in the most literal sense.
But I think where Maggiulli really hits the nail on the head is that it’s the confluence of all these things that make it easy to miss. Here’s how he describes it:
The issue with the upper middle class trap is that it’s a collective action problem. Individually, every decision is rational. It’s rational to send your children to the best schools, to want a nicer home, and to travel to opulent destinations. But, collectively it’s self-defeating. When everyone is vying for the same limited resources, it lowers quality of life across the board.
Many Upper Middle Income households make rational, logical single decisions. However when you take them in aggregate, it creates a situation where you’re for the local-maxima, but it doesn’t really achieve the global-maxima that you one had in mind. And of course the current day’s expense is reverse-compounded expense from your retirement or medium to longer term goals.
As we explore about Human Design and BG5 and how you can find individual alignment and create more material wealth in your career and in your business, there is also an important to focus on proper financial planning through exploration and thinking about retirement, legacy. It’s also important to think about being mindful about expenses too.
https://ofdollarsanddata.com/the-upper-middle-class-trap/