Not Rich Yet | Managing higher incomes

May/10

21

So what do you tell someone thinking about school?

Going to school – under-grad or grad – is tough these days. Many graduates are hurting to find jobs while tuition rates are going through the roof. But as someone for whom education payed off, I often get asked for advice by the younger generation among friends and family.

Here are my three pieces of advice:

  • Make sure you will enjoy it
  • Make sure you are talented and will excel
  • Make sure it will put you on a path you will be happy with both financially and as a person

Enjoy it

In order for pursuing a specific program or degree to lead to success, you typically need to do well in the program. One huge prerequisite for doing well at something is that you need to enjoy doing it. If you can’t stand the sight of blood, becoming a doctor is not such a hot choice. If you don’t like doing math, then studying accounting is not the route to success for you either.

Talented

Next, you should make sure you are actually good at what you want to do. You could enjoying singing tremendously, but if you can’t hold a tune to save your life – see me or most American Idol contestants – you will not do well as an opera singer. You should be better at  your chosen path than most or all of your friends. You should have an undeniable knack for it.

Right path

Finally, and most importantly you need to make sure that the degree you are pursuing will lead you on a path that you will be happy with.

Financial happiness

There are many degrees and programs that put you on track for a career that will return your investment and will give you a decent income.

There are many other degrees that will not pay off and may very well lead to an income under what you expect to earn. For example, law school tuition plus living expenses will cost up to $150k in total while many young lawyers make only $45-60k – try to make that math work.

So do some serious research on what careers you could pursue with a given degree, and what the expected income with that degree would be. Compare that to the life style would would want to live to be financially happy. And please be realistic. Some young lawyers earn $180k per year – do you think you are good enough to be one of the lucky few? If not, where does that leave you?

Also keep in mind the quality of program you can get into. An MBA from Harvard has a very different earning potential than an MBA from a no-name community college. Often the lower tier schools are not worth the money – you need to compare tuition and living expense rates with typical graduate salaries.

I was convinced in high school that I wanted to be an archaeologist. That was until I figured out what they earn :) . Then I chose something else I was good at and that led to an income that could support a family.

Happiness as a person

Financial happiness is not everything however. You should be happy living the career implied by your degree day in and out. If you have a serious social bent and want to do good to everyone you know, becoming a tax collector is probably not the right path. If you love the outdoors and hate being stuck in an office, studying to be an accountant doesn’t make sense.

These are not reasons to go to school

Finally some things that do NOT qualify as reasons to study for a particular program

  • My friends are doing this
  • But it sounds cool
  • I don’t know what else to do

Final words

In the end, you just need to think through what you really want to do and imagine yourself as a graduate. Is that the life you want to live? Don’t make a seat of the pants decision that you will regret for the rest of your life.

And please don’t study psychology if you don’t intend to enter that field.  Psychology is interpreted by most employers as “I had no idea what to study so I choose psych”.

Image by Ed Yourdon

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