Many young, ambitious professionals feel financially stuck, even as their careers take off. The reason? Their career capital is growing faster than their financial capital.
Most young professionals spend a lot of time thinking about how to grow their careers (buying a reliable car, earning a professional qualification, moving home to be closer to the office), but far less time thinking about how to grow their investments.
Both need attention. Career capital comes from your skills, experience, qualifications, network and reputation. Financial capital comes from saving, investing, and reducing debt. The trouble is that career capital usually feels more urgent. Those exam fees must be paid now. That industry event is next month. The client opportunity is in front of you today.
Financial capital is no less important, but it feels far less urgent. As a young professional, your retirement may be 20 or 30 years away (or more), so your financial progress is easy to postpone.
One practical way to solve this is to get into the habit of paying your future self first. When you receive a salary increase or bonus, put some of it away before those extra rands get eaten up by a new expense. Put it towards savings, an investment, or reducing debt.
The same applies to how you spend money on your career. A useful course, professional exam or good networking opportunity may be worth the money, but not every expense linked to work is automatically an investment in your career. Ask yourself whether it will genuinely improve your skills, help you do your job better, or give you access to a real opportunity.
I’m not saying that every extra rand must be saved. A financial plan that feels like punishment is difficult to maintain. If you pass an exam, earn a promotion or complete an important project, celebrate it. Enjoy the dinner or take the weekend away. Just be careful not to turn every reward into a long-term debit order.
Once a year, stop and ask yourself: am I making financial progress as my career progresses? Your salary may be higher, but are you saving or investing more than you were a year ago? Your role may have changed, but has your financial situation improved?
Progress does not need to happen all at once. Paying off some debt, building an emergency fund or increasing an investment all count.
Career capital helps you earn more. Financial capital gives you options. Take 10 minutes this weekend to choose one small action that will help your investments grow with your career.
Five Ways To Grow Your Financial Capital Alongside Your Career
1. Automate The First Step. Set up a debit order for your savings or investment on payday, so that the money moves before you can spend it. Even a modest amount builds the habit, and you can increase it later.
2. Split Every Increase. The next time your salary goes up, decide in advance how to divide the increase. For example, put half towards savings, investments, or debt and enjoy the other half. You’ll still get the benefit, and your future self will get a share too.
3. Build An Emergency Fund Before Anything Else. Aim to set aside enough to cover three to six months of essential expenses. Keep it in an accessible account, like a money market account, so that an unexpected expense (like a car repair or retrenchment) doesn’t send you into debt or force you to cash in long-term investments.
4. Use Of A Tax-Free Savings Account (TFSA). In South Africa, growth and returns inside a TFSA aren’t taxed, which makes it an excellent home for long-term investing.
5. Do An Annual “Capital Check-In”. Pick a date (say, your work anniversary or the start of the tax year), and compare your career progress to your financial progress. Look at your savings rate, debt balance, and investment value from a year ago and today. If your income went up but your net worth didn’t, you may need to tweak your plan.
