You’ve got a great salary most people would kill for and great benefits, too. You like your colleagues and even the company culture. But you’re not satisfied with what you do every day; you’re not interested, and you’re not invested. You dream constantly of leaving your high-level job to find something more fulfilling.
So what’s keeping you? Those golden handcuffs.
What does 'golden handcuffs' mean?
The term itself is generally attributed to John Steinbeck who wrote an essay about San Francisco called The Golden Handcuff, in which he said the city is “a golden handcuff with the key thrown away.” It seems to have been the first instance of the term in print, published by San Francisco Examiner in 1958.
However, the way we use the term “golden handcuffs” today to describe a lackluster (albeit often stressful) job with a great salary seems to have come into being in the mid-1970s.
Usually people who find themselves in golden handcuffs are top employees and c-suite executives who aren’t just paid extremely well at the present moment, but are also tied to future financial and other benefits, which they’ll lose if they leave before the contracted term.
Examples of what they stand to forfeit include stock options, supplemental executive retirement plans (SERPs), large annual bonuses (sizeable percentages of their salary), vacation homes, company cars, and insurance policies such as fully subsidized HMO plans.
What industries are most affected by the golden handcuffs?
Any high-paying career can have golden handcuffs attached. Usually, however, you'll find that careers in IT, software, law, medicine, or finance offer time-related incentives to senior employees or those who have unique skills that are difficult to replace.
The practice of handcuffing employees isn't new.
In fact, Patty McCord referred to the practice when she wrote Netflix Culture: Freedom & Responsibility in 2009, the document that contained the company’s core values. And in a 2014 HRB article, she explains: “Most tech companies have a four-year vesting schedule and try to use options as “golden handcuffs” to aid retention, but we never thought that made sense. If you see a better opportunity elsewhere, you should be allowed to take what you’ve earned and leave. If you no longer want to work with us, we don’t want to hold you hostage.”
The handcuffs can go on early.
Sometimes it starts with young professionals who aren’t making six figures yet, but are bringing in healthy $80K+ salaries. When they find that the work they’re doing doesn’t bring them job satisfaction, it’s very hard at that point to consider an entry-level position in another industry. The pay cut they’re looking at can be tens of thousands of dollars—and these people are so early in their careers, many are still paying off student loans, starting families, and trying to get into the housing market.
What are some ways to break free from golden handcuffs?
We asked accredited financial counselor Jessica Medina about the best way to break free from golden handcuffs. She reminds us first that the lifestyle isn’t limited to the big house or fancy cars. The golden handcuffs can also be all the little things you spend money on just because your challenging, high-level job is stressful.
So if you think you may have fallen victim, Medina says take an honest look at your spending patterns and watch out for the following:
Spending required to do your job: Extended child care, transportation costs, business clothing, dry cleaning, parking.
Spending associated with working all the time: Take out/ordering in, house cleaning services, Instacart delivery.
Spending because you "deserve" it: Fancy anything (jewelry, bags, shoes, accessories) that may not even get used.
Spending for self-soothing: Massages, alcohol, entertainment, travel.
“Of course,” she adds, “you may also be in a high cost-of-living area because that's where the high-paying jobs are—and you don't want a long commute, so you need to be in the most expensive part of the city. All those things seem necessary when your job is demanding and pays well.”
Medina says to think about how many of those expenses would go away if you really enjoyed what you did and got to do it on your own terms. “When you’re not trying to add happiness to your life with comfort, convenience, and things, it's much easier to imagine a life without the big salary.”
Once you calculate how much your reduced-income lifestyle would cost, reduce your current spending as much as possible and start saving. If you act as though you’ve already taken the pay cut your dream job would cost you, you’ll have funds to fall back on and the transition to making much less won’t seem as drastic.
If possible, replace some of that lost income with a side business you start now on the weekends and continue to grow. It could be something relatively hands-off too, like investing in rental property with a management company doing the day-to-day tasks. So, while you’ve still got the security of the golden handcuffs, look for ways to develop alternative revenue streams.
About our source
Jessica Medina is a former lawyer turned Accredited Financial Counselor® on a mission to help attorneys figure out their finances so they can pursue their true passions, no matter the salary. Connect with her on LinkedIn to hear how she graduated from Columbia Law School as a single mom of twins with over $200,000 in student loans, took a stroll through Biglaw and the federal government, and now teaches other lawyers how to use their money to finance their dream lives.