Spend Money To Make Money – Investing In Your Career

Let’s make some money, foo!

We just spent $500 on a work trip for Mr. PoP.  His employer isn’t going to reimburse us, and we’re not able to use it as a tax deduction.  But it still might be some of the best money we spend all year because it’s an investment in Mr. PoP’s career.  There’s no guaranteed payoff, but if it does, it’s sure to be well worth it.

Last year we made a similar investment in Mr. PoP’s career.  We extended a couple of weekend trips on our own dime so that Mr. PoP would be able to meet with nearby clients face-to-face.  These little extensions added about $600 to the cost of our travel in 2012, but by Mr. PoP’s count, he earned over $20K in commissions and bonuses from the relationships that he built and fostered on these little side trips.  $20K on a $600 investment is about a 3200% ROI.  Granted, there was a lot of time and hard work by Mr. PoP in there as well – but that’s still a solid ROI, even if it is pre-tax.

 

If The ROI Is That Good, Why Doesn’t Work Cover The Cost?

You figure that if Mr. PoP earned $20K in commissions and bonuses from our little $600 investment in 2012, then his employer made a pretty penny on our investment as well.  So why don’t they pay for it?

Without hopping inside the corporate hive-mind, it seems as though the answer points to uniformity.  If they reimbursed Mr. PoP for trips like this, they’d have to for all employees with Mr. PoP’s job title.  And by their corporate calculus, it’s not worth it across the average.  Not everyone travels as cheaply as Mr. PoP (we stayed on a friend’s air mattress on one such trip extension last year), so that could significantly affect the calculations.

When There Is No “Work” Yet…

Sometimes we get the chance to invest in our career when that career hasn’t even really begun.  When I was an undergraduate, I spent time studying abroad in Europe.  But before I left, I submitted an application for a very competitive PAID summer internship program.  A week after arriving in Europe, I found out I had an interview, but would need to interview in person.  In the States.  And the kicker was that the internship program was not authorized to pay for travel outside of the U.S. for interviews.  I would need to buy a last minute international flight and pay for it myself.  *eep!*

As I remember, the ticket was about $700, which probably equated to about half of my net worth at the time.  Naturally, I hesitated.  I knew this internship program could open up doors for me down the road, not to mention that it was a paid internship – that’s a rare gem for in terms of jobs for college students.  I bit the bullet and bought the ticket.

I got the internship.  Over the course of the next two summers I earned over $19K working in this internship program.  I also earned a job offer (which I turned down) straight out of undergrad.  Not bad, right?  That’s a 2600% ROI on the dollars spent, not to mention the countless doors that it opened up for me career-wise.

 

Do You Have To Spend Money To Make Money?

Of course not.  If Mr. PoP hadn’t spent a bit of money and fostered these client relationships, there’s a good chance that he would not have earned that $20K in commissions and bonuses.  But he still would have earned a very healthy amount.

Similarly, I have enough confidence that even without spending $700 on that plane ticket I would have been able to get some job that summer and in subsequent years.  But I’m not sure I would have had quite as successful a career as I’ve had so far.  In fact, I know that my current employer hired me at least in part because of skills I learned as a direct result of those summer internships.

 

It Doesn’t Always Work

If you recall, when we first got married, Mr. PoP spent 6 months working for minimum wage – well below his previous earnings.  At the time we viewed the time that he spent working for minimum wage as an investment, since he was working at a small business we wanted to purchase from the owners.  But the sale ended up not going through.  Thus, our ROI on that particular investment was negative.  Going by the wage he had at his previous job, every one of his paychecks during that period equated to a -400% ROI in terms of earnings compared to the opportunity costs of working elsewhere.

This instance makes it clear that not every investment in your career is going to blast it out of the ball park.  There’s risk involved.  For that reason, we don’t invest in our careers beyond anything we feel comfortable counting as a “sunk cost”.

 

Targeted Investments Seem To Pay Off The Most

Don’t let “spending money to make money” be an excuse to spend willy-nilly.  Is a fancy car or couture clothing really going to provide a high ROI on your career?  Unlikely.

Think of it like you’re calculating the expected value of an option.  And what you’re looking at is a mis-priced option.  You want:

Probability of Success * $ Benefit From Success >> $ Cost To You

By keeping the cost to you as low as possible, and concentrating on those moments in your career where you have the greatest opportunity to impact your probability of success for the better, you can seek to maximize these investments in your career.

 

Are you investing in your career?  Do you pay for classes?  Join networking groups?  Sponsor charities or community organizations?  Are your career investments targeted to maximize your ROI?

