Early Bird Gets the Money

Your early twenties will determine your income for the next 10 years


I am going to write about something I’ve witnessed in my short professional life but have never really read about anywhere, perhaps because it follows a more deterministic school of thought less clickbait-friendly than a vapid inspirational article assuring you will eventually figure out your true calling and become as rich as you always dreamed you would be.

Because free-market capitalism is our de facto economic system (not that there’s anything wrong with that), your future as a professional is completely determined by your past as a professional. That is, your job opportunities are theoretically limited to skills you have displayed in previous roles or learned throughout your education. Pretty basic stuff.

Let’s run through a simple example: take two people fresh out of undergrad — one of them went to an Ivy League school while the other went to a second-tier liberal arts university. They both are smart and have virtually the same skillset, but of course look quite different on paper.

The Ivy League grad may go on to work for a fellow alumni as a quant in a big hedge fund in New York City making $80,000/yr before bonuses. Our second graduate, whose alumni network does not quite extend to boutique finance firms, accepted an offer from a suburban commodity trading company, making $50,000/yr as a trader before a modest bonus. Our Ivy League grad is making over 50% more than their liberal arts counterpart on day one, which is not a big deal. This is their first job, and the market was bound to slightly favor the more prestigious candidate. There is still plenty of time for the other candidate to catch up.

Fast-forward two years to the promotion cycle. The Ivy League grad has caught the eye of a private equity firm looking for a quant with 2 years of experience working for a reputable New York City finance firm. They extend an offer of $120,000/yr plus the promise of a very generous February bonus season. As the grad is informing their current employer of this opportunity they cannot refuse, their employer counters the offer with $130,000/yr and a comparable bonus. Meanwhile, our second subject gets a raise to $70,000/yr for their great performance these past two years. Bonuses don’t really change at this place until you’ve been here for about 5 years — our grad starts wondering whether they should stay for much longer.

Only 2 years later, our Ivy league graduate is now making almost 100% more than their liberal arts counterpart. This is when we can start to notice a formidable difference in their trajectories. Do you still think the second candidate can catch up?

Fast-forward another 2 years.

Our Ivy League grad is now offered to run one of the new quant desks. The position pays $200,000/yr and comes with an exorbitant bonus season of 70–100% of salary. Their vast knowledge of the trading landscape and their connections in New York City now have our subject thinking of maybe opening up their own quant shop in a year or two.

Meanwhile, our second subject finally quit their job at the trading company after years of deliberation and took a more technical role at a software firm in the city. The slight career transition came with a price — the offer was $68,000/yr, a slight decrease from their previous role. Hopefully bonuses increase after 2–3 years with the company. In any case, the career shift was a good decision and there seems be more room to grow in this company and industry. I think we can stop here. Let’s look at this graph for a second:

Most people’s careers follow one of these two growth patterns. We love to glorify the exceptions to the rule (high school dropouts who become billionaires is an all-time favorite), but I think those absurdly improbable cases are not a good representation of what we will likely experience and often mislead people into thinking their break is around the corner. It is not, unless you are working ridiculously hard for it. Careers mostly go one of these two ways. Many of my friends who got a good start (top university, prestigious first job) started a chain reaction that has grown their careers in exponential time. This is not to say that you cannot improve your situation later in life — people do it all the time. But graduates who manage to lock in something in their early twenties are very likely to experience this exponential growth and the gap that starts to widen between those who got the ‘best’ jobs out of college and those who got ‘regular’ jobs becomes almost impossible to bridge after a while.

I know this sounds pessimistic, but the more you think of it as realistic the better off you will be. Instead of believing things will eventually just click for you all on their own, be aware of this and understand the importance of quickly locating your unique opportunity to begin your own exponential growth.

This might mean reassessing your current job & career if you’re in your mid-twenties like me. Or if you’re a sophomore in college, it might mean stopping and thinking what you actually plan to do after you graduate, and positioning yourself early for the best possible career by applying to internships at prestigious companies in your field (unfortunately, most people start to think about their career in their last year of school).

I recently attended a coding bootcamp and basically hit refresh on my career. I will likely have to take a small pay cut for my next job, given I’d be starting again at the bottom. Coming straight out of a bootcamp without any other meaningful tech experience, I will likely not get hired by Amazon or Google. It will take a few years to work my way there. By that time, exponentials that started their journey at 22 will be light years ahead.

Currency is not the only commodity that benefits from compound interest — build your career early and you will reap its ever-growing dividends down the road. If you think you can turn your natural talents and interests into skills that could make you go exponential in some field, then don’t waste any more time and jump to it with both feet. You can always easily return to any linear-growing career if it doesn’t pan out.

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