I’ve recently been thinking about why people think that self-employment is such a big risk, especially in industries where human capital is important and economies of scale tend to be less important — like professional software development, for example. What is it that makes it so risky?
- Is it the fact that you have to compete in a free market? Sure, but then again, so does your employer.
- Is it the fact that you lose out on benefits and retirement savings match? That stuff doesn’t come for free, and you should consider it as part of your salary, but it doesn’t mean you couldn’t provide that for yourself.
- Is it the fear of not receiving a stable pay check, and perhaps living on a low income for months on end? That is a valid concern, but there are tens of thousands of jobs out there — it’s not like you’ll go broke and die alone just because you took a shot, no matter how dramatic some people make the choice out to be.
Why is it risky to live off some of your savings, and either become successful or re-enter the workforce? What exactly are you risking?
Our anchors are too heavy; they drag us down and dampen our curiosity and sense of exploration.
Anchor #1: Our fear of not keeping up with our peers. The more I think about it, and the more I dig into the reasons why I myself have been averse to the idea of self-employment in the past, and why I think others are averse to the idea, is the fear of failure to keep up with our peers. As much as we try not to, and perhaps we don’t admit it, but we are always comparing ourselves to our friends, family, neighbours, coworkers and colleagues, and judging ourselves in relation to them. What other metric is there to go by? What will my mom/girlfriend/etc… think of me if I do this and am not wildly successful?
Anchor #2: Our fear of not accumulating enough wealth for ourselves and our family. At the same time, we have a fear of not achieving our goals. Jobs usually aren’t all that bad, and through a job, we can build up retirement savings, go on vacations, and stash money aside for the future, for our retirements, and for our children. We count on our jobs to get us there, even in today’s world where employment is less than assured, and governments are racking up so much debt that job-destroying inflation and taxation are sure to increase in the future. However, that lies outside of our realm of experience; we don’t see that, we only see our own lives, desires, dreams, and goals.
Self-employment seems like a big risk when you take all of this into consideration. Will I still be able to reach my retirement savings goals? Will I still be able to provide for my family?
What happened to your sense of exploration and excitement?
Do you remember the sense of wonder, excitement and curiosity you had as a child? You probably got yourself into all kinds of trouble, scraping some knees and bruising some elbows, but at the same time, you probably had a blast and gained so many great memories. What a shame it would be if you were too afraid to climb up into the treehouse cause you might have fallen off the ladder, or if you never got on a bike because you might have fallen off and scraped your knees and elbows.
Nothing worth achieving is ever easy in the beginning. A sense of fear is a good tool to prevent us from rushing headlong into danger, but at the same time, especially with all of the wealth of modern society, I am afraid that we get too attached to this wealth and we become so afraid of losing it that, ironically, we are unwilling to make the choices that could help us to increase our wealth.
You will not die alone like a fool.
I sometimes think about what people had to go through in World War II, and I think “now that was a real risk!” No matter what side of the war you were on, that war was nasty, brutal, and one of the worst evils that humans have ever done to themselves, if not the worst. Could you imagine being an Allied soldier, facing the bullets and mortars at the beaches of Normandy? What about the Germans and Russians alike, who fought bitterly in subzero temperatures and watched as their comrades were killed or frozen to death. What a life a Russian soldier must have had: Turn back, you get shot; press on, you probably get shot anyways, and at the end of it all, you might still have ended up in the gulags!
Somehow, all of that madness came to an end, and people’s entire lives were changed. My own grandmother grew up in this world, and she faced tough choices in her life that I will never have to face in mine. She didn’t grow up in a world that was interconnected and online, and while she did have her own business at one point, she had to risk a lot more than simply “not making a dime” for a few months!
I’ve also travelled to Ethiopia, a country where many people today live a very primitive agricultural existence and where the only real choice for them is if they wake up or starve. Ironically, though, the further away you get from the cities the happier people seem to be, because they don’t know what they are missing. It’s not their fault at all — if I had been born there, would I have the opportunity to be doing what I’m doing now? I don’t know. My life would certainly be very different.
Take the opportunities that you have been given in life, and be grateful for them
Every time I feel fear and doubts creeping up in my mind, I just remind myself to be grateful that I even have the shot. I am only an average Canadian, but hey, that is pretty good if you look at all the possible places I could have been born! I don’t understand how some people with millions in net assets and hundreds of thousands in income can become so paralyzed. At the same time, it seems that those with little wealth but big envy are the least happy in life.
My advice for getting over the fear
- Get over what other people have. No matter how much you have, someone else will have more than you. Keeping up with your peers in this way is unsustainable. I believe in surrounding yourself with people better than you so that you can learn from their qualities, but if you can’t get over your jealousy of those who have more than you, you will never reach true happiness.
- Get over yourself. Your life is not so dramatic that leaving your job will end up into some sort of a Hollywood tragedy where your entire life is ruined. Don’t use your desire to take the easy road and get some wealth the easy way be the excuse that prevents you from living the life you truly want to live.
- Dream a little. Bring back some of that inner child. The universe won’t care if you spend your life worrying or not, but you owe it to yourself to give that inner child a chance.