60 comments to Spend Money To Make Money – Investing In Your Career

  • I really like the final point. Some people use the “you gotta spend money to make money” excuse so that they can justify a purchase. A new car, clothes, a new house explaining that these purchases are good for their career. However, truth is its expenses like the trip you and Mr. PoP make that really fit the statement.
    Justin@TheFrugalPath recently posted..A Reader’s Response To: Can we Afford a Baby?My Profile

    • Definitely. That’s what we look at as the heart of it, too. Cloaking extravagant spending as an “investment in yourself” is pretty counter productive in the long run.

  • I’ve been considering enrolling in some graduate level classes that could benefit my career. I’ve hesitated because the cost would be relatively high, and I wouldn’t see a salary increase with my current employer. However, it could make me more marketable to future employers. It’s a tough decision and I’m still weighing options. Thanks for laying out some of the primary considerations!

    I especially like your statement that, “we don’t invest in our careers beyond anything we feel comfortable counting as a “sunk cost”. This will be a key deciding factor for us — whether we would be comfortable losing the $2,000-$12,000 it would cost for me to take additional classes that may or may not result in career advancement.
    JW_Umbrella Treasury recently posted..Thrift Store Scores: Seasonal DecorMy Profile

    • Yeah, that’s tough. If your current employer provided an immediate salary boost it would definitely change the equation. Does your employer offer education expenses as a benefit at all? Some provide reimbursement (or partial reimbursement) for courses that would boost your productivity in your current position.

  • I’m pretty fortunate that my company pays for all of my training. If I left my current employer, I could easily turn that training into serious money. But unfortunately, I’m under contract for another 3 years.
    Johnny Moneyseed recently posted..Increase your income instead of waiting for a pay raiseMy Profile

    • And that’s one of the reasons I’m not a big fan of long term employment contracts… but on the bright side, when those 3 years are over, you’ll still have all the benefits of that training which you can sell to the highest bidder!

  • I think we constrain our investments to just RE, stocks, and bonds. Some of the best investments are unusual and in ourselves. When I thought about the $100/yr blogging would cost me (let’s not worry about it being fun for now), I was easily able to rationalize it. I don’t know what the expected earnings is, but the earnings potential is unlimited, so even if it is rather unlikely that ill hit it big, the upside is potentially gigantic compared to a modest start up cost.
    Ross recently posted..What People Still Don’t Get About GamblingMy Profile

    • The potential upside to blogging is definitely big, but for us the payoff has been in holding us accountable rather than income. The ROI is still there, though! =)

  • Luckily my work paid for a lot of the cost for me to improve my career and certifications. They didn’t pay for my graduate or undergraduate degrees, but they did pay for my certification which cost over $15,000.
    Michelle recently posted..Our New 2013 Camaro 2SS and $1,713 in Extra IncomeMy Profile

  • I had to pay out of my own pocket for courses to upgrade my position at work. I invested about $5,000 and hundreds of hours in courses and exams but now I make more money, am more employable because of my classification and I am less likely to be laid off than some of my coworkers.

    I consider it a great investment in my future even though the tax deductions did not amount to much.
    Jane Savers @ The Money Puzzle recently posted..Lottery Winner Blew 10 Million In 9 YearsMy Profile

    • I hope it is a great investment in the future! Sounds like its one that you made after doing a lot of research, which definitely bodes well.

  • Our company has paid for a lot of our training and have sent us to Las Vegas, Tampa, and even Disney World for various seminars. I think the trips are very generous!

    I think that it’s a great idea to invest in your own career! I would probably spring for some classes if my employer didn’t.
    Holly@ClubThrifty recently posted..Online Shopping: A Money-Saving Initiative?My Profile

  • The company I work for used to pay for a lot of our training, but now they say the budget is tights and they can’t afford it.
    Glen @ Monster Piggy Bank recently posted..How to Consolidate DebtMy Profile

  • I seek as many non costly or cheap methods of investing in my career. Patience has paid off a bit for me. For instance I was going to buy adobe premier to practice editing on a different program, which would be expensive, but I just held off, and now I have a new fully loaded (but used) mac tower and monitor for 400 total with premier that would have costs me thousands if I was impulsive. It depends on the situation though. For mr. pop, it sounded like the right time and it paid off.
    Budget and the Beach recently posted..I’m Breaking Up with my HairdresserMy Profile

    • That definitely sounds like you made a great career investment there. How is the new tower treating you? Does it make all your editing go so much faster?

  • I’ve done a number of things to invest in my career from taking classes in practice management, to networking groups, to sponsoring community events. I don’t know that any one thing was the golden ticket, but I think if you don’t invest in yourself and keep growing, it’s easy to stagnate. I do sent my top employees to Las Vegas every year to conferences to learn new things. It always seems to pump them up and keep them motivated.
    Kim@Eyesonthedollar recently posted..We Flipped a House!-Part 1, Buying the HouseMy Profile

    • Do you think the conferences are more motivators and boosts to productivity than learning new skills? As an attendee, that’s often what I feel I get out of them rather than a specific skill.

