That is … until it drives you INSANE because all you do is work – all of the time!
All too often we make the mistake in our careers by having the notion that taking on more and more projects will convert proportionally to more income. But then we’re disappointed when all that happens is we end up working way too much and the whole thing just blows up in our face.
Believe it or not, there’s a theory in economics that can help explain why this is an effort in vain. But as you’ll find out, where one door closes, another one can open.
Let’s take a dive into understanding how this all works together.
The Law of Diminishing Returns:
When I was studying for my MBA, there was a really interesting concept they taught called “the law of diminishing returns”.
What in the world does it mean?
Though that many sound like a fancy term, it’s really a pretty easy concept to understand.
Example – Building a Deck with Your Friends:
Suppose you decide to build a deck for your house. For one single person, that would be quite an undertaking!
So you decide to get some help. You get one of your friends to come over and help you. Now there are two of you to work on the deck.
That’s better, but there is still quite a bit of work to done.
So now you call over two more friends for a total of 4 people. Now the work is very manageable for each person.
So what would happen if you invited two more friends over for a total of six people?
Each person might work, but its likely that at least a few of the people wouldn’t be working as hard as they could be. They’ll probably share some of their work load with some of the other friends and not really be working at maximum capacity.
Now what if we had 8 or 10 people? That would be quite a deck-building party!
But in all honestly its not going to be a good “party”. I’d be willing to bet that half of the people are probably standing around doing nothing while the other ones are working at about half efficiency.
The more people we seem to add, the less productive everyone seems to get. Plus the more chaotic the project seems to become!
If we could go back, we probably would choose to just keep the number of people working on the deck to just” 4” because that seemed to be the “optimal” number of people to do a good job.
That’s the law of diminishing returns at work.
It demonstrates how throwing more resources at something doesn’t always produce the desired effect.
Noticed how as we went from one worker on upward, things became more productive. But then at some tipping point adding more people to the project actually made things worse.
Feeling the Effects of Working Too Much:
I know what you’re thinking …
… I’m not building a deck any time soon. What does this got to do with me?
Though you may think this law has no relation to your life, the truth is that it can actually reveal something very important about your day to day work life that you may have never considered before …
How Many Hours Do You Work?
Think about how much effort you put into working every week at your job.
Remember that “effort” could be measured by lots of different factors:
- Physical stress
- Emotional stress level
A lot of people start a job or new position with lots of ambition! They sike themselves into believing the more they work the more they will start to see their pay go up!
They say to themselves:
- I’ll work more hours!
- I’ll take on more projects!
- I’ll take on more stress!
Now you start to take on more and more. Your superiors are very pleased with what you’ve accomplished, and thus the reward is now even more handsome! The initial notion that work and reward are proportionally related seems to be holding true!
So what’s the only logical thing to do? If you want more money, keep on piling on the work!
And so the cycle of madness continues.
… until one day something strange happens …
You start to see fewer rewards.
Not knowing what to do, you continue working too much and putting in more effort than you probably need to. You’ve got way too much on your plate. AND again there is no-to-little increase in reward.
With too many balls in the air, you start dropping them.
- Deadlines get missed.
- Details are over-looked.
- Communication is poor.
Your superiors start to get upset with your performance, and now not only are you not getting any rewards, your job is on the line!
At the same time working way too much has now negatively affected:
- Your marriage
- Your kids
- Your health
- And pretty much every other aspect of your personal life.
The law of diminishing returns has again held true.
The Lesson Learned:
Taking a big step back from this scenario and looking at the big picture, again you will see there was a bell curve.
For a short while harder work and more effort paid off. But that strategy didn’t work forever. In fact it worked against you if you worked too much!
This is NOT to say that we shouldn’t work hard or do good at our jobs. We certainly should provide a good service for the wage we’re paid. But simultaneously we must also be smart about this and know when the scales are not in balance.
As the captain of our own ships, we absolutely need to make sure that we keep a good work-life balance! We need to find out what our own personal optimal point is on our bell curve and stick to it.
Chasing endlessly after bigger rewards is a fools game; only to ultimately end up costing us more than we stand to gain.
The Beauty of Diversification:
So this then poses an interesting challenge:
… If working more hours won’t make me richer, what will?
My Working Through Lunch Example:
It’s become somewhat of an institutionalized office concept in some industries that everyone works through their lunch hour.
Work gains one more hour from you. You lose one more hour of your life. BUT we tolerate it because we believe it is necessary to chase after that bigger reward!
Consider for a second what would happen if you took back that hour. All for yourself.
What if instead of filling out forms or responding to emails (or whatever you do at work during this time), you instead learned more about investing.
As we’ve proven time and time again on this blog and in my eBook, understanding simple concepts like how tax-sheltering can ultimately make you millions of dollars richer by the time you decide to retire! (If you don’t believe me, just check out this post here.)
Ask yourself – What would you rather do?
- Those mindless work tasks that no one really cares about OR learn the skills that add over a million dollars to your bottom line someday?
I thought so!
To illustrate another example, there have been many times I’ve returned to my desk around lunch time to respond to blog advertising requests. Within that hour I might pull in an extra $100, $200, or more of extra income!
Not a bad haul for a lunch hour!
I think those forms and emails can wait …
Diversifying Your Income Streams:
If you’ve felt this way at your job for a while now, I want you to do this:
- Think about a place or time where you could shave off 15 minutes, 30 minutes, or even a full hour from your daily routine. It might be your lunch hour, not staying so late, etc.
- NOW devote that time to some other money making effort!
It doesn’t matter what it is! It could be:
- Writing an eBook
- Researching real estate
- Or any other extra income idea! (Check out our whole list here)
Put your talents and knowledge to task and challenge yourself to get a BETTER rate of return for your time!
And also remember – have some fun with it!
After 4 years of blogging and continuing to be a life-long student of personal finance, I can guarantee you: The rewards are there!
You won’t be disappointed with what you find.
Readers – Do you believe in the law of diminishing returns? When do you feel working too much doesn’t pay off any longer? What are you doing to diversify your income streams and get a better rate of return for your effort?
Featured image courtesy of Techniker Krankenkasse | Flickr