The Average Salary of A Data Scientist is $100k+. Here's Why It Doesn't Excite Me Anymore
Is the amount or the type of income more important?
Let’s be honest. One of the first things we googled before starting our data science journey was “how much do data scientists make?“
This is a fair question. At the end of the day, we should not only study something we’re passionate about or that pays the bills, but something that can give us the financial stability we deserve.
I did this search too and found that the salary of a data scientist ranges from $110K to $276K in the USA (this might vary based on company, position, etc.)
That’s a great salary! But after reading “Rich Dad’s Guide to Investing” by Robert Kiyosaki, this paycheck we get after hard work doesn’t excite me anymore.
The 3 Types of Incomes (And Why Should Care About It)
According to Robert Kiyosaki, there are 7 basic rules of investing.
As someone who works as a data scientist (or wants to), you must know at least the first 3 rules:
Know what kind of income you are working for
Convert ordinary earned income into portfolio income or passive income as efficiently as possible
Keep your ordinary earned income secure by purchasing a security you hope converts your earned income into passive income or portfolio income
Rule #1 is all about the 3 different types of income you can get: ordinary income, portfolio income, and passive income.
Ordinary income is what you get from your paycheck at the end of every month. This is (unfortunately for most of us) the highest-taxed income. No matter how little or huge your income is, or if you work at a big tech company or at a startup, you’ll end up paying more taxes if you get an ordinary income. The more you get, the more you pay.
Portfolio income is the most popular form of investment income. They come from stocks, bonds, and mutual funds.
Passive income comes from real estate, royalties from patents, license agreements, etc.
Why do I mention all of this? Simple, anyone who codes, builds models, or works with data usually has ordinary income. This means you work harder than anyone else and pay more taxes than anyone else.
So the next time you see that the average salary of a data scientist in the USA is more than $100,000, ask yourself “and how much do they pay in taxes?“
The answer might surprise you.
Converting Ordinary Earned Income into Passive Income Isn’t so Simple
Passive income comes from dividends, rents, and business. This is taxed at a lower rate than your earned income (aka your paycheck).
Rule #2 suggests that you should convert this earned income into portfolio income or passive income as efficiently as possible. This isn’t something simple, though, and you should at least read the book or find a financial advisor to help you with this.
There’s also rule #3 that encourages you to keep your ordinary earned income secure by purchasing a security, but here’s the catch — as the author says — all securities are not necessarily assets.
If the security makes money, and you get money, then it’s an asset, but if it loses money and becomes an expense, then the security is a liability. That is, a security might or might not help you convert your earned income into passive income or portfolio income.
I’m not impressed anymore by a $100k+ paycheck because this is ordinary income.
Now you should ask yourself, “do I want to have a good paycheck for some years or should I start building portfolio income and passive income streams?”
Disclaimer: This article is for informational purposes only, it should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.