  • I’m always looking for ways to invest in my career. The problem is that there are tons and tons of different potential investments. But picking the one with the best ROI can be difficult, especially because a lot of them come with hefty price tags.

    One thing that I’m trying to do is to figure out what people above me have in terms of certifications, or experience, or whatnot. And then go after that. Otherwise, I run the risk of spraying money and time everywhere and not getting much back for my efforts.
    My Financial Independence Journey recently posted..ConocoPhillips (COP) Dividend Stock AnalysisMy Profile

    • I think it’s definitely worthwhile to learn what types of certifications, etc the people above you have – hopefully that’ll make finding the ones with the highest ROI pretty easy!

  • I would never have thought about paying for the business trip myself, but it looks like it was well worth the expense. I still think the company should reimburse if it led to more business (a way not to cover the average and below average employees).
    Pauline recently posted..Expat banking: how I manage bank accountsMy Profile

    • Reimbursement is kindof slipperly because Mr. PoP’s sales cycle is so long. He’ll often court clients for a year before they sign a contract. So it’s hard for a manager to know immediately if something like this was worth the company’s dime.
      But for Mr. PoP – the clients that he met with on our money because “clutch” in a sense. He was able to count on them to come through when he needed to hit metrics at the end of the quarters to qualify for super-sized bonuses. And he wants to keep those relationships and keep building on them!

  • From reading your previous posts and comments, it seems like you have your head screwed on straight. So, your judgment clearly can be trusted, and if you figure this $500 is money well spent, I think that’s good enough. Sometimes the payoff from a specific endeavor is hard to quantify, but that doesn’t make it any less valid a thing to do.

    You guys are awesome… keep going! :)
    William Cowie recently posted..Will The Stock Market Crash Now?My Profile

    • Awww, thanks William! It’s definitely hard to quantify the payoff, and that’s one of the big reasons that we like to limit our downside to amounts that we feel totally okay about being sunk costs. That way, even if the payoff is zilch, it’s not the end of the world for us.

  • Qualifications aren’t really necessary for me to get ahead. They count a bit more for T; his employer offers quite a few courses, etc, but only covers part of the cost. We’re happy to pay for the rest, though, as they should help him in the future in regards to employability. I don’t know how much we’ve spent on these … it’s usually $50 here, $20 there, but probably not more than a few hundred.
    eemusings recently posted..In which I struggle to reconcile feminism and arranged marriagesMy Profile

  • Employer-reimbursed tuition is one perk that not enough people take advantage of. It’s just an investment in time, but then again, so are most things, aren’t they?
    101 Centavos recently posted..Sunday Morning Fish Wrap: It’s springtime and it’s bloody well snowing…My Profile

  • This one hits home. I’m a software developer and early in my career, I spent about 250 hours over the course of 6 months studying on my own. I had no family and lots of free time. Shortly after, I passed a certification and doubled my pay. It was one of the smartest moves I ever made.
    Mr. 1500 recently posted..10 Questions and a Pizza Place with Lacy from EarnVerseMy Profile

    • Sounds like that was definitely a smart move! I’ve heard different opinions on the usefulness of certifications for software and IT guys – some swear by them as an easy way to weed out candidates, but others insist there are very smart guys who were just not motivated or “corporate” enough to want to put the time into the cert process. Sounds like there’s probably a bit of truth to both, but I’m glad you’ve benefitted.

  • I’m a bit advocate on continuing education in terms of keeping up with a career. I’m fortunate that my employer pays for all my training but even if they didn’t I’d be learning something you can bet on that. Knowledge is power!
    Canadian Budget Binder recently posted..Family Finances: Somebody Is Watching YouMy Profile

  • I would agree that, if done correctly, investing in your career can really pay off. I’m working towards my Masters in Accounting, which in the end will have cost me $30,000+ (had to take a lot of prerequisite classes to get into the program). Not something to go into lightly! It won’t help me with my current employer, as they rarely have turn-over in the higher accounting positions, so there isn’t much room for growth. But I can expect to earn $60,000-120,000 after graduation (or before, if I decide to change companies before I finish the program). Given that I’m making ~$45,000 now, it’s well worth the investment!
    Ms.W @ GrowingHerWorth recently posted..Small Step Towards FreedomMy Profile

  • I definitely think it`s a good idea to invest in your career. either it`s time or money.
    The Norwegian Girl recently posted..No More Gym ExpensesMy Profile

  • I managed to post the comment before I was done commenting!
    anyway: For me investing in a decent education is the right thing for me. it`ll cost, but in return I`ll have the right qualifications!
    The Norwegian Girl recently posted..No More Gym ExpensesMy Profile

    • But definitely keep the ROI in mind when it comes to education. I don’t know how it is in Norway, but here there are many expensive private colleges that are no better than their significantly cheaper state-run counterparts.

