What is the foundation of all of personal finance?  If you are thinking “spend less than you make” you’d be exactly right.  Once you’ve got that figured out you can focus on the other things like saving, investing, mortgages, budgeting, blah blah blah blah yawn.

But what if you never had to think about anything other than spending less than you make?  What would that mean?  It means you don’t have to invest, you don’t have to really budget, you don’t have to think about a darned thing other than spending less than you make.

In order for that to work there are a few assumptions you have to make.  The first is that you would work forever.  Sounds awful, but if you loved your work and got three months of vacation every year you might consider working forever.  I certainly would.

A second assumption is necessary to live in the life of simply saving more than you make, job stability.  In the investment world, we have something called the risk free rate.  It’s basically the base rate of return you can expect without taking on risk in an investment.  Investors often try to minimize risk while maximizing return.  In the employment world, we have something called the employment preservation objective (EPO).  Well we don’t have that because I just made it up.  But the employment preservation objective is an employee’s desire maintain employment, without any gaps or instability, as long as possible.  A position with a weak EPO might be sales, where turnover is high.  If you were to work as a teacher, your EPO would be stronger.  However even a teacher doesn’t have the best EPO.  They can be fired for poor performance and many are on a regular basis.  Also, many are forced into retirement after hitting certain ages.

If you want to maximize your EPO you have to go deeper into government, the US Supreme Court.  Why is the Supreme Court the holy grail of EPO?  Because you’re appointed for life and no one has ever been fired or let go.  The only way to remove a justice from the bench is via impeachment.  To date, only one justice has ever been through the process and in the end remained on the bench.  The only way you leave the court is to quit or die.  Currently the ratio of quitting to dying is close to 50/50.

If I loved being on the court I’d stay there until I died too.  This is serious maximization of EPO; its EPO is further enhanced in that it is a high paying job.  Everyone on the court is packing over $200k in salary.

Perhaps this is why the current nominee, Sonia Sotomayor, isn’t concerned about saving for the long term. The personal finance dudes at MainStreet.com highlighted that she only seems to have a savings and checking account, with no other real assets except a condo in New-York. Hardly someone we’d pick to be the spokesperson for personal finance.  Though she likely has an equivalent of a 401(k) with some pretty good savings in it this doesn’t have to be publicly disclosed so the blogosphere immediately attacked her as someone who lives paycheck to paycheck.  That’s highly unlikely.  MainStreet goes on to post what they suggest she should do to save for a potential retirement but who cares?  If confirmed, Sonia rolls into the strongest EPO in the states, and she gets summers off.

If she does eventually retire she has a guaranteed pension.  Though pensions don’t last forever, the government would bailout their own federal pension in a heartbeat.  If the government couldn’t, then the dollar is worthless anyway and we’ve all got bigger problems.  Even if she doesn’t land that gig she already makes over $150k a year and can only be removed from her seat in the same manner as a Supreme Court Justice, so she’s still set.

So sign me up to be a Supreme Court Justice, perhaps the best job in the country.  What other jobs maximize EPO?  Do you have one?

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  By 		The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice.

categories: government, personal finance