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?