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Why a Regular Pay-Cheque is Not Going to Make You Rich

Last Updated 2022/04/22

It is supposed to go something like this:

  1. Birth
  2. School
  3. Job
  4. Marriage
  5. Children
  6. Fin

While, marriage and children are optional, and increasingly so these days, the rest is non-negotiable. We are living longer than ever before and will probably have to work for far longer than previous generations. For many, the perceived safety of a monthly pay-cheque is more important than being rich. Most people may not have even thought about it like that before. Many believe that eventually, we will be successful, we will have everything we want, the car, the house, the two foreign holidays a year, and a home cinema setup to binge on boxsets. Quite how the monthly pay cheque and (ir)regular raises will get us to the land of plenty, we don’t pay much attention. This mindset permeates our society at every level. If I were a socialist (I am not), I would suggest that this is the illusion of trickledown economics. So, the rich get richer, and their money trickles down to those less well off as they buy products and services. To go any deeper into this would involve a whole book’s worth of content, so, let’s just leave it as a societal norm. You can witness a great example of the perceived safety of a monthly pay cheque on trying to get a mortgage, in the UK, since 2008. Before the 2008 financial crisis, we had self-certification mortgages, through which people could make up a number and get a mortgage on a house for it. Since stricter rules have come in (with good intentions), it is now a lot harder to get a mortgage. Where it gets bizarre is when you compare the ease at which you can get a mortgage as an employee, contrasted with as an entrepreneur. For many mortgages, as an employee, you only need 2-3 payslips and a few bank statements. You can even get a mortgage with a job offer letter from some lenders! Compare that with a company director, when you will need three years of signed off accounts, a letter from your accountant, tax return information, (and to sell your soul to the devil?). Imagine this was an employee and a director from the same company or not even an employee, but someone who had just been for an interview and given an offer letter. You could have had a successful company for two years, but it would be far easier for the new employee, with their offer letter, to get a mortgage. The potential monthly pay cheque is seen as far more reliable than the entrepreneur. When most businesses fall on hard times, many entrepreneurs will look to reduce costs. Employees are the most significant cost, in general, to most companies. So, that offer letter is looking a lot less reliable than the entrepreneur, whose employees would all probably go before them, and who has complete knowledge of the likelihood of this occurring. The security of monthly pay cheque is an invalid excuse for not chasing the big win.

Adam Sykes