Bryce Harper recently signed a 13-year, $330 million contract with the Philadelphia Phillies.

Harper's is the biggest free agent deal in U.S. sports history, eclipsing recent signings like Manny Machado's 10-year, $300 million contract with the Padres (at least in total dollars.)

Or not: Machado will make $30 million per year, while Harper will earn an average of $25 million per. And Machado's contract includes an opt-out clause that will allow him to become a free agent again after 5 years; it's possible he could sign a new contract for even more money.

Harper doesn't have an opt-out clause; his salary will be capped until he's 39 years old.

But don't feel too sorry for him: Harper will earn an average of $156,695 per regular season game.

So who got the better deal?

Machado certainly has more options -- and may be able to take advantage of the steady growth in baseball revenue (which may be boosted even further by the spread of legal sports gambling.) Machado's opt-out clause could allow him to enjoy a larger slice of a larger pie.

But in raw dollars, Harper will make more. Even for math-challenged me, it's easy to determine that $330 million is more than $300 million.

What Matters is What You Keep

And then there's this: What you make is important, but what you keep matters most -- and  Harper should keep a lot more of what he earns than Machado. 

Machado plays for San Diego, which means he's subject to California income tax rates. California imposes a 13.3 percent tax on income over $1 million per year. Pennsylvania caps its state income tax at 3.07 percent.

Even though both will surely employ tax-planning strategies to reduce their tax burden... a difference of 8 percent on hundreds of millions of dollars is huge. Harper will keep tens of millions of dollars more than Machado in state tax alone.

And then there's the relative costs of living. California's cost of living is 33 percent above the national average, while Pennsylvania's is 1.1 percent below the national average. In short, the money Harper keeps will go a lot farther than Machado's.

What you earn matters. But what you keep matters more.

The Same Principle Applies to Startups and Remote Work

Remote work means many people can choose where they live. Companies like Buffer don't have headquarters; all of their employees work remotely. 

The same is true for countless startups and small businesses; location, geographic proximity to customers, etc. are in many cases largely irrelevant. That's true for me; professionally speaking, I could live and work from anywhere.

So why don't I move to, say, Wyoming, where there is no state income tax, sales tax is just over 5 percent, and the cost of living is more than 4 percent below the national average? Or move to states like Mississippi, South Dakota, Missouri, Ohio... plenty of states have lower tax rates and lower costs of living than Virginia.

Family, lifestyle, hobbies, friends... money isn't everything, and other considerations are (and should be) important as well.

But by moving, I could keep more of what I earn.

And so, maybe, could you.

If you have a great opportunity -- or you want to experience somewhere new, somewhere that also means you'll keep more of what you earn -- and the only thing holding you back is the thought of moving... move.

Just like if you want to be closer to family or friends and the only thing holding you back is the thought of moving. Or if you want to be closer to people who think and feel and act like you.

You'll quickly find cool new places to hang out. You'll quickly develop new routines. You'll quickly make new friends.

When an economic opportunity is better, and the fear of moving is the only thing holding you back... move.

You'll meet cool new people, do cool new things, and gain a cool new perspective on your life.

It might make it possible for you to take that lower-paid remote work job you'll love. It might make it possible for you to bootstrap that startup you've dreamed of. Or it might make it possible for you to enjoy a better work-life balance.

Or it might "just" improve your financial situation.

Bottom lines don't just matter to businesses. Bottom lines matter to everyone. Always think beyond what you will make and determine what you will keep.

Because, at least in financial terms, what you keep is the number that really matters.

Published on: Mar 14, 2019
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