“I have never let my schooling interfere with my education.”
― Mark Twain
“I am going to college. I don’t care if it ruins my career. I’d rather be smart than a movie star.”
–Natalie Portman
Natalie Portman went to Harvard, and it did not ruin her career. And no, I did not go to Harvard. If I had tried, the admissions committee would have laughed out loud.
My major did not lead to especially high paying jobs either. And yet, I retired at age 50, and my net worth is in the top three percent of families nationwide.
Just so you know, I started out at a junior college, not Harvard. Then I moved on to the big state school and grad school.
Don’t miss the point: the significant accomplishment is that I went to college and graduated. You see, college attendance is typical for the financially independent. Eighty percent of millionaires have college degrees according to the Millionaire Next Door.
People with a college degree will earn about a million dollars more over their lifetime than those who do not go to college.
Going to college is one of the highest indicators of future financial success according to several academic sources.
So we are talking about a nearly sure-fire recipe for success, right?
No, there are no guarantees. But if you have the intellectual ability to go to college and can pay for it, you should. Here is a significant caveat: as with any important decision, the cost, time and income payoff must be worth it.
Ask anyone staggering under the weight of student loans.
I was lucky. I had family help, scholarships and worked part and even full-time jobs for a while to pay my expenses. My diet helped too. Ramen noodles. Pop tarts. Free ketchup packets as a vegetable. I ended up with no debt upon graduation–and have not eaten ramen since.
Don’t get me wrong; it is not just all about the cost. That is an undeniable component of the decision, but the real question is what do you gain from it?
WHAT COLLEGES DO TO HELP
College achieves five goals that many of the financially successful use throughout their lives. It:
- Provides training for a job—this is a big advantage when working towards a degree in high demand. The opposite is also true since college cost can weigh heavily on a low earning graduate. According to Forbes, the highest paid major is Petroleum Engineering while the lowest paid is Early Childhood Education. One pays about three times what the other does.
- Reinforces the value of continuous learning—no question here. And potential employers know that. Still, the love of continuous learning is ultimately up to the person, not their college experience. More about this factor later.
- Provides the minimum requirement for certain kinds of professional work–face it, for certain jobs they will not even let you in the door without a degree. Usually, it is a requirement for higher paying jobs.
- Allows exposure to different fields—not everyone knows what they want to do after they go to high school. College exposes students to various areas of study and can be helpful (even, I suppose, things like comparative medieval literature). I think it is slightly silly to expect 18-year-olds to know what they want to do for the rest of their life. After all, I am still figuring out that part myself.
- Provides ready-made connections through social activity on campus and a network of graduates after graduation—for many graduates, college is a pipeline to a first or even second or third job. Moreover, some colleges make a point of remaining engaged with graduates long after they graduate. It appears that these connections are especially important for the children of very wealthy to maintain their financial status. The network is often more valuable than what they learn.
All of these five items can aid in building the financial strength of college graduates. Of course, the worst of all possible worlds is to incur a lot of college cost, but never graduate.
For most people, the critical question needs to be this: what if one or several of the five items are missing? For instance, if you are in a high paying major, do you care if the college provides ready-made social connections? If you are paying high tuition and are not studying a major in economic demand, are the other four items on the list worth the expense?
The financially successful (and yes, their parents) must weigh those factors carefully.
SUMMARY:
- As a general rule, going to college is an essential factor in achieving financial independence.
- People who attend college make up a disproportionate number of the wealthy and financially independent.
- Only some of the college fields of study pay well upon graduation. Still, there are numerous advantages to attending a college that does not have to do with the job training college provides. Nonetheless, it is important to consider what matters most before attending college and incurring significant cost.
- College is expensive. People who incur the cost but who do not graduate have the worst possible outcome.
ACTION PLAN:
- Expect to go to college if you wish to become financially independent. People who end up wealthy are overwhelmingly likely to be college graduates.
- Consider what you want to get out of college, and what the debt and financial payoff are.
- Consider what happens if you do not use alumni connections, will not be trained for a high paying job, and will not use the experience to be exposed to a variety of professions. Think about alternatives to college.
- Don’t go if you do not expect to graduate.
Disclaimer: consult with a financial professional before taking any steps outlined here. Not all advice may be suitable for your circumstances or investment style.
Photo: University of Strasbourg
Photo Credit: M.Strīķis