An interesting article from TODAY (Link Here) shows why for the majority of people, even a highly paid career such as a pilot – they continue to struggle and face the crunch to survive when these are considered high-income earners.
The article interviews a random selection of 12 pilots, and while the sample number is considered relatively small, it gives a good indication of how numbers crunching and dire the situation is for these pilots during the pandemic.
High-Income Earners = Higher Wealth?
Many of us would think that high-income earners have a better correlation to wealth.
After all, if you earn $10,000 as opposed to say $2,000, you should be much better off technically when it comes to your savings rate…. right!?
|Most People Would Think Linearly That Nothing Can Go Wrong|
As it turns out, this isn’t necessarily the case.
From the article, one of the pilots is earning an income excess of $14,000 (including allowance) yet still struggles when the company had to force a company-wide pay cut to $6,000. Another pilot being interviewed has also admitted to being cash-strapped as his total compensations suffered a major cut down from the earlier of $23,000 to $13,000. We would think that is still a lot by most standard but when he has an obligation to pay $19,000 in his expenses the whole story is completely different.
It was easy for most of us (the bottom ladders) to assume that with that sort of income earned per month, it would have been a breeze to survive the winter. After all, basic housing, medical and food supplies don’t take up that much of a pile.
But life has a way of making fun of us when we least expect.
As some of us earn more money, the potential of our savings increases. But we ended up with so many social junks that our expenses start to increase. Most people ended up with a lesser or equal number of savings rates or worst fare poorer than before.
High compensation including allowances and variable bonuses are often deceptive in nature.
They make us feel rich because we think that’s where we should belong.
|Welcome to the Life of Social Junk|
At first, we started off with an upgrade coffee lifestyle venturing into the likes of Starbucks or Coffee Bean.
Then, we started upgrading our cars, homes, vacations, and many more of our other social lifestyle.
Earning high salaries have a way of filtrating us into a lifestyle that systematically drains each and every single drop of us, through spending more with the convenience of free x-month installments and debts.
You see your friends getting the latest gadget up on the market – Buy.
You look at your co-peers sending their kids to many different tuitions – Follow.
You look at that nice view from the top of your dream apartment – Buy.
You check your debt borrowings and it allows you to upgrade your car – Do it.
These are the kind of life we ended up today because we are filled with material possessions with little or no meaning to it.
We are simply chasing the better after the next best, only to find out there are infinitely better things to chase.
What If Those Pilots Act Differently?
Some people like me, especially if you linger around longer in the finance community, would always think cynically.
At first, I don’t think it’s healthy to always exhibit this sort of thinking, but it usually helps mentally and the amount of work you put in at the other extreme when the world gone bad has tremendously helped to turn the situation around.
For instance, I am always skeptical about how long I can survive in the corporate world.
I have always assumed that bad nasty people leads the corporate world and at anytime at their discretion they are going to eat me up.
Because of this mentality, I’ve gone into the other side of always trying to look after myself first.
I saved hard. I saved for the rainy days. I saved preparing for winter moments like today.
And I invest for the future.
|Increase Other Income, Think Cynically|
Will these pilots end up in a better position than today had they saved more in good times in preparation for the rainy days? Perhaps so.
While it is difficult due to the nature of their roles having to fly in and out and keeping up with their fellow peers, I believe they can do that to a certain extent.
Most pilots also probably do not qualify for basic housing subsidy given their high household income so they are likely to live in a private condo. Nevertheless, they should still have enough buffer to save for their rainy days given their high level of income and allowances.
Perhaps, the journalist should have come up with a “What Would You Do Differently?” type of questions that would intrigued the readers from the lessons learnt.