  • I’m all about spending money on my career. A great mentor once told me that you had to “push your chips across the table” if you ever wanted to earn more. I’ve had that viewpoint ever since.
    Joe Saul-Sehy recently posted..How Colors Affect Your Investment DecisionsMy Profile

    • I think especially in your career that it would give clients confidence when they see you investing in yourself (and investing alongside their money).

  • I have to spend money on my career. I`m required to attend continuing education classes and maintain a license to work (almost $700 alone every year) but anything I do for my career is a tax write off. I agree though that it’s worth investing if the ROI is there. My husband extended a stay during his last job which led to making the contacts that are his current employers, well worth the extra hotel stay.
    Catherine recently posted..Things I Don’t Understand: Designer ClothesMy Profile

    • In the US there’s a pretty big threshold you have to cross before you can deduct unreimbursed job expenses – so we’re never able to deduct any. But glad that you guys are able to – I’m sure that lessens the burden.

  • I always smile when Mrs. Bonner and I talk about our finances. She chose Physical Therapy as a career and racked up $100K in student loans getting her doctorate. I’m a biomedical engineer and was lucky to have received a research assistantship in grad school that took care of my tuition and gave me a monthly stipend that was enough to cover all my expenses. Pick something no one wants to study and get paid to do it :)
    Mr. Bonner recently posted..Earn itMy Profile

  • I guess the biggest investment I made was in going back to school to get my MBA. The employer did pay for most of it, but I had to dedicate my time, and it was A LOT of work going part-time. In the end, I think it was really worth it b/c of pay increases, the network, and the confidence gained. Also, the degree is for life and nobody can take it away.

    The other investment was in a good wardrobe and staying fit.
    Financial Samurai recently posted..Determining The Value Of Your Credit Card Rewards PointsMy Profile

    • I’ve heard mixed reviews on the ROI of an MBA, but have gathered that it seems to depend a lot based on what school you end up getting your degree from and how good you are at parlaying that network going forward.

      As for a good wardrobe… really? Would love to hear more of your ROI analysis there, since I haven’t found that to be the case. In my experience if you’re smart enough you can wear whatever the hell you want, and if you’re not quite that smart, you’re safe with the “3 c’s” of business fashion. Clean, classic, and conservative. And those don’t have to be insanely expensive.

  • […] PoP @ Planting Our Pennies writes Spend Money To Make Money – Investing In Your Career – Just like any investment, we want to look for a maximum ROI when investing in our careers. […]

  • […] Spend Money to Make Money – Invest in Your Career Investing in your career is well worth it, provided you do it in a sensible fashion. There are definitely good career investments and bad ones. (@ planting our pennies) […]

  • The point about ROI is very well made! Many people consider college, for example, an “investment” no matter what they major in. If so, it’s a terrible investment for some majors at expensive colleges, and for many more majors, might get a return, but the return may be very poor compared to going somewhere cheaper.

    Going to CMU for a computer science degree? That’s a smart investment. Going to Columbia for a teaching certificate? Not so much. Your school district isn’t going to pay one penny more for that degree than for the person who went to the local satellite of the state university.
    Jenny @ Frugal Guru Guide recently posted..The True Cost of Commuting…No, Really!My Profile

    • Good point, Jenny! Especially given that college is often paid for using leverage, which makes the ROI calculations all the more important since you’ll need to use those returns to pay down the loans!

  • […] most popular post of late was definitely Spend Money To Make Money – Investing In Your Career, which was mentioned by Funny About Money in Around And About the Web, by 20s Finances in the […]

  • […] to spend money to make money, right? Planting Pennies points out the reasons why it is important to invest in your career, including […]

  • […] Mrs PoP from Planting Our Pennies presents Spend Money To Make Money – Investing In Your Career […]

  • Yeah, exactly, some are just excuses. Justifications to convince themselves that what they are doing is right. There’s a fine line between good and bad investments.
    KC @ genxfinance recently posted..How Does The Stock Market Work?My Profile

  • […] Spend Money to Make Money – Investing in Your Career – Sometimes it’s worth the extra dollars you spend if it makes a big enough impact in the long run. Read this advice on when to go for it and when it’s just not worth it. […]

  • […] post Spend Money To Make Money – Invest In Your Career was highlighted by Quizzle as a Top 5 Weekly Reads, and by PT Money in his Quick Money Tips […]