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Heistonomics (or: bumpy vs smooth careers)

4 September 2020

I recently listened to two podcasts in a row that talked about mobster movies: Goodfellas and Lock, Stock, and Two Smoking Barrels. Both are good movies. Both movies involve heists.

It got me thinking about the economics of being someone who makes a living in this sort of way. Not in terms of the questionable legality and ethics, but in terms of the economics.

These types of operations might have some forms of recurring revenue. (In the case of Goodfellas, “insurance” premiums to “protect” policyholders.) But what these guys seem to be pursuing are big, periodic paydays more so than regular income.

In a way, it’s a different professional or career model. Instead of being careerists gunning for a secure, regular, smooth salary, the protagonists (antagonists?) of these movies want the big, periodic, lumpy payoffs.

Call it heistonomics.

You can follow a similar professional model even if you don’t want to be a mobster – you can practice heistonomics, but still be legal and ethical.

I have a friend who is operating this career model. He built up a professional and financial runway that allows him to do occasional contracting work, while spending most of his time working on his own big projects. He has also utilised his skills and resources to help others with their speculative projects. To date this has been very profitable for him.

In a sense, I’m practising heistonomics as well.

There are two aspects behind this approach:

  • My wife and I operate something of a “barbell strategy” in terms of our incomes. She generates a reliable, relatively low risk, income. This enables me to pursue endeavours that are more lumpy – that might generate less reliable income but have more potential upside, financial and otherwise.
  • I operate my own personal “barbell” strategy by operating Fairhaven Wealth to generate something of a “reliable” income, without any other significant constraints to stop me from trying even more speculative projects.

I’m the first to admit that not everyone can do this, especially as someone with young children (where the phrase “cash is king” has special resonance). I am especially privileged to be able to follow this model.

A few things I’ll add:

  • This is a higher risk, higher potential return career strategy. Good outcomes aren’t guaranteed.
  • It’s harder to plan around from a cash flow perspective. It’s generally easier to do if you have a low burn rate rather than a high cost of living. It also helps if you have other sources of income.
  • This is another advantage that children of wealthier parents have. It’s not just the financial benefits, but the ability to take on greater professional risk, knowing that they will always have someone to help out during fallow times.
  • There is an emotional cost to heistonomics. Working in a traditional career has its own challenges, but there is something resembling a linear relationship between effort and rewards. You put in the set amount of hours, and you get a reliable, consistent salary. If you’re especially lucky, you might even have a clear trajectory mapped out in front of you. Executing a heistonomics strategy, the relationship between inputs (eg time) and outputs (eg income) can be decoupled. You can work really hard and get little in return. But you’re also more likely to be in a position where you can hit the jackpot and be remunerated in a disproportionate manner. You have to dive into the storm of uncertainty, which many people would prefer to avoid.

So there you have it! A different career model compared to the ordinary careerist, salary earning model.

Instead of pursuing a regular income, you can try heistonomics: going for bigger, lumpier, paydays, a bit like mobsters looking for their next heist.


Tags

bumpy, career, heistonomics, income, risk, smooth


About the author 

Sonnie Bailey

In his spare time, Sonnie likes telling people that he’s a former Olympic power walker, a lion tamer, or that he is an orthodontist. He is none of those things. In reality, Sonnie is a financial planner based in Christchurch. Through his business, Fairhaven Wealth (www.fairhavenwealth.co.nz), he provides independent, advice-only, fixed-fee financial planning services. Sonnie is a “recovering lawyer”: he has specialised in trusts and personal client work. He has also worked as a financial services lawyer for many years.

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