Personal Finance (Sec. 2.3)

FUNDAMENTALS OF FINANCE

A Guide for Helping Professionals

Adam J. McKee


SECTION 2.3:  College


This work is licensed under an Open Educational Resource-Quality Master Source (OER-QMS) License.

Open Education Resource--Quality Master Source License


Many people use the terms “job” and “career” interchangeably.  I want you to learn to differentiate and make some important distinctions that will help you secure your financial future and your sanity later in life.  A job is a set of tasks that you do for payment.  People often hope those tasks will always be there, and they base their future plans on this hope.  This is a huge mistake.  Jobs, you see, are all about the people and company that you work for.  Financial prudence dictates that you assume that 100% of primary income sources will at some point fail.  In today’s economy, the old practice of getting a job at a good company, working your way up the ladder, and one day retiring on a generous pension are over.

A career is different.  A career is a set of sought-after skills and knowledge that you possess and that others are willing to pay for.  A career is not centered on an employer; it is, rather, centered on you.  The difference is largely semantic in the short term, but in the long term, it is of critical importance.  Because a career centers on you, it allows you to provide for your needs and meet your obligations.  It allows you to move in time, space, and rank whenever an opportunity presents itself.

When you build a career as opposed to merely “getting a job”, you can better ensure a good income for you and your family regardless of what happens with a particular employer.  A career orientation also points to the best way to ensure your future financial success.  By focusing on you, it keeps you aware that it is in your best interest to make yourself the best at your entire skill set.  It encourages you to always be on the lookout for ways to hone the skills you already have and to develop new ones.

A college education is necessary but not sufficient to guarantee you success in your chosen career field.  To really gain a competitive edge and put your career on the right trajectory, you need to focus on developing skills and knowledge that will put you at the top of your game.  The key is to approach college as a constant stream of strategic decisions regarding your career.  Unfortunately, many students approach college as a sort of expensive five-year social experience where you have a lot of fun and drink a lot of beer.  There is nothing wrong with playing hard if you are also working hard.  At the risk of sounding unkind, most people are lazy and avoid challenges.  You can catapult yourself into a successful career simply by basing all of your decisions on gaining skills and knowledge that decision-makers in your field value.

Potential employers want to see a passion and drive in an applicant.  They also want to see this in those looking for promotions.  Choose a career path wisely, and be sure it is one that you can be passionate about and maintain a sense of optimism and a positive attitude for a very long time.  Employers also want to see strong interpersonal skills and a well-developed ability to build and work within a team.  Perhaps the most universally sought outset of skills is good communication.  You absolutely must hone your writing skills, your public speaking skills, and interpersonal communication skills.  In an increasingly multicultural society, there is a great benefit to learning a second or third language.  Many public agencies today will pay you an ongoing bonus if you speak Spanish.

Customer service skills are in demand in both the business and public service sectors.  In the public service sector, this translates into an ability to treat every client with dignity and respect and the ability to engineer positive outcomes with every encounter.  Employers universally demand that you have keen ethical decision-making skills.  Employers need to know that you are well aware of right and wrong in both the human and professional contexts and that you can always be counted on to do the right thing.  Employers almost universally value flexibility.  You need to be able to adapt to changes in your work environment and within an evolving set of procedural rules and best practices.  Never leave a potential employer wondering if you have the drive and determination to stay at the top of your game.

Employers almost universally demand initiative from their teams.  In other words, they want to know that you can go out and do your job well without the need to be micromanaged.  The related ability to demonstrate problem-solving skills is valued by nearly every agency and company on the planet.  Problem-solving skills are closely related to critical thinking and analytical ability.  To solve a problem you need to analyze the problem, then think critically about potential solutions so that you can ethically decide on the best choice.  The work of helping professionals directly impacts the lives of others in highly significant ways.  Employers want to know that you possess a high degree of reliability and responsibility.  If you can’t be depended on to show up on time all of the time and perform your duties to the best of your ability, your career will never amount to much.  Finally, employers value good time management.  They value your ability to prioritize tasks and complete tasks in a reasonable amount of time.

Give that sample of “employer competencies” that college graduates are expected to possess, you may notice that the list is not congruent with your lived experiences.  Education in the United States has sadly become very data-driven, and that means forms of assessment that lend themselves to statistical analysis and comparison.  Not every institution and every teacher is guilty, but students learn more objective facts that can be tested via automatically graded multiple choice tests than anything else.  Much is said about critical thinking, problem-solving, and developing analytical skills, but these are seldom taught or tested in practice.  The sad truth is that you will have to take it upon yourself to make sure you master these skills along the way to earning your degree.  Taking the right elective classes, choosing the right minor area of study, and availing yourself of educational experiences outside of the curriculum are all important options.

The Bureau of Labor Statistics provides us with a handy list of factors that influence wage differences from person to person:

  • Workers who have an advanced education or hold professional certification or licensure may earn more than other workers in the same occupation who don’t have these credentials, especially when credentials are sought after by employers.
  • Experience and skill. Often, the longer you do a job, the more productive you become. As a result, experienced workers usually earn more than beginners. Workers who have in-demand skills also may earn more.
  • Industry or employer. Occupational wages vary by industry and employer. Diverse working conditions, clientele, and training requirements are among the reasons why wages might differ from one employment setting to the next.
  • Job tasks. Jobs for a specific occupation often have similar position descriptions, but individual tasks may vary. And jobs involving more complex tasks or greater responsibility may have higher wages than those that do not, even within the same company.
  • Geographic location. Some states or areas have higher wages than others for jobs in an occupation. Local demand for the work and cost of living are among the geographic factors affecting wages.
  • Success and performance. Some occupations are extremely competitive, and a small number of workers who are successful in them often have very high earnings. Workers whose pay depends on their job performance also might have very high wages or very low wages.

Carefully consider what those factors mean to your future plans.  They provide some big insights in a small space as to what you should try to accomplish with your career.  Also, consider what is missing from that list:  A credential from a “great school.”  The vast majority of employers don’t care where your degree came from as long as you received it from a regionally accredited institution (and the stamp of approval from field-specific accrediting bodies for some professions).

When it comes to education, free is the best price to pay.  Look for options that allow you to pursue your educational goals without shelling out any cash or taking out any of those evil student loans.  Be sure to study your financial aid situation, and adhere to all deadlines.  It is a terrible shame to pay money for tuition when you could have received a scholarship if only you had filled out a one-page form on time!

Financial aid usually comes in three major forms.  The most common forms are need-based and merit-based.  Need-based financial aid means that you need to fill out a FAFSA and apply with your financial aid office to receive free money that you get by simply being broke.  As unfair as it may be, students “neediness” is determined by parents income until they obtain a certain age or meet some other criterion for “independence” such as being a veteran or being married.  Work closely with your financial aid office to maximize your chances of receiving these monies.

When someone mentions “merit-based” scholarships, academic scholarships for brainiacs come to mind first.  But these scholarships can be for singing in a choir, playing a sport, or playing an instrument in the band.  Let’s not dismiss academic scholarships without some further consideration.  Most of these types of aid are based on test scores such as the SAT or the ACT.  The numbers that a student needs to qualify are often set by the individual institution.  So, the more “prestigious” the institution, the higher the numbers.  Small, regional teaching colleges may have much lower numbers that do state flagship schools where the focus is on research or football.

Don’t forget to look into free or much-reduced methods of earning college credit.  The first step in this endeavor is to obtain a copy of the college catalog.  Most students are blissfully unaware that colleges have catalogs, but they can prove to be very valuable investments, especially since they are almost always made available online for free.  The catalog will have a section that describes types of credit that the school offers that don’t involve sitting in a classroom for 4.5 months and paying tuition.

Look into the prospect of receiving college credit for your life experiences.  Many colleges offer credit for life experiences.  Some of these programs require you to put together a “portfolio” detailing your experiences and justifying why those experiences equate to college credit.  Others list specific experiences that translate to college credit, such as military training and law enforcement training.  There are also tests that you can take in place of classes.  Many of the general education courses are offered as a standardized CLEP test.  Many colleges also have a “challenge exam” rule for courses that do not have CLEP exams.

You may hear it said that “a college education is always worth the cost.”  You’ve also likely hear that a college education is a waste of time and that some of the richest people in the country dropped out of college to start businesses.  That fact is true; several high profile computer geniuses found that they could be more successful putting their computer genius to work than by trying to enhance it in the college classroom.  In short, they were unicorns.  Recall our basic premise that you are no unicorn.

For the vast majority of people, there is a direct correlation between the level of degree that you hold, what your degrees are in, and salary.  The more STEM-oriented your degree, the more money you will make.  That is a strike against the helping professions, with the notable exception of most medical fields.  The other major factor is what degree you hold; someone with a 4-year degree will make more money than someone with a 2-year degree.  Someone with a Master’s degree will make more money (on average) than someone with a 4-year degree.  Interestingly, the Ph.D. falls under the regression line; if you are strictly interested in the financial reward, don’t get a doctoral degree!  Professional degree such as JDs and MDs will make you much more money.

References and Further Reading

Torpey, E. “Measuring the value of education,” Career Outlook, U.S. Bureau of Labor Statistics, April 2018.

“Projections of occupational employment, 2016–26,” Career Outlook, U.S. Bureau of Labor Statistics, October 2017.

 


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