Many wonder about ‘How much does one earn over a lifetime?’ Here is an interesting mathematical analysis. This is a simplistic calculation with many assumptions. Four data points have gone into it: Type of Employment, Starting Salary, Working life & average growth rate.
Type of Employment: A job is when you work for business started by someone. Self employment means you are that ‘someone’. In simple words starting a business is Self Employment.
Starting Salary: This is the income one makes in the first year of working. Typically in self employment first year income is low.
Working Life: It is assumed that working starts at age 25. Retirement in jobs happen at 60 & in self employment happens at 70.
Average Growth Rate: This is the growth in salary/income per year averaged for the working life. This rate will not be a same every year; some years it might be very high and some years it might be zero. A conservative estimate is taken here.
Total Earnings: This is sum total of all the money earned in the working life of 35/45 years.
This table presents a simple calculation of ‘Earnings over Lifetime’
Type of Employment | Starting Salary | Working Life | Average Growth Rate | Total Earnings |
Job | 3.5 Lac | 35 | 7 | 4.84 Crore |
5.5 Lac | 35 | 7 | 7.60 Crore | |
7.5 Lac | 35 | 7 | 10.37 Crore | |
Self Employment | 2.5 Lac | 45 | 7 | 7.14 Crore |
2.5 Lac | 45 | 9 | 13.15 Crore | |
2.5 Lac | 45 | 11 | 24.67 Crore |
Conclusions:
We earn a lot more in Business. But it comes with its own risks. Not everyone is fit for that.
Total earnings are far higher if we start at a higher salary. So focus a lot on developing yourself.
Higher Growth Rate (Salary Hike) is very crucial to earn more.
So what do we do?
There are two things you should focus on to increase ‘Earning over Lifetime’: Starting Salary & Growth Rate.
Starting salary depends on your potential when you enter the workforce. To improve that, invest in yourself. Understand the industry you want to work in and develop yourself accordingly. Setting a Goal is surely the first step to start growing in life.
Growth Rate depends not only on your performance in work environment but also on promise you show for future. Hence keep learning even after you enter workforce. Constant learning and stretching your abilities is the surest way to keep the growth rate sky high.
This is a simple representation for the curious soul. You shall get a decent idea about ‘How much does one earn over a lifetime?’ by reading this article.
About Author
Anurag is a Certified Career Counselor and Coach. He is an Engineer & MBA with 20+ years experience in Education Industry. All of knowledge that you find here stems from first hand experience of coaching thousands of successful students. He has been passionately working in the field of career counseling since 2019.
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