Would you risk a good life for a great one?
Many people I talk to have a good life. They’re paid well, live in a nice home, and get to vacation a few times per year. Despite this, they feel like something is missing or is holding them back from having a greater sense of life satisfaction. Most often, it’s their job. They want to quit to pursue their passion but can’t because they have golden handcuffs!
For a variety of reasons, people feel stuck at their jobs. Some get consumed by fear of the unknown or are afraid that their coworkers will judge them for leaving. While these may play a part, most of the time they can’t or won’t leave because of the financial impact that they would experience from quitting.
Typically, workers caught in golden handcuffs have large amounts of money waiting for them, if they can just stick it out. With these financial incentives looming, they’ll do whatever it takes, even if it comes at the expense of their family, happiness, and overall quality of life!
Like lifestyle creep or trying to keep up with the Joneses, golden handcuffs are a trap that many employees fall into.
Golden handcuffs (aka the golden handshake) are financial incentives that are given to employees as a way of discouraging them from leaving their current employer. As a result, most people come to the conclusion that they can’t quit. If they did, they’d loose their benefits and the financial impacts would be too severe!
Whether they realize it or not, employees that have golden handcuffs are in an invisible cage. They’re often told what to do and when to do it, but aren’t allowed to speak up for themselves because of their high compensation.
For some reason, most people believe that earning more money will make them more happy. While this does hold true to a certain degree, it’s usually much less than most people expect.
For instance, one Gallup Poll found that making between $65k and $95k per year in North America is optimal for people’s emotional well-being and that an income of $105k gives the highest sense of life evaluation. Emotional well-being refers to someone’s ability to handle positive and negative situations without it affecting their overall lives. Life evaluation is similar to the legacy phase on the Hierarchy of Financial Needs. It has to do with the thoughts an individual experiences when they reflect back on their lives and accomplishments.
Surprisingly, this poll also found that people making $105k often had a higher sense of life satisfaction than those who earn well above this amount. Researchers attribute this to the fact that most high-income earners are more likely to compare themselves to others and pursue material possessions which can cause them to focus on what they don’t have, instead of what they do!
Companies spend a lot of time and money hiring, training, and retaining key personnel. They don’t want to waste money and lose out on all their efforts!
Employers offer golden handcuffs as a way to attract applicants and retain top performers. Often, these individuals have specialized skills whose performance is tied to the company’s bottom line. Organizations depend on these key employees, so they offer financial incentives as a way to promote loyalty and reward employee retention.
Golden handcuffs aren’t given out because an employee is well-liked. Instead, it’s often due to the job being time-consuming, exhausting, and never-ending!
Today, more people than ever can’t escape their jobs. Technology ties them to their work every second of the day. They receive a constant stream of calls, texts, and emails on a device that’s attached to them 24/7!
Golden handcuffs usually have terms and conditions, too. Employees only receive their benefits after a specified period of time on the job or once certain conditions get met. Otherwise, they risk losing them and a significant portion of their overall pay!
As a mortgage banker, I received a yearly bonus. It was strategically paid out in late February, which happened to be the end of our slow season. Most people would stay on working, knowing that if they left sooner, then they’d lose out on part of their income. Not only that, but if they did leave, it would take several months before their income returned to normal!
Often times, people with golden handcuffs have compensation packages that come with Non-Disclosure Agreements (NDAs) and non-competes. Both of which further limit the employees’ options, locking them into a company for years to come!
Employers aren’t the only ones responsible for limiting employee’s freedom, either. Oftentimes, workers do it to themselves!
Not all handcuffs are made of gold. Many people are more familiar with ones that come in a different material altogether, plastic!
These plastic handcuffs (aka credit cards) are best known by the names of gold, platinum, and sapphire. They can also force people to stay at jobs they don’t like!
Consumer driven golden handcuffs are self-inflicted. They stem from people who live above their means and take on high rate debt. As a result, many of them end up living paycheck to paycheck and some live just so they can work and pay bills!
In my corporate days, I remember watching management get excited when one of their employees purchased a big ticket item. The boss knew the additional monthly expense would keep their worker chained to their cubicle and addicted to their paycheck for months or years to come!
Consumer debt comes with huge interest rates, too. Typically, they’re twice as high as the average rate of return you could earn in the stock market. In addition, these debts are restrictive and limit how people spend their time. The more they consume, the more debt they have, the longer they have to work to pay their bills, and the more stuck they become!
Consumer driven golden handcuffs are made for debt prisoners, people who don’t value their freedom. They get caught and punished for their crimes, which include over consumption, careless spending, and lifestyle creep!
If they don’t find a way to break free, they’ll likely never achieve their financial goals or build independent wealth!
At some point, most people will come the the realization that they no longer love their jobs. Often, something has changed or there’s been an adjustment outside their circle of control, like a change in management or company policy.
Some people will try to hang on and try to make it work. But, typically they end up emotionally spending as a way to cope and reward themselves for making it through another work week.
Instead of spending more than you should, start planning your escape. Take these 5 steps as soon as you realize that you have golden handcuffs and are unhappy. Afterall, life is about living and not working 24/7!
No matter how bad it seems, no one’s ever stuck in their situation. Even if you have golden handcuffs, you still have a choice in how you make money and the amount of time you spend doing it.
Too many people have subscribed to society’s definition of success, which is always bigger, better, and greater than what they currently have. Unfortunatley, this just leads to an endless cycle of trading time for money which keeps them handcuffed to a job they despise!
Instead, design the life you want to live and build a financial plan that supports it. Then, get to work on making it happen!
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