I am one of those people who always has a plan when it comes to my career. My career plan calls for a gradual, but constant, move to the top. It also calls for a my work income to continue to gradually and steadily increase over time. But while I would like to think that things will continue to go accordingly to plan, there is always the chance that my career will take a turn for the worse. If that ever happens, there is a possibility that I may have to accept a long term hit to my income.
Late last week I spoke to my company's former VP of Sales who was let go last May. He is still unemployed. No doubt the job market is tough for everyone, but I think it's even tougher for executives who are searching for a job. I think that once you make it into the executive ranks, it becomes dramatically harder to find a job if you involuntarily lose your job. For one thing, there aren't that many executive positions available in the first place. For another, it seems to me that there is a certain stigma that attaches to an executive who loses his job.
My former colleague seems discouraged and it doesn't look like he has too many immediate job leads.
Dealing with long term loss or reduction in income when it occurs is unpleasant, but it's pretty straight forward: reduce your spending, take the best job you can and try to rebuild. The question is, how do you plan for the possibility of a long term decline in income? For my wife and I a major part of our financial resiliency plan is to rely on two incomes. Having two incomes helps both in the case of job loss, and in the case of underemployment. First, losing a single job cannot eliminate our family income. Second, even if one of us has to accept a lower paying job for the long term, the percentage decline in our household income would be lower than if we relied on a single source of income.
Another part of our plans is frugality. We live below our means.
In recent years I came across a large number of people who lived through prosperous times in their careers, only to revert back to the mean a few years later. Some of these made smart financial decisions and did not inflate their lifestyles. Those continue to live a comfortable, prosperous life, even after the good times ended. On the other hand, those who relied on permanent sunny skies for their financial stability have been less fortunate. It appears that moderation is an important part of the plan even when talking about long term career and income planning. Never count on the good times to keep on rolling